The US government saw its budget deficit widen from the prior year in the October to June period as spending rose, but customs duties surged to a record after President Donald Trump鈥檚 wide-ranging tariffs on imports.
The budget gap widened by $64 billion to $1.3 trillion for the first nine months of the fiscal year, said the Treasury Department on Friday.
This came as increased expenditures outweighed receipts, with greater spending seen in areas like Medicare, the government health care program for seniors, and Medicaid, the federal program for low-income Americans.
There were also higher expenses from interest on the public debt, which hit a record $921 billion.
But collections of customs duties also ballooned from $61 billion to $113 billion鈥攁 record surpassing levels seen in past fiscal years.
In June alone, the US government collected $27 billion in customs duties, up from $7 billion in 2024.
The jump came after Trump imposed a 10 percent tariff on imports from almost all trading partners in April, alongside steeper rates on Chinese goods, steel, aluminum and autos since returning to the presidency.
The Trump administration has repeatedly pointed to levies as a revenue driver.
Treasury Secretary Scott Bessent said at a cabinet meeting this week that tariff income could exceed $300 billion by year-end, although economists warn that tariffs would likely shift trade flows over time.
Overall, government receipts rose by seven percent, boosted by tax collection from individuals. This was helped by increased employment and wages, said a senior Treasury official.
But there was a slump in corporate taxes collected, which the Treasury official said was likely due to expectations of preferable expensing and deduction provisions included in Trump鈥檚 new flagship tax and spending bill.
Budget outlays jumped by six percent as a whole.
The increase in expenditures was fueled in part by higher interest payments on the public debt, as borrowing costs have been elevated.
In the latest fiscal year, interest on the public debt cost the Treasury Department $921 billion, up from $868 billion in the prior year.
Interest on the public debt has become a major government expense and in recent times, Trump has called on the independent central bank鈥檚 chair Jerome Powell to cut interest rates, saying this would help lower debt financing costs.
