Will Tariffs Reduce the National Debt?

Creatix / June 30, 2025

The U.S. national debt has surpassed $34.7 trillion, and the cost of servicing that debt—just the interest payments—has soared to over $1 trillion annually as of mid-2025. This marks a historic shift: we now spend more just paying interest on the National debt than on defense, Medicare, or any single discretionary program. Economists warn that unless fiscal policy changes, interest costs will crowd out critical investments in infrastructure, education, and innovation, deepening the structural debt burden for future generations.

From Osama to MAGA OBBA: the path to U.S. bankruptcy.

Osama Bin Laden "succeeded" in putting us in a path to bankruptcy. The U.S. national debt began to increase dramatically after 9/11, marking a sharp departure from the budget surpluses of the late 1990s. In response to the terrorist attacks, the U.S. launched costly wars in Afghanistan and Iraq, while also implementing sweeping tax cuts under the Bush administration. These policies, combined with increased homeland security spending and a decline in revenues during the early 2000s recession, reversed the downward debt trajectory.

 The debt expanded further after the 2008 financial crisis, when massive stimulus packages and bailouts were introduced to stabilize the economy. From that point forward, the debt continued to grow rapidly, accelerating again during the COVID-19 pandemic and most recently due to rising interest costs, entitlement growth, and ongoing deficit spending. Now MAGA brings us the One Big Beautiful Act (OBBA)—a sweeping package of tax cuts, infrastructure projects, and social spending—is raising alarms about its multi trillion dollar impact on the national debt. 

No one said that MAGA would be free. Somehow to make us great again, we have to go bankrupt. Or is it that the tariffs will save the day? Supporters of OBBA argue that there's a hidden offset overlooked by critics, pundits, and "fake news" economists: tariff revenue. As the U.S. imposes higher duties on imports from other countries, could these trade tariffs actually help fund the bill and reduce long-term deficits?

Let’s explore this.

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🇺🇸 What the Bill Does

The "One Big Beautiful Bill" combines:

• Middle-class tax cuts

• Corporate tax incentives

• Large-scale infrastructure investment

• Defense spending increases

• Domestic manufacturing subsidies

Its cost is estimated at $3 to $4 trillion over 10 years, depending on the scoring model. Critics, including the Congressional Budget Office (CBO), argue the bill would significantly increase the national debt unless matched with equivalent revenue.

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💰 Tariffs: A Hidden Revenue Stream?

Tariffs are taxes on imported goods. When the government places a duty on foreign products, that money is collected by U.S. Customs and Border Protection and sent to the Treasury. While tariffs are often considered a trade policy tool, they are also a source of federal revenue.

Here are some facts:

• In 2022, the U.S. government collected roughly $78 billion in tariff revenue.

• Tariff collections have peaked at over $90 billion in some years.

• Some proposals tied to the "One Big Beautiful Bill" estimate expanding tariffs to new sectors and countries, potentially pushing annual collections to $150 billion or more.

Over 10 years, that could generate $1.5 trillion—not enough to fully pay for the bill, but enough to meaningfully reduce the net cost.

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⚖️ Tariffs vs. Debt: How the Math Works

If tariffs generate $1.5 trillion over a decade, they could offset 30% to 40% of the bill’s projected cost. Supporters argue that this, combined with growth effects from domestic investment and reshoring, could bring the bill closer to fiscal balance.

However, the CBO typically scores tariffs conservatively, and does not assume they will grow indefinitely. That’s because:

1. Tariffs reduce import volumes, shrinking the base over time.

2. They can cause retaliation from trading partners, hurting U.S. exports.

3. Higher prices on goods often get passed to U.S. consumers, potentially dampening economic activity and offsetting gains elsewhere.

So while tariffs do generate real income, they may also carry hidden costs—including inflation and disrupted supply chains.

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🧠 Are Critics Ignoring the Revenue Side?

In political debates, critics often cite the spending and tax cut side of legislation like the One Big Beautiful Bill—but rarely highlight the revenue it could create via tariffs. This creates a lopsided narrative where the bill seems like a debt explosion with no counterbalance.

Supporters argue that when paired with tariff revenue, domestic job creation, and reshored supply chains, the bill becomes much more fiscally reasonable—especially if new tariff policy targets high-volume imports in strategic industries.

Still, independent analysts warn that tariff revenue is not guaranteed. If consumers shift behavior, or if global partners retaliate, the income could fall short—and debt could still rise sharply.

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🧭 Conclusion: Will "Ugly" Tariffs Save the "Beautiful" Bill?

No one really knows. The future hasn't been created yet. Tariffs may be waived or eliminated as easily as they were implemented. Even if left in place, tariffs would most likely offset a portion of the cost of the One Big Beautiful Bill for this year. Chances are that Congress will find ways of keep the uncontrolled spending and tax cuts increasing while tariff income decreases for one reason or another. 

Imposing high tariffs comes with high risks: inflation, trade wars, and shrinking global cooperation. The answer, then, depends on assumptions—how much tariff revenue is generated, and how much economic drag it causes in return.

At best, tariffs will "pay" a tiny portion of the increasing debt. It seems that debt is by now a new constant in life. We now have at least four constants: change, death, taxes, and debt.

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