US Deficit Grows to $291 Billion in July Despite Record Tariff Revenues

The U.S. budget deficit widened in July, climbing to $291 billion even as the government collected an unprecedented amount from tariffs, according to Treasury Department data released on Aug. 12.

The increased deficit—up 19 percent, or $47 billion, from $244 billion a year earlier—came as federal spending rose at a much faster pace than revenues. Outlays for the month hit $630 billion, a record high for July, reflecting higher interest costs on the national debt and increased spending across a range of programs.

Tariff collections, fueled by President Donald Trump’s trade measures, surged to more than $28 billion in July, breaking the previous record set just a month earlier. The jump came on top of a $27 billion haul in June that helped the government post a rare monthly surplus.

Since the fiscal year began in October, tariff receipts have now topped $154 billion as of Aug. 8, according to the Treasury’s Daily Treasury Statement—a more current figure than the $135.7 billion reported for the same period in the July Monthly Treasury Statement.

The tariff revenue surge has been driven by Trump’s trade policies, a key fixture of which is a 10 percent baseline levy on nearly all imports along with a series of reciprocal duties—some as high as 40 percent—that have taken effect against dozens of trading partners. Trump has argued that the higher duties will deliver a lasting boost to government finances and has floated the idea of sending some of the proceeds back to taxpayers as rebate checks. Treasury Secretary Scott Bessent has forecast that tariff revenues could reach $300 billion by year’s end, though some analysts say that goal is ambitious.

Economists agree the tariffs are reshaping trade flows and bringing in substantial revenue, but differ on how much the costs will reach consumers. Goldman Sachs economists said in a note this week that U.S. consumers have so far absorbed roughly 22 percent of the costs from Trump’s tariffs but could be shouldering about two-thirds by year-end if past patterns hold—a shift they project would push core inflation higher and leave businesses bearing far less of the burden than they do now.

That forecast contrasts with the administration’s stance that companies and foreign exporters will continue to carry most of the costs, keeping consumer prices largely stable.

In an Aug. 12 post on Truth Social responding to the Goldman analysis, Trump rejected the notion that tariffs are driving inflation, saying most of the burden is being shouldered by companies and foreign governments. He accused Goldman of refusing to “give credit where credit is due” and of having been wrong in earlier predictions about both market impacts and tariffs. Trump said the duties have brought substantial revenue flows into the U.S. Treasury and boosted stock market performance and national wealth.

Inflation data through July show only modest tariff pass-through to consumers so far, though some analysts and industry voices warn the shift Goldman predicts could lead to higher prices for a range of goods, with effects that may linger even if overall inflation later cools. Analysts at ING said in a note that, for now, “things looked fairly benign” in tariff-exposed sectors in July because businesses were still absorbing most of the costs.

Chad D. Cummings, an attorney and CPA specializing in cross-border transactions, told The Epoch Times in an emailed statement that the Goldman estimate largely aligns with prior tariff cycles, and warned that shifting tariff costs onto customers could buoy the margins of protected domestic producers but squeeze consumer-facing sectors, while uncertainty around both trade policy and the ultimate distribution of tariff costs could dampen capital investment.

For the first 10 months of the fiscal year, the deficit stands at $1.63 trillion—about 7 percent higher than a year earlier—per the July Monthly Treasury Statement. Both revenues and spending are at all-time highs for the period, underscoring the scale of the government’s fiscal challenges.