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Tariffs totaled 0.4% of US GDP

US tariffs totaled 0.4% of GDP in 2021 due to additional tariffs as well as increases in imports that began in 2020 after the start of the pandemic.

In the Congressional Budget Office (CBO) baseline, tariffs decline gradually, to 0.3% of GDP in 2032, in part because non-oil imports are projected to grow more slowly than the GDP.

US tariffs have averaged 0.2% of GDP over the past two decades.

Customs duty revenues have increased in recent years after the implementation of new tariffs.

They include import tariffs on solar panels and some household appliances, which came into force in February 2018; tariffs on steel and aluminum imports from certain countries, which came into force in March 2018; tariffs on a range of imported products from China, which were imposed in 2018 and 2019; and tariffs on certain softwood lumber products from Canada, which went into effect in December 2021.

Some of the tariffs on steel and aluminum were later replaced by tariff quotas.

The additional taxes applied to affected imports range from 10 to 25% of the estimated customs value of those products.

CBO’s baseline reflects the assumption that those recent rates will continue through the 2023-2032 period at currently prevailing rates.

However, the Administration has broad authority to modify the rate policy without legislative action.

Tariffs

CBO’s projections of customs duty revenues reflect TRQs on certain imports from Argentina, Brazil and South Korea that went into effect June 1, 2018, and TRQ on imports from the European Union that entered into force on January 1, 2022.

Those projections do not reflect TRQs that took effect after the CBO completed its projections, including a TRQ on imports from Japan that went into effect on April 1, 2022, and a TRQ on imports from the United Kingdom. which is scheduled to go into effect on June 1, 2022.

CBO projects that the federal budget deficit will shrink to $1.0 trillion in 2022 (it was $2.8 trillion last year) and that the annual shortfall would average $1.6 trillion from 2023 to 2032.

 

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