Even with record tariff revenue, the US budget deficit continues to grow. In July, the deficit rose 20% year-over-year, despite a 273% jump ($21 billion) in customs income from President Donald Trump’s tariffs, according to Treasury data.

The rising deficit reflects higher federal spending, including interest on the public debt and increased Social Security payouts, while the national debt approaches $37 trillion. Experts note that tariffs may provide significant revenue, but they are unlikely to meaningfully reduce the deficit or federal debt in the short term.

Treasury officials and analysts also caution that while tariffs can temporarily boost revenue, spending continues to outpace collections. The Trump administration expects future trade deals, including extensions with China, to help improve revenue streams, but economists warn that tariffs alone cannot balance the budget.

In short, despite the Trump-era tariffs generating record income, the US government continues to spend more than it collects, keeping the deficit on an upward trajectory.

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