The U.S. government’s budget deficit grew nearly 20% in July to $291 billion despite a nearly $21 billion jump in customs duty collections from President Donald Trump’s tariffs, with outlays growing faster than receipts, the Treasury Department said on Tuesday.
The deficit for July was up 19%, or $47 billion, from July 2024. Receipts for the month grew 2%, or $8 billion, to $338 billion, while outlays jumped 10%, or $56 billion, to $630 billion, a record high for the month.
The month of July this year had fewer business days than last year, so the Treasury Department said that adjusting for the difference would have increased receipts by about $20 billion, resulting in a deficit of about $271 billion.
Net customs receipts in July grew to about $27.7 billion from about $7.1 billion in the year-earlier period due to higher tariff rates imposed by Trump, a Treasury official said. These collections were largely in line with the increase in June customs receipts after steady growth since April.
Trump has touted the billions of dollars flowing into U.S. coffers from his tariffs, but the duties are paid by companies importing the goods, with some costs often passed on to consumers in the form of higher prices.
The month of July this year had fewer business days than last year, so the Treasury Department said that adjusting for the difference would have increased receipts by about $20 billion, resulting in a deficit of about $271 billion.
Net customs receipts in July grew to about $27.7 billion from about $7.1 billion in the year-earlier period due to higher tariff rates imposed by Trump, a Treasury official said. These collections were largely in line with the increase in June customs receipts after steady growth since April.
Trump has touted the billions of dollars flowing into U.S. coffers from his tariffs, but the duties are paid by companies importing the goods, with some costs often passed on to consumers in the form of higher prices.
Significant numbers of firms are likely holding goods in bonded customs warehouses in the hope that negotiations will bring tariff rates down, but at some point those goods will enter the country, triggering duty payments, he said.
“I suspect these numbers are showing us there is a sizable balance of imports where the duties haven’t been recognized yet,” Matheny said, adding that this could lead to a “temporary big surge in duties.”
The overall year-to-date budget results showed a $1.629 trillion deficit, up 7%, or $112 billion, from the same period a year earlier. Receipts were up 6%, or $262 billion, to $4.347 trillion, a record high for the 10-month period, while outlays grew 7%, or $374 billion, to $5.975 trillion, also a 10-month record.
The year-to-date customs duties were more than eaten up by an increase of 10% or $141 billion in costs for government healthcare programs, including Medicare for seniors and Medicaid for the poor, to $1.557 trillion.
The Social Security pension program, the largest single expense item, saw an increase of 9% or $108 billion over the first 10 months of fiscal 2025 to $1.368 trillion.
Interest on the public debt also continued to grow, topping $1.01 trillion for the 10-month period, an increase of 6% or $57 billion over the prior year due to slightly higher interest rates and increased debt levels.
Reposted from Reuters
