Washington (AFP) – The US budget deficit narrowed just slightly over the past year, official data showed Thursday — despite a surge in customs revenues, which hit a record as President Donald Trump imposed wide-ranging tariffs since January. The overall deficit shrank by two percent, or $41 billion, for the 2025 fiscal year ending in September, the Treasury Department said. Interest paid on the public debt climbed to a record, at $1.2 trillion, while health spending picked up.
But these were not offset by a notable jump in collected customs duties, including tariffs. The amount of such duties taken in rocketed from $84 billion to $202 billion year-on-year, Treasury data showed. Taxes paid by individuals also picked up by six percent over the year to $3.5 trillion, from $3.3 trillion. However, gross corporate taxes collected slipped by 14 percent to $486 billion. A senior Treasury official estimated that the estimated deficit to GDP ratio now stands at 5.9 percent, down from 6.3 percent in the prior fiscal year.
Trump has imposed sweeping country-specific tariffs since returning to the presidency, while also targeting key sectors like steel, aluminum, and automobiles with specific rates. However, the global tariffs Trump imposed while tapping emergency economic powers have faced legal challenges. The Supreme Court is due to hear arguments on their legality next month. Trump has repeatedly trumpeted the tariff revenues his administration has collected this year.
US Treasury Secretary Scott Bessent, however, warned in a September interview that his agency could have to make major refunds if the high court ruled against them. The government’s deficit figure released Thursday was similar to estimates issued by the nonpartisan Congressional Budget Office around a week ago. Bessent had lauded the CBO’s numbers last week, saying the world’s biggest economy was on its way to bringing down the debt and deficits.
The data release comes as a US government shutdown hit day 16, with Congress deadlocked in a clash over spending. Bessent warned Wednesday that the shutdown was “starting to cut into muscle” and could cost the US economy billions of dollars. The amount could be as much as $15 billion a week, a Treasury Department official said, after Bessent initially put the figure at $15 billion a day during a press conference. The Treasury official said the estimate was based on a report by the White House Council of Economic Advisers.
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