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The idea that tariffs could be used as a revenue source to finance tax cuts is intriguing, but also controversial, as it invites potential trade conflicts and economic repercussions.
Financial Impact: Deficit and Debt Considerations
The analysis provided indicates that tariff revenue could reduce the federal deficit by around $2.8 trillion after accounting for modest economic effects such as slightly lower GDP growth and temporarily higher inflation. The Congressional Budget Office (CBO) estimates suggest a significant reduction in primary deficits and interest payments, which could reshape the nation's fiscal landscape.