NextFin news, The Congressional Budget Office (CBO) released a report on Friday from Washington, D.C., stating that President Donald Trump’s signature policies, including tariffs on approximately 75 percent of imported goods and a crackdown on immigration, will act as a drag on the U.S. economy in 2025.
The CBO forecast that these policies will slow economic growth this year, increasing unemployment and inflation rates. However, the report also noted that the sweeping tax legislation championed by Trump, known as the One Big Beautiful Act, which permanently extended individual income tax cuts and allowed businesses to immediate expensing of equipment and research costs, is expected to strengthen consumer spending and private investment.
As a result, the CBO projects a rebound in economic growth in 2026, with GDP growth rising to 2.2 percent, up from the 1.8 percent forecast earlier in the year. The agency expects the economy to be larger through 2028 than previously estimated, with real GDP ending the forecast period 0.1 percent higher than projected in January.
The report highlights the net effect of three major policy changes: the 2025 reconciliation act tax cuts, new tariffs on imports, and reduced immigration levels. While the tax cuts are expected to have a positive impact, the tariffs and immigration enforcement are anticipated to weigh on growth in the short term.
The CBO’s analysis was published amid ongoing debates in Washington about the economic impact of Trump’s policies ahead of the 2028 presidential election. The agency’s findings provide a detailed outlook on how these policies are likely to influence key economic indicators such as GDP growth, unemployment, and inflation over the next several years.
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