US budget deficit widens despite higher tariff revenues

The US federal budget deficit grew between October and June compared to the same period last year, despite the increase in tariff revenues, according to documents released by the US Department of the Treasury on July 11.

During the first nine months of the current US fiscal year, the deficit rose by $64 billion, to $1.4 trillion—up from just over $1.3 trillion a year earlier, marking a 6% increase, Treasury data showed.

The growing deficit is largely driven by increased government spending, particularly on healthcare programs for retirees and low-income individuals.

Another major factor is the rising cost of servicing US debt, with interest payments surpassing $920 billion—a record high.

On the revenue side, customs duties climbed from $61 billion in 2024 to $113 billion during the first three quarters of the current fiscal year.

This surge is linked to elevated tariffs on imports, with the average tariff rate jumping from 2.5% at the end of 2024 to 17.6% as of July 1, 2025, according to Yale University data.

During a cabinet meeting this week, Treasury Secretary Scott Bessent projected that tariffs would generate an additional $300 billion in revenue by the end of the year.