Customs Duties Surge 270% Year Over Year, Helping Reduce Monthly Budget Deficit
U.S. customs duty collections surged to a record high in May, providing some relief to the monthly budget deficit. However, questions remain about the sustainability of this revenue as the Trump administration continues trade negotiations and faces legal challenges regarding its tariffs.
According to the U.S. Treasury Department’s monthly budget statement, customs duties brought in $23 billion in May. This marks an increase of $17 billion—or 270%—compared to the same month a year earlier.
The federal fiscal deficit for May stood at $316 billion, a 17% decrease from the previous year’s figure for the same month, after adjusting for calendar-related differences. For the first eight months of the current fiscal year, the total deficit reached $1.37 trillion. When factoring in deferred revenue from 2023 to 2024 and calendar shifts, the year-to-date gap is 1% smaller, according to an agency official.
Another factor supporting May’s fiscal performance was a reduction in the cost of servicing national debt. This was attributed to lower payments on inflation-linked securities and a smaller discount on Treasury bills, the official added.
Despite these developments, Treasury Secretary Scott Bessent issued a cautionary note on June 11, stating that the U.S. is still on track for another large annual deficit. During testimony before a House panel, he projected that the deficit would range between 6.5% and 6.7% of gross domestic product—marking the third consecutive year above 6%. Bessent emphasized his aim to reduce it to around 3%.
The spike in tariff revenue largely reflects steep increases in levies imposed under former President Donald Trump. Some of these tariffs, particularly on Chinese goods, began to ease in mid-May following a preliminary agreement. U.S.-China trade talks this week resulted in a framework for a broader deal, though it still requires formal approval from Chinese President Xi Jinping.
Meanwhile, rising spending on Social Security and healthcare programs continues to drive federal expenditures higher, as shown in the Treasury’s June 11 data.
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