US deficit hits $291b in July despite tariff revenue

Perth Now

11 hours ago

The US government's budget deficit grew nearly 20 per cent in July to $US291 billion ($A446 billion) despite a nearly $US21 billion jump in customs duty collections from President Donald Trump's tariffs, the Treasury Department says.
The deficit for July was up 19 per cent, or $US47 billion, from July 2024. Receipts for the month grew two per cent, or $US8 billion, to $US338 billion, while outlays jumped 10 per cent, or $US56 billion, to $US630 billion - a record high for the month.
The month of July this year had fewer business days than last year, so the Treasury Department said that adjusting for the difference would have increased receipts by about $US20 billion, resulting in a deficit of about $US271 billion.
Net customs receipts in July grew to about $US27.7 billion from about $US7.1 billion in the year-earlier period due to higher tariff rates imposed by Trump, a Treasury official said.
These collections were largely in line with the increase in June customs receipts after steady growth since April.
Trump has touted the billions of dollars flowing into US coffers from his tariffs, but the duties are paid by companies importing the goods, with some costs often passed on to consumers in the form of higher prices.
Consumer price index data on Tuesday showed increases in prices for some tariff-sensitive goods like furniture, footwear and auto parts, but they were offset by lower petrol prices in the overall index.
For the first 10 months of the fiscal year, customs duties totalled $US135.7 billion, up $US73 billion, or 116 per cent, from the year-earlier period.
Treasury Secretary Scott Bessent told Fox Business Network the growing US tariff revenue will make it difficult for the Supreme Court to rule against Trump's import taxes if a legal challenge to them makes its way to the country's top court.
The overall year-to-date budget results showed a $US1.629 trillion deficit, up seven per cent, or $US112 billion, from the same period a year earlier.
Receipts were up six per cent, or $US262 billion, to $US4.347 trillion, a record high for the 10-month period, while outlays grew seven per cent, or $US374 billion, to $US5.975 trillion, also a 10-month record.
The year-to-date customs duties were more than eaten up by an increase of 10 per cent or $US141 billion in costs for government healthcare programs, including Medicare for seniors and Medicaid for the poor, to $US1.557 trillion.
The Social Security pension program, the largest single expense item, saw an increase of nine per cent or $US108 billion over the first 10 months of fiscal 2025 to $US1.368 trillion.
Interest on the public debt also continued to grow, topping $US1.01 trillion for the 10-month period, an increase of six per cent or $US57 billion over the prior year due to slightly higher interest rates and increased debt levels.
with AP