U.S. deficit hits $291B despite tariff windfall

The U.S. government ran a massive $291 billion deficit in July, according to data released Tuesday night by the Treasury Department, even as customs duty collections soared nearly $21 billion thanks to Trump’s tariffs. 

That deficit was 19% larger than July 2024, growing by $47 billion, driven mostly by a sharp rise in federal spending that completely outpaced revenue growth.

The numbers show receipts rose only 2%, bringing in $338 billion, while outlays jumped 10% to a record-high $630 billion, the largest July total on record. Treasury officials tried to downplay the shortfall by pointing out that this July had fewer business days than last year.

If you adjust for that, they claimed receipts might’ve been $20 billion higher, which would’ve pulled the monthly deficit down to around $271 billion. Still, no matter how you slice it, they spent way more than they earned.

Tariffs bring in billions but don’t shrink deficit

Customs receipts in July hit $27.7 billion, way up from $7.1 billion a year earlier, mostly because of higher tariffs imposed by Trump. That’s a 290% jump. A Treasury official confirmed the surge lined up with June’s numbers and noted that duty collections had been climbing steadily since April.

These figures back up what Trump has been bragging about for months; billions flowing into the federal account from his tariff policy. But here’s the thing. Importing companies are the ones paying these tariffs, and surprise, they don’t just eat the cost.

A chunk of those fees gets passed right on to consumers. You might not see it directly on the label, but it shows up in the final price.

According to Tuesday’s inflation report, prices of items that usually feel the heat from tariffs, furniture, footwear, and car parts, all went up. But a drop in gasoline prices helped offset those hikes, keeping the headline inflation rate at 2.7%, the same as June.

So technically, prices held steady overall, but the real story is in the details. If you zoom in on the core inflation rate, which strips out food and energy, it rose by 3.1%, the fastest pace since February. That kind of increase isn’t what the Federal Reserve wants to see. They’ve been aiming for a 2% inflation target, and they’re not there yet.

Trump slams Powell, fires BLS head over weak jobs data

Even with rising customs revenue, the broader picture doesn’t look great. Over the first 10 months of the fiscal year, the U.S. has already racked up a $1.629 trillion deficit, up 7% from this time last year. Receipts for the period reached $4.347 trillion, a new record, growing by $262 billion or 6%.

But spending grew even more, $374 billion higher, hitting $5.975 trillion, also a record for that stretch. Trump, always one to deflect blame, didn’t miss the chance to attack the Federal Reserve again. He’s still furious the central bank hasn’t cut interest rates this year.

He claims high rates are dragging the economy down and is still using social media to push his point. On Tuesday, he posted: “Jerome ‘Too Late’ Powell must NOW lower the rate.”

He’s also been on a firing spree. After the Bureau of Labor Statistics dropped weaker-than-expected jobs data, which cast doubts on how great the tariff strategy really is, Trump fired Erika McEntarfer, the agency’s head. That same agency compiled the inflation data he’s mad about.

Trump’s attacks aren’t just online rants anymore. He’s now backing a “major lawsuit” against Powell, tied to renovations at Fed properties, signaling that the pressure on the central bank chief is only getting more intense.

Still, the Fed, which was created by Congress to be independent of the White House, has refused to cut rates. Officials are worried that giving in could fuel even more inflation, especially with tariffs in the mix.

KEY Difference Wire helps crypto brands break through and dominate headlines fast