CICC Analysis: Trump Formally Signs the "Great American Beautification Act," Which Will Drive Up the Fiscal Deficit in the Future

On July 4th, Trump officially signed the "Great American Beauty Act," which will increase the fiscal deficit in the future, but some of the deficit can be offset by tariff revenue. The act will boost real GDP in 2026 by less than 0.5 percentage points, and the effect on inflation will not exceed 0.15 percentage points. Over the next decade, the combination of US tariffs and tax cuts will increase the net deficit by approximately $1.3 trillion, and the deficit rate will remain at around 6%. Given the current low unemployment rate, moderate inflation, and healthy private sector balance sheets, there is no immediate risk to US government debt. [CICC]