The Congressional Budget Office (CBO) released a report on “CBO’s Current View of the Economy from 2025 to 2028” that found that President Trump’s tariffs and the One Big Beautiful Bill Act are set to have competing effects on the U.S. economy. The CBO said that tariffs are expected to rein in economic growth, while the tax cuts in the reconciliation bill are expected to boost it through increases in capital stock and productivity.
The report also found that while tax cuts and work requirements in the One Big Beautiful Bill Act will boost labor supply in the long run, the CBO projected Trump’s immigration crackdown will shrink it in the short run, saying that it is already contributing to a dramatic drop in hiring. The CBO projected that gross domestic product (GDP) is expected to grow by 1.4% this year, down from a 1.9% prediction made in January, primarily because “the negative effects on output stemming from new tariffs and lower net immigration more than offset the positive effects of provisions of the reconciliation act this year.”