US budget deficit balloons to US$739 billion despite Donald Trump’s tariff boasts
- Gap in first eight months of financial year widened by US$206 billion from a year earlier
- Revenue increase of 2.3 per cent fails to keep pace with 9.3 per cent rise in spending
The US budget deficit widened to US$738.6 billion in the first eight months of the financial year, a US$206 billion increase from a year earlier, despite a revenue boost from President Donald Trump’s tariffs on imported merchandise.
The shortfall was 38.8 per cent more than the same period a year ago, the Treasury Department said in its monthly budget review released on Wednesday. So far in the financial year that began October 1, a revenue increase of 2.3 per cent has not kept pace with a 9.3 per cent rise in spending.
As Trump ratcheted up the trade war with China with higher levies on imports from the Asian nation, the US recorded US$4.9 billion in customs duties in May, bringing the total to US$44.9 billion in the first eight months of the financial year – almost double the same period a year earlier.
Trump has repeatedly boasted that the US is taking in billions in dollars through the tariffs, though importers in America are actually paying the levies.
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Even so, those extra funds have failed to keep the budget gap from increasing under Trump, driven by a combination of Republican tax cuts that will add up to about US$1.5 trillion over a decade, and increased government spending.
The deficit is forecast to reach US$897 billion this financial year, from US$779 billion last year, and rise to more than US$1 trillion in fiscal 2022, according to the Congressional Budget Office.
The White House has said the tax cuts will pay for themselves by creating more revenue through faster and sustainable economic growth.
In May, the fiscal deficit increased to US$207.8 billion, up 41.5 per cent from the same month last year. The forecast in a Bloomberg survey of economists was US$202.5 billion.
