The USITC recently released updated trade and tariff data. We estimate an effective tariff rate (ETR) of 10.3 percent through January 2026. We project that replacing the IEEPA tariffs with a new 10% global tariff rate lowers the ETR to 7.7 percent on a bias-corrected basis appropriate for short-term projections.
We analyze how employers could exploit DHS' new H-1B lottery rules by reclassifying positions into closely related occupations with lower prevailing wages to increase their chance of selection. We find that 61 percent of registrations would achieve a higher wage level through reclassification, undoing 42 percent of the expected compensation increase.
We project that the new DHS H-1B selection rule, going into effect in March 2026, will shift the H-1B visa allocation toward higher-paid and higher-education foreign-born workers, but by less than alternative designs being debated. Based on data from the current random lottery in the last five years, we estimate that the new DHS rule will have no significant impact on wages of U.S.-born workers, including non-college, college-educated, and STEM workers. Any reduction in competition from fewer STEM H-1Bs is offset by a reduction in productivity growth.
We project that corporate tax revenue will decrease by $276 billion over 10 years on a conventional basis due to changes in international tax provisions related to the Section 250 deduction under OBBBA.
We estimate the reconciliation bill signed by President Trump increases primary deficits by $3.2 trillion over 10 years. The dynamic cost, including changes to the economy, is larger at $3.6 trillion. GDP falls by 0.3 percent in 10 years and 4.6 percent in 30 years.
For the final bill, please see our analysis of the President Trump-Signed Reconciliation Bill .
For the final bill, please see our analysis of the President Trump-Signed Reconciliation Bill .
For the final bill, please see our analysis of the President Trump-Signed Reconciliation Bill .
If spending and tax changes in Reconciliation are made permanent, federal debt increases by 11.1 percent in 10 years and 24.3 percent in 30 years. GDP remains flat and wages fall by 0.5 percent. Dynamic costs exceed conventional costs in the budget window.
We estimate the House reconciliation bill increases primary deficits by $3.3 trillion over 10 years. Even so, GDP rises in the short and long term, as precautionary increases in labor supply and savings respond to a reduced social safety net.
