The nation’s red ink took center stage as Maya MacGuineas, president of the Committee for a Responsible Federal Budget, assessed tariff revenue and the long shadow of President Donald Trump’s tax bill during an appearance on Mornings with Maria. Her message was clear: tariff dollars are real, but they do not plug the gap left by tax cuts. The discussion comes as policymakers weigh growth, inflation, and interest costs that have turned deficits into a pressing concern.
MacGuineas leads a watchdog group that tracks federal spending and tax policy. She spoke about how much tariffs bring in and how much the 2017 tax law costs. The conversation framed a central debate in Washington: how to fund government priorities without pushing the debt higher.
Why Tariff Revenue Falls Short
Tariffs raised more money after 2018 as duties on Chinese goods and other imports increased. U.S. customs duties rose from roughly $35 billion in 2017 to about $70 billion in 2019, according to Treasury data. That is a sizable jump, yet small when set against annual deficits measured in the hundreds of billions.
Economists also point out that tariffs act as taxes on imports. Importers often pass those costs along to businesses and consumers. Some firms shift supply chains to reduce exposure, which can limit revenue gains over time. Others absorb part of the cost, squeezing margins and investment.
In short, tariff receipts help the Treasury’s bottom line but do not solve it. Even at their peak in recent years, they were only a fraction of the budget gap.
The Lasting Price Tag of the 2017 Tax Law
Trump’s Tax Cuts and Jobs Act lowered individual rates, cut the corporate tax rate to 21 percent, and changed how U.S. multinationals are taxed. The law was designed to spur growth and investment. It succeeded in lifting business cash flow and nudging investment for a time, though separating its effects from a strong pre-pandemic economy is tricky.
Nonpartisan estimates from the Congressional Budget Office and independent analysts put the law’s cost near $1.5 trillion over ten years before interest, and higher once interest payments are included. Some provisions expire at the end of 2025, which complicates the math. Extending those expiring tax cuts would raise the long-term cost.
Supporters argue faster growth offsets part of the hit. Critics counter that growth gains were too modest to cover the loss of revenue. MacGuineas’s group has repeatedly warned that temporary policies that get extended become expensive promises.
Competing Claims, Shared Risks
Advocates of tariffs say they protect domestic producers and can be used to press trading partners on policy. Yet the money raised is small compared with spending. The hit to consumers can also feed inflation, and countermeasures from other countries can hurt exporters.
Backers of the tax cuts say they made U.S. companies more competitive and put more cash in workers’ pockets. Opponents say the plan tilted benefits to higher earners and widened the deficit. The fiscal watchdog view, represented by MacGuineas, stresses that both approaches can add to the debt if not matched by savings or new, sustainable revenue.
- Tariffs increased federal receipts but remain a modest slice of revenue.
- The 2017 tax law boosted growth but reduced revenue on net.
- Rising interest rates make persistent deficits more expensive.
What the Numbers Mean for Policy
The federal deficit neared $1 trillion in 2019 before the pandemic. Since then, emergency spending and higher interest costs have pushed debt service to one of the fastest-growing budget items. Every percentage point increase in rates magnifies the bill on existing debt and new borrowing.
That math limits easy choices. Counting on tariffs to cover tax cuts is not realistic. Counting on growth alone is also risky. A durable plan likely needs a mix: base-broadening tax changes, targeted spending restraint, and rules that limit temporary measures that later become permanent.
What to Watch Next
Congress faces a major decision in 2025 when many individual tax provisions expire. Extending them without offsets would increase the deficit. Letting them lapse would raise taxes on many households. Separately, any shift in tariff policy—new duties, higher rates, or rollbacks—will have budget effects that are meaningful but limited.
MacGuineas’s bottom line aligns with the numbers. Tariffs bring in cash, but not enough to balance tax cuts. With interest costs climbing, the longer leaders wait, the tougher the trade-offs become.
For now, the takeaway is simple. Growth helps. Tariffs add a sliver. But the deficit problem is bigger, and it requires choices that match policy promises with a stable way to pay for them.
