Tariff Repeal Needs Replacement to Avoid More Borrowing

The Senate may soon vote on resolutions to repeal the national emergencies that the Trump Administration has utilized to put in place significant tariffs on most countries around the world. Ending these emergencies would effectively repeal these tariffs and thus reduce projected revenue by $2.2 trillion over a decade. Importantly, these tariffs have already been ruled illegal by the U.S. Trade Court but remain in effect while the Supreme Court considers whether to uphold or overturn the ruling. Recently, the Committee for a Responsible Federal Budget outlined several ways to replace the tariff revenue.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

With the national debt approaching record levels, we need to focus on reducing deficits, not increasing them.

It certainly makes sense for Congress to reassert its taxing power. But the country is over $30 trillion in debt and borrowing another $2 trillion annually. Rising tariff revenue is the one bright spot in an otherwise abysmal fiscal picture – if Congress wants to end these tariffs, we need a replacement.

Congress could consider replacing the tariffs with a border-adjusted cash flow tax as many have suggested. Or they could cut spending, cut tax breaks, or adjust the reconciliation law. There’s no shortage of options to pay for ending the tariffs.

Without an offset, it’s our kids who will ultimately pay the cost.

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For more information, please contact Matt Klucher, Assistant Director for Media Relations, at klucher@crfb.org.