Customs duties jump 301% year-on-year; deficit still over $1.3tn for fiscal year
The U.S. federal government posted an unexpected $27 billion budget surplus in June, reversing a steep $316 billion deficit from the prior month, as a surge in customs duties boosted government receipts, the Treasury Department reported Friday.
Economists had anticipated a monthly deficit of around $41.5 billion, but revenues were lifted by tariff collections that soared to nearly $27 billion, up from $23 billion in May and more than triple the figure from June 2024. The last time the government recorded a June surplus was in 2017, during President Donald Trump’s first term.
June’s surplus brings the fiscal year-to-date deficit to $1.34 trillion, up 5% from the same period last year. However, after adjusting for calendar effects, the year-to-date deficit edged 1% lower. The U.S. fiscal year ends on September 30.
Tariffs provide a short-term boost
Customs duties have totalled $113 billion so far this year, marking an 86% increase from the same period in 2024. Much of this surge follows Trump’s across-the-board 10% tariff on imports imposed in April, alongside a slate of reciprocal tariffs targeting key U.S. trade partners.
The administration has credited these tariffs with helping to shore up government finances. While critics warn of inflationary risks and supply chain disruptions, the immediate fiscal impact has been significant—June’s customs revenue alone matched the entire monthly surplus.
Without calendar adjustments, however, the Treasury noted the government would have posted a $70 billion deficit for the month, underscoring the fragile underlying budget picture.
Debt costs remain a major burden
Despite the June surplus, federal finances continue to strain under the weight of the US$36 trillion national debt. Net interest payments—the cost of servicing debt minus investment returns—reached $84 billion in June and $749 billion for the fiscal year to date. Interest is on pace to exceed $1.2 trillion for the full year, second only to Social Security in total federal outlays.
Persistently high Treasury yields have worsened the burden. Trump has repeatedly urged the Federal Reserve to cut short-term rates to ease the cost of debt servicing, but markets don’t expect a rate cut until September. Fed Chair Jerome Powell has expressed concern that tariff-driven price increases could complicate inflation control.
Spending slows, receipts rise
In addition to the tariff windfall, the Treasury reported a 13% increase in total receipts from June 2024, while federal outlays fell 7% year-on-year. For the year to date, receipts are up 7%, compared with a 6% rise in spending.
June’s revenue surge also followed the passage of Trump’s “Big Beautiful Bill”, a sweeping spending package that the Congressional Budget Office estimates will add $3.4 trillion to the national debt over the next decade.
Despite June’s surprise surplus, analysts caution that structural pressures—including rising entitlement costs and debt service—mean the deficit trend remains troubling. Still, the unexpected revenue from tariffs has offered the administration a rare fiscal win in an otherwise debt-heavy year.
