Higher tariffs imposed under President Donald Trump helped reduce the federal deficit in fiscal year 2025, according to a Treasury Department report that shows a sharp rise in customs duty collections compared with the previous year.
Treasury officials said federal tariff revenue increased by roughly $118 billion in fiscal 2025, driven largely by higher duties on imported goods following tariff hikes implemented earlier in the year. The additional revenue contributed to a smaller budget deficit than previously projected.
Customs duties accounted for a significant share of the increase in overall government receipts. Total tariff collections for the year were well above 2024 levels, providing a notable boost to federal revenue at a time when deficit reduction remains a central issue in Washington.
Supporters of the policy argue the numbers undercut claims that tariffs are purely symbolic or economically harmful. They point to the Treasury data as evidence that tariffs can function as a meaningful revenue tool while also pressuring foreign trading partners.
Economists, however, remain divided. Some acknowledge the short-term revenue gains but warn that tariffs represent a relatively small share of total federal receipts and may have mixed long-term effects.
Critics argue that higher import costs can ripple through supply chains, raising prices for businesses and consumers and potentially slowing economic growth.
Federal Reserve economists have noted that tariffs can disrupt production costs and demand in certain sectors. Other studies suggest a significant portion of tariff costs is ultimately passed on to U.S. consumers through higher prices, limiting their net economic benefit over time.
The Congressional Budget Office has projected that if tariff increases remain in place, they could contribute to deficit reduction over the next decade, though the overall impact depends on how businesses, consumers, and foreign governments respond.
The debate over Trump’s tariff authority is also playing out in the courts. Legal challenges have been filed questioning whether the president has the power to impose broad tariffs using emergency authorities, as the Conservative Brief reported.
Treasury Secretary Scott Bessent said it is unlikely the Supreme Court will overturn Trump’s use of those powers.
“I believe that it is very unlikely that the Supreme Court will overrule a president’s signature economic policy,” Bessent said during a television interview, adding that the Court typically avoids decisions that could create economic instability.
The report comes as Trump signals plans for another round of tariffs on European goods. He announced that imports from several European countries will face a 10 percent tariff beginning February 1, rising to 25 percent by June 1, unless a broader agreement is reached.
Trump said the new tariffs are tied to national security and trade fairness, arguing the U.S. has long subsidized European economies by allowing low-tariff access to American markets.
“We have subsidized Denmark, and all of the countries of the European Union, for many years by not charging them tariffs,” Trump said. “Now it is time for Denmark to give back.”
