Federal deficits are expected to swell to higher levels over the next decade than previously expected, the nonpartisan Congressional Budget Office said in a new report Wednesday.

The CBO also said that President Donald Trump's tariffs are projected to shrink gross domestic product by 2020, and warned that further tariff hikes could stifle economic growth.

The U.S. budget deficit is expected to hit $960 billion in 2019, and average a whopping $1.2 trillion per year between 2020 and 2029, according to the CBO's look ahead at the U.S. budget and economic outlook over the next decade.

The new deficit projection for 2019 rose $63 billion from the last report, which came out in May. The CBO says this is mainly because of the massive new budget deal, which passed both houses of Congress and was signed into law by Trump in early August.

"The nation's fiscal outlook is challenging," CBO Director Phillip Swagel said in the report. "Federal debt, which is already high by historical standards, is on an unsustainable course."

Swagel said that the debt is projected to rise even higher after 2029, due to the aging of the U.S. population, growth in health-care spending and rising interest costs.

The White House did not immediately respond to CNBC's request for comment on the new CBO report.