US President Donald Trump's recently proposed fiscal initiative, the "One Big Beautiful Bill Act" (OBBBA), together with new tariff measures and the Department of Government Efficiency (DOGE), is expected to intensify the US federal deficit and dampen economic growth, according to analysis by ING THINK.
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ING's assessment warns that "the US fiscal position is not in a good place." The federal deficit currently stands at 6.7 percent of GDP, and net government debt, once 35 percent, is projected to exceed 100 percent of GDP this fiscal year (think.ing.com). The OBBBA plan extends former tax cuts from 2017, with the Congressional Budget Office forecasting that it will reduce tax revenues by $3.7 trillion over the next decade, while cuts in spending amount to only $1.3 trillion, "leaving the primary deficit $2.4 trillion wider than would otherwise have been the case".
ING underscores that much of OBBBA merely enshrines existing legislation: "most of the Bill is merely an extension of the 2017 tax cuts, which had been due to sunset at the end of this year," and "generates no positive impetus for US economic activity relative to trends already in place" (think.ing.com). While new tariffs and DOGE's efficiency measures, though modest at under $200 billion, may "fill the financial hole created by OBBBA," ING stresses that "US deficits will remain wide and debt levels will continue to grow".
Moreover, ING cautions that combining extended tax cuts with tariffs and efficiency plans will impede growth. The analysis highlights that "the combination of these policies is likely to be detrimental to economic growth in the near term, which runs the risk of official deficit and debt projections being too optimistic".
ING forecasts US GDP growth to decelerate from 2.5 percent in 2024 to an average of 1.5 percent across 2025–26, approximately 0.3–0.4 percentage points below official projections. With interest rates and demographic-related spending rising, deficits are expected to remain at or above 6 percent of GDP through much of the next decade, and debt-to-GDP ratios may increase by around 2 percentage points annually.
For European business and interior sector audiences, the ING outlook signals caution: slower US growth, persistent deficits, and rising borrowing costs could reverberate internationally, dampening export demand and increasing volatility in global markets.
More information:
ING
www.think.ing.com