U.S. Budget Deficit Narrows as Trump’s Tariffs Surge Customs Revenue

The U.S. government recorded a $316 billion budget deficit in May, a 9% decrease from the previous year, driven by a significant increase in customs receipts. President Donald Trump’s steep import tariffs nearly quadrupled customs revenue to a record $23 billion, up from $6 billion in May 2024. A Treasury official noted that these tariffs, applied to goods from nearly all trading partners, significantly increased port-of-entry collections. Fiscal year-to-date customs receipts rose by nearly 60% to $86 billion, reflecting the impact of these trade policies.

May saw total receipts climb to $371 billion, a 15% increase from the previous year, largely due to the tariff-driven customs revenue. However, outlays reached $687 billion, up by $16 billion. After calendar adjustments for benefits paid in May due to June starting on weekends, the adjusted deficit was $219 billion, a 17% reduction from the $263 billion adjusted deficit in May 2024. Notably, interest on public debt, a major government expense, dropped by 10% to $92 billion, down $11 billion from the prior year.

For the first eight months of the 2025 fiscal year, the U.S. deficit totalled $1.365 trillion, a 14% increase from $1.202 trillion in the same period last year. Receipts hit a record $3.482 trillion, up 6%, while outlays reached an all-time high of $4.846 trillion, an 8% rise. The tariff-driven revenue growth has provided some relief, but rising outlays continue to challenge fiscal sustainability.