US tariff revenue hits record high in May, helping cut budget deficit

By Jarrell Dillard

 

US customs duties climbed to a record in May, helping shrink the budget deficit for the month, while doubts remain about the persistence of the inflows as the Trump administration negotiates with trading partners and faces a judicial challenge over its levies.

 

The Treasury Department recorded $23 billion in customs-duties revenue for May, according the agency’s monthly budget statement. This represents a $17 billion, or 270 per cent, increase from the same month a year earlier. May’s figure is more than triple the monthly average of 2024.     

 

 

The fiscal deficit was $316 billion for May, down 17 per cent from the same month a year before, after accounting for calendar-year differences. For the first eight months of the fiscal year, the deficit was $1.37 trillion. Taking account of revenue deferred from 2023 to 2024 and for the calendar differences, the year-to-date gap is 1 per cent smaller, an agency official told reporters. 

 

The jump in customs duties revenue reflects several new tariffs put in place by President Donald Trump, the bulk of which took effect in early April. The highest levies on China were reduced temporarily in mid-May, when the US and China reached a preliminary deal. This week, US-China talks yielded a framework for an agreement, though Chinese President Xi Jinping still has to sign off on it.

 

Also helping last month’s finances: a decline in the Treasury’s cost of servicing its debt. That was thanks to smaller payments on inflation-linked securities, and a reduced discount on Treasury bills, an agency official said.

 

Still, Treasury Secretary Scott Bessent earlier Wednesday warned that the US faces another supersized deficit for the current year. Speaking at a House panel, he told lawmakers the gap would be 6.5 per cent to 6.7 per cent of gross domestic product — a third straight year in excess of 6 per cent. Bessent wants to shrink it toward 3 per cent. 

 

Increasing spending on Social Security and healthcare programs continue to drive US outlays higher, Wednesday’s data also showed.