US customs duties top $100 billion for first time in a fiscal year

Highlights:

• US Treasury reports small budget surplus for June
• Gross customs duties reach $27 billion in June
• Bessent says US 'reaping the rewards' of Trump's tariff agenda
• Treasury chief says US tariff revenue could reach $300 billion in 2025

US customs duty collections surged again in June as President Donald Trump's tariffs gained steam, topping $100 billion for the first time during a fiscal year and helping to produce a surprise $27 billion budget surplus for the month, the Treasury Department reported on Friday.

The budget data showed that tariffs are starting to build into a significant revenue contributor for the federal government, with customs duties in June hitting new records, quadrupling to $27.2 billion on a gross basis and $26.6 billion on a net basis after refunds.

The budget results are likely to reinforce Trump's view of tariffs as a lucrative revenue source and as a hammer to enforce non-trade foreign policy. He said on Tuesday that "the big money" would start to flow in after he imposes higher "reciprocal" tariffs on US trading partners on August 1.

US Treasury Secretary Scott Bessent said on X that the results show the US "reaping the rewards" from Trump's tariff agenda.

"As President Trump works hard to take back our nation's economic sovereignty, today's Monthly Treasury Statement is demonstrating record customs duties – and with no inflation!" Bessent said.

For the first nine months of fiscal 2025, the customs take reached records of $113.3 billion on a gross basis and $108 billion on a net basis, nearly double the prior-year collections. The government's fiscal year ends on Sept. 30.

Based on those results, tariffs have now grown into the fourth-largest revenue source for the federal government, behind individual withheld receipts at $2.683 trillion for the fiscal year, non-withheld individual receipts at $965 billion and corporate taxes at $392 billion.

Source: Reuters

In the space of roughly four months, tariffs as a share of federal revenue have more than doubled to around 5% from about 2% historically.

The June budget surplus represented a turnaround from the $71 billion deficit in June 2024. The new tariff-related revenue helped boost total budget receipts last month by 13%, or $60 billion, to $526 billion, a record for that month, the Treasury said. Outlays in June fell 7%, or $38 billion, to $499 billion.

But adjusting for calendar shifts of some revenue and benefit payments, it said there would have been a budget deficit of $70 billion in June along with a year-ago adjusted deficit of $143 billion.

The overall year-to-date deficit, however, increased 5%, or $64 billion, to $1.337 trillion, as outlays rose for health care programs, Social Security retirement benefits, defense spending, debt interest and the Department of Homeland Security, the Treasury said.

Receipts for the first nine months of the fiscal year rose 7%, or $254 billion, to a record $4.008 trillion, driven in part by withheld taxes from higher employment and wages, while outlays grew 6%, or $318 billion, to a record $5.346 trillion.

The Treasury's interest costs on the national debt continued to grow, exceeding all other individual outlays at $921 billion for the first nine months of the fiscal year, up 6%, or $53 billion, from the year-ago period.

But the Treasury's weighted average interest rate largely had stabilized at 3.3% at the end of June, up two basis points from a year ago, a Treasury official said.

BIGGER FLOW

Bessent earlier this week suggested a steeper ramp-up in tariff collections, telling a cabinet meeting that calendar-year 2025 collections could grow to $300 billion by the end of December.

At the June run rate, gross customs collections would hit $276.5 billion in six months' time, which means reaching Bessent's target would require some increases.

Ernie Tedeschi, economics director of the Budget Lab at Yale University, said it may take more time for the tariff revenue to fully ramp up because businesses and consumers have sought to front run the duties by buying ahead.

Once that effect fades and Trump implements higher "reciprocal tariff" rates after an August 1 deadline, the Treasury may collect an extra $10 billion in tariffs per month, bringing the total to $37 billion, he said.

"I think there's a significant risk...that we get addicted to tariff revenue," said Tedeschi, who served as a White House economic adviser during the Biden administration. He added that tariff income could fade over time as businesses and consumers adjust their behavior.

But Trump this week has ratcheted up his tariff actions, announcing 50% levies on copper imports and goods from Brazil and a 35% tariff on Canadian goods, all due to start on August 1. The Trump administration is preparing more sector-based tariffs on semiconductors and pharmaceuticals.