Trump's tariffs add $150 billion to US revenue, but where will it go

Donald Trump's tariffs have generated $150 billion in revenue, but questions remain on how it will be used amid deficit and debt concerns

The White House says tariff collections in President Donald Trump’s second term have hit a historic high, topping $150 billion by July 29, 2025. The surge has brought the first June budget surplus in nearly 10 years, and July alone saw nearly $28 billion in customs duties — the biggest monthly haul of the year so far.

 

This revenue jump follows a sweeping tariffs launched in April, when the Trump administration imposed a 10 per cent levy on nearly all imported goods, along with additional hikes depending on the US' trade deficit with nations. In their first four months, these measures brought in around $100 billion, more than triple the amount collected in the same period last year.

 

 

Treasury officials now project tariffs could generate over $300 billion for the federal government annually, with Commerce Secretary Howard Lutnick telling Fox Business that monthly collections could reach $50 billion.

 

How tariffs work

A tariff is a tax charged on imported goods, paid by the companies bringing products into the United States. The money is collected by US Customs and Border Protection at entry ports and transferred to the Treasury Department’s general fund, where Congress decides how it will be spent.

 

While intended as a tool to protect domestic industry and raise government revenue, tariffs often lead to higher prices for consumers, as importers pass on some of the costs.

 

Where the money might go

Trump has floated several uses for the growing tariff revenue. These include:

1. Paying down part of the $1.3 trillion federal deficit that the government’s running for the current fiscal year
2. Issuing 'tariff rebate checks' to Americans, though that would require congressional approval

According to a report by The New York Times, Republicans seem to hope that the tariffs could help offset the estimated $3.4 trillion that could be added to the debt over the next decade following the passing of Trump's 'One Big Beautiful Bill Act'.

 

Highest tariffs since the Great Depression

The US last imposed tariffs of this scale during the Great Depression under the Smoot-Hawley Tariff Act of 1930, a move that triggered international retaliation and reduced global trade. Economists cited by USA Today warned that while tariffs can deliver large sums to government coffers, they can also slow economic growth, disrupt supply chains, and strain industries dependent on imports. 

 

What are the risks?

Higher import taxes can hit US manufacturers by raising the cost of raw materials, while also prompting trading partners to retaliate.

 

For example, during Trump’s first presidential term, tariffs on $370 billion of Chinese goods led to counter-tariffs on key US farm exports, costing American farmers $27 billion in lost sales over 2018-19. The government responded with $28 billion in relief payments to agriculture.

 

According to report by USA Today, as of December 2024, the US agricultural sector has still not fully recovered from this.

 

This time round, tensions are not only prevalent between the US and China, but several nations, as trade agreements have yet to be reached with major trade partners.

 

Research from the Peterson Institute for International Economics (PIIE) suggests that while tariffs could theoretically raise trillions over a decade, the gains would be sharply reduced once economic slowdowns and foreign retaliation are taken into account. For example, a 15 percentage point tariff hike could generate $3.9 trillion before knock-on effects — but only $1.5 trillion if other nations strike back.

 

Moreover, tariff revenue remains far from enough to offset the US debt entirely. The country's total federal debt has climbed above $36 trillion. This has prompted warnings from economists that rising interest payments are crowding out public investments in infrastructure and other growth-focused programmes, according to a report by CNN.

 

While a proposal from Sen Josh Hawley to issue rebate checks funded by tariffs could reverse that effect, a former economist from the Biden administration has warned that such a move could fuel inflation. 

 

Why now?

Republicans see tariffs as a way to plug revenue gaps and strengthen domestic manufacturing. Trump argues they can also be a bargaining chip in trade negotiations. However, experts caution that tariffs cannot simultaneously deliver on every one of these goals, and that the short-term windfall might come with long-term economic costs.

 

For now, America’s customs cash boom continues. The bigger question is whether it will ultimately serve as a financial lifeline or prove to be a costly gamble for the economy.