US monthly budget deficit widens despite record tariff revenues

The US monthly budget deficit rose 10% year-on-year to $291 billion in July, despite a surge in customs duties to a record $28 billion, up 273% from a year earlier, Treasury Department data showed on Tuesday.

With two months left in the fiscal year, the deficit for the 10 months to July reached $1.63 trillion, 4% lower than last year after calendar adjustments and excluding the impact of deferred tax payments collected in 2024, Treasury officials told reporters.

Tariff revenues since the start of the fiscal year totaled $142 billion. In June, higher collections helped the government post a rare monthly surplus of $27 billion, the first for June since 2015.

Treasury Secretary Scott Bessent said 2025 tariff revenues could exceed $300 billion, well above 1% of GDP, versus his earlier forecast of $300 billion.

Still, most economists and the Congressional Budget Office expect last month’s tax-and-spending package signed by President Donald Trump to widen the deficit over the next decade. Rising interest costs, along with higher spending on Medicare and Social Security, remain key drivers of the gap compared with pre-pandemic levels.