Tariffs and the $38 trillion national debt: Kevin Hassett anticipates 'substantial decreases' in the deficit, whereas Scott Bessent views it as a 'diminishing ice cube'.

Hassett went on to state that he's optimistic not only about economic expansion but also “the fact that we have tariff revenue and we’ve got a lot more spending restraint than was here in the past.”. He pointed out that tariffs constitute a significant element of Trump’s economic agenda and “a lot of the revenue coming in to the Treasury” originates from these tariffs. Hassett framed tariffs as a component of a larger supply-side approach, which he believes can stimulate growth, broaden the tax base, and eventually alleviate the national debt.

The previous day, at the DealBook Summit held in New York, Hassett's colleague and Secretary of the Treasury, Scott Bessent, had characterized tariff revenues as more akin to a “shrinking ice cube” rather than a sustainable financial solution. This perspective was consistent with the recent estimate from the Congressional Budget Office (CBO), which indicated that national debt savings had diminished by $1 trillion from August to November, owing to trade agreements leading to a progressively reduced effective tariff rate. Pantheon Macroeconomics recently determined that tariffs have generated $100 billion less than the White House had initially anticipated, primarily due to a significant decline in imports from China.

Certainly, the increase in tariff income from 2024 to 2025 is substantial, approximately three to four times the amount from the preceding year, according to calculated by Apollo Global Management’s Torsten Slok in September (illustrated below). However, Hassett's assertion of fiscal prudence has been questioned by fiscal oversight groups, particularly the Peter G. Peterson Institute and Committee for a Responsible Federal Budget. The latter organization determined that the $1 trillion increase in the debt over a mere two-month period represented the most rapid expansion outside of the pandemic era.

Bessent defended the tariff regime in his interview with The New York Times‘ Andrew Ross Sorkin, saying tariffs are currently bringing in substantial revenue, and they are “good for labor.” He stressed the ultimate goal is to rebalance trade and rebuild domestic manufacturing, not to fund government permanently. ​

Supreme Court watching

The statements from Bessent and Hassett emerge as the Supreme Court considers if Trump exceeded his authority by employing the 1977 International Emergency Economic Powers Act to implement duties significantly greater than those utilized by previous presidents under the statute. Bessent stated on Wednesday that should the Supreme Court successfully invalidate numerous tariffs, it would result in “a loss for the administration” and “a loss for the American people.”

Concerning the Supreme Court, Hassett stated that the application of an economic emergency statute was warranted due to the societal harm stemming from many years of substantial trade imbalances and reduced welfare for American workers, as demonstrated by “deaths of despair,” frequently linked to fentanyl. Hassett expressed the administration's certainty that the Supreme Court will affirm Trump’s utilization of emergency authorities to impose import duties. He also dismissed the notion that tariffs are inherently inflationary, characterizing them as a singular price surge instead of a continuous factor in escalating costs, a point also reflected in Bessent’s conversation with Ross Sorkin.