Trump’s $200 billion tariff hit swells budget deficit to $2.1 trillion for 2026, CBO confirms

The federal government’s tariff windfall is evaporating faster than expected, and the Congressional Budget Office says it’s blowing a $200 billion hole in this year’s budget.

CBO now projects the fiscal 2026 deficit will hit $2.1 trillion, according to the nonpartisan scorekeeper’s Monthly Budget Review released Monday—up from the $1.9 trillion the agency forecast in February, before the Supreme Court struck down President Trump’s signature tariff program.

Federal spending is running close to its February baseline for the year, CBO noted, meaning the deficit is almost entire due to the revenue side.

CBO estimates that tariff and customs-duty collections in 2026 will come in $250 billion below its earlier projections. The 60% drop traces directly back to the Supreme Court’s Feb. 20 ruling that found the Trump administration lacked authority to impose tariffs under the International Emergency Economic Powers Act.

Stronger-than-expected income and payroll tax collections, running about $75 billion above the February baseline, have cushioned some of the blow. But CBO said the rest of the government’s revenue streams are tracking $25 billion below projections, leaving a net revenue gap of roughly $200 billion that outlays alone can’t explain.

“We’ve borrowed an astounding $1.8 trillion this fiscal year, with $431 billion in the month of July alone, and equating to nearly $6 billion per day,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “We’re on track to surpass $2 trillion in borrowing this fiscal year despite not being in a recession. That........

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