US Posts $291 Billion July Deficit Despite Record Trump Tariff Revenue

The US federal budget recorded a substantial $291 billion deficit in July, despite an unprecedented jump in tariff revenue — up nearly $21 billion thanks to Trump’s trade measures. According to Treasury Department data, this represents a 19% year-over-year increase compared to July 2024, or $47 billion more. The primary driver was a sharp rise in federal spending that far outpaced modest revenue growth.

Spending Hits New Records Revenue rose only 2% from a year earlier to $338 billion, while spending surged 10% to a record $630 billion, the highest July total in history. Treasury officials partially attributed the shortfall to fewer working days this July compared to last year. Adjusted for that factor, the monthly deficit would have been about $271 billion — still with spending far exceeding income.

Tariff Revenue Climbs, But Can’t Close the Gap Tariff collections in July reached $27.7 billion, up from $7.1 billion a year earlier — a 290% increase, driven largely by higher duties imposed under Trump. Since April, tariff revenue has grown steadily, which Trump has cited as proof of his trade policy’s success. However, the reality is more complex. Importing companies are passing these costs on to consumers — not always directly on price tags, but embedded in final product prices. Tuesday’s inflation report showed price increases in goods sensitive to tariffs, such as furniture, footwear, and auto parts. Falling gasoline prices helped offset these pressures, keeping overall inflation at 2.7%, the same as in June. Looking at core inflation (excluding food and energy), prices rose 3.1%, the fastest pace since February — a signal the Federal Reserve views as concerning given its 2% target.

Ten Months, $1.63 Trillion in the Red For the first ten months of the fiscal year, the deficit totaled $1.629 trillion, up 7% from the same period last year. Revenue rose 6% to a record $4.347 trillion, but spending grew even faster — up $374 billion to a record $5.975 trillion.

Trump Pressures the Fed and Fires BLS Chief Trump blames the Federal Reserve for dragging down the economy with high interest rates and has repeatedly called on Chair Jerome Powell to cut rates. On social media, he wrote: “Jerome ‘Too Late’ Powell must cut rates IMMEDIATELY.” After the Bureau of Labor Statistics released weaker-than-expected jobs data that undermined his claims about the benefits of tariffs, Trump fired BLS Commissioner Erika McEntarfer — the same agency that also compiled the latest inflation report. In addition, Trump is backing a “major lawsuit” against Powell over costly renovations at the Fed’s headquarters, further escalating pressure on the central bank, which by law operates independently from the White House. The Fed, however, has refused to cut rates, warning that doing so in an environment of elevated tariffs could spark another wave of inflation.

#usa , #Tariffs , #DonaldTrump , #USGovernment , #Fed

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