US Fiscal Deficit For 2026 To Come Down By $300B - $500B, Bessent Says

• Bessent, speaking at the Economic Club of Minnesota, also said that U.S. abilities to collect tariffs at the same level is not in doubt.
• U.S. trade deficit contracted sharply in October by 39% to $29.4 billion.
• U.S. labor productivity accelerated in the third quarter (Q3) of 2025, according to a report released by the Bureau of Labor Statistics on Thursday.
   

U.S. Secretary of the Treasury Scott Bessent on Thursday said that the U.S. fiscal deficit will come down by $300 billion to $500 billion in 2026. 

U.S. fiscal deficit for the year 2025 stood at $1.78 trillion, down from $1.83 trillion it had in 2024, according to data from the U.S. Treasury. 

Bessent speaking at the Economic Club of Minnesota also said that U.S. abilities to collect tariffs at the same level is not in doubt. 

Recent Data

U.S. trade deficit contracted sharply in October, according to data released by the Commerce Department's Bureau of Economic Analysis and Census Bureau on Thursday. The trade gap narrowed 39.0% to $29.4 billion.

In another data, U.S. labor productivity accelerated in the third quarter (Q3) of 2025, according to a report released by the Bureau of Labor Statistics on Thursday.

The report stated that nonfarm productivity accelerated to an annualized rate of 4.9% in Q3, up from 1.9% during the year-ago period, and higher than the upwardly revised 4.1% increase in the second quarter (Q2).

Tariffs Impact

The Congressional Budget Office (CBO) in its latest estimates said that the U.S. President Donald Trump’s tariff increases on imports from foreign countries will reduce U.S. deficits by $3 trillion if they are maintained through 2035. CBO based its estimates on tariffs imposed between January 6 and November 11.

The tariffs would lead to primary deficits being reduced by $2.5 trillion over 11 years, while government borrowing costs would fall by around $500 billion as a result, the report from CBO said. 

Donald Trump has hailed his tariffs on several occasions. He has said that the U.S. is getting richer because of the tariffs he has imposed on foreign nations. 

U.S. equities edged lower on Thursday. The SPDR S&P 500 ETF (SPY) edged lower by 0.05%, while the SPDR Dow Jones Industrial Average ETF (DIA) was up 0.56%, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) fell 0.74%. Retail sentiment around QQQ on Stocktwits remained in ‘extremely bullish’ territory over the past day. 

 

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