Not fully liberated

It’s been almost 2 months since liberation day, and after several changes in terms of tariff rates, delays in implementation and negotiations, the U.S. has now a formal tariff policy in place. The amount collected so far is difficult to calculate because it seems customs is more focused on collecting than reporting, but estimates place tariff renvenue between $17-$20Bn. That is about 8% effective tariff rate vs the promised fully phased-in tariff policy of 18%. At the pace it’s going the US should collect $200-$220Bn per year, and if fully implemented, around $500Bn. Assuming this is correct, tariffs can in fact pay for the INCREASE in the budget deficit brought to you by OBBB. But it will not decrease the deficit, and we have to bear in mind that we’re trying to negotiate out of tariffs by getting better terms on our exports, which may not have an immediate impact on the country’s budget. If we add up DOGE savings, which are reported to be around $160Bn YTD (although they seem to be significantly lower in practice, around $10Bn) we get annual savings between $50Bn and $400Bn, which is remarkable, but not enough, at least so far. OBBB may be signed this week and we may not get enough money to counterbalance its effect. Simple math doesn’t check, at least for now.

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