STEVE INSKEEP, HOST:
The president has been promising his tariffs will help make America more prosperous. And there is evidence the tariffs are at least helping the government's bottom line. Reports from the Treasury Department show that Trump's tariffs have raised nearly $70 billion so far this year, and a new forecast out this week says if that keeps up, it could shave trillions of dollars off the federal debt over the next decade. NPR's Scott Horsley is following all this. Hi there, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Steve.
INSKEEP: OK. So this forecast comes from an organization the White House doesn't like when they say things like lots of deficit spending coming, but they do like it in this case. So what is it?
HORSLEY: Yeah. It's the Congressional Budget Office, which says if all the tariffs in place at the beginning of the week stayed in effect for a full decade, it could cut the federal debt by $2.8 trillion, which is in the ballpark of that big tax cut and spending bill passed by the House - what it's expected to add to the debt over the next 10 years. In other words, the tariffs could help to fill the hole that congressional Republicans have been digging with that tax and spending bill. But keep in mind, the tariff revenue isn't just coming out of thin air, and it's not being paid by foreign countries. It's mostly being paid by Americans, like Patrick Allen (ph). He's a wine importer in Columbus, Ohio.
PATRICK ALLEN: That revenue comes from somewhere. It's a tax on the backs of the people that are importing either raw materials or in my case wine. We're the people that are paying this tax, and eventually it gets built into the price everybody's paying for goods.
HORSLEY: And congressional forecasters acknowledge as much. They say while the tariffs will bring in a lot of money for the government, they will also likely lead to higher inflation and slower economic growth.
INSKEEP: How much of a drag on the overall economy are these tariffs, then?
HORSLEY: Yeah, the CBO projects a fairly small drag. But it's really just a guess because we don't have any recent experience with tariffs of this size. You'd have to go all the way back to the Great Depression to find import taxes this high in the United States. So Shai Akabas, who's been keeping tabs on the tariffs at the Bipartisan Policy Center, says a lot of economists are worried the tariffs will actually do more damage than the CBO is predicting.
SHAI AKABAS: Some are forecasting larger impacts and potentially pushing us into a recession. We won't know if that actually materializes until we see the fallout.
HORSLEY: And the tariffs themselves have been really unpredictable, as the president tries to negotiate with U.S. trading partners. So that presents another challenge, not only for forecasters, but more importantly, for the businesses and families who are trying to make decisions in this environment.
INSKEEP: How do businesses handle that unpredictability, changing tariffs day by day?
HORSLEY: Yeah. It's really challenging. Patrick Allen's wine business, for example, typically works with three-month lead times.
ALLEN: We're a small company, so we drive the back roads France and find these small wineries. We buy the wine from the winery, import it into the U.S.
HORSLEY: And right now, Allen should be ordering wine to sell during the fall and the Christmas holidays, but a lot of his customers are sitting on their hands because they have no idea what the tariff is going to be.
ALLEN: Say if I order $100,000 of wine from France, if there's a 20% tariff, I'll have to pay $20,000 to get the wine out of customs before I sell a bottle.
HORSLEY: I talked to a customs broker last week who used to advance her clients money to pay the tariffs. And, you know, she could do that when the import tax was 2% or 2.5%. But with today's much higher rates, she's not doing that anymore. Clients have to pay the tariffs up front on their own. So while these import taxes are raising money for the government, they're also gumming up the gears of commerce. Allen told me at least he's got some nice French wine to soothe himself with.
INSKEEP: Hope you're able to pour yourself a glass, Scott. Thanks so much.
HORSLEY: You're welcome.
INSKEEP: That's NPR's Scott Horsley. Transcript provided by NPR, Copyright NPR.
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