US August deficit falls to US$345 billion as tariff revenues rise
[WASHINGTON] The US budget deficit for August fell US$35 billion or 9 per cent from a year earlier to US$345 billion as President Donald Trump’s tariffs pushed net customs receipts up by about US$22.5 billion for the month, the Treasury Department said on Thursday.
With one month to go in the 2025 fiscal year, the year-to-date deficit rose US$76 billion, or 4 per cent to US$1.973 trillion.
A US Treasury official declined to predict whether the deficit would top US$2 trillion for the full fiscal year ended Sep 30 but told reporters that September typically has higher revenues than August because of quarterly tax payment deadlines.
The official said the fiscal-year-to-date deficit was the third highest for that period after the Covid-era 11-month deficits of US$3.007 trillion in fiscal 2020 and US$2.711 trillion in fiscal 2021. Those two years also had the highest full-year deficits due to a collapse in receipts and heavy Covid-19 relief spending.
Receipts for August rose US$38 billion or 12 per cent to US$344 billion, while August outlays grew US$2 billion to US$689 billion. Both receipts and outlays reached new records for the month.
Adjustments for calendar shifts in benefit payments and receipts would have produced a US$47 billion deficit reduction in August instead of the US$35 billion reduction, the Treasury said.
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“With one month left in fiscal 2025, we expect the deficit for the year to come in at US$1.78 trillion, reflecting the fact that September is typically a surplus month due to strong estimated individual and corporate income tax collections,” Oxford Economics Lead US Economist Nancy Vanden Houten said in a note.
Net customs receipts in August also reached an all-time monthly record of US$29.5 billion, quadrupling from US$7 billion a year earlier, driven by Trump’s tariffs, which administration officials have touted as a now-essential federal revenue source.
The customs duties were the third-highest revenue category in August after US$153 billion in individual income taxes and US$134 billion in Social Security and Medicare payrolls deductions. For the fiscal year to date, net customs duties were up US$95 billion to a record US$165.2 billion.
The year-on-year growth in monthly customs receipts has remained in the low US$20 billion range for the past three months despite higher duty rates from Trump’s global “reciprocal” tariffs starting on Aug 9. The Treasury official said that higher tariff collections typically begin to show up in budget results about a month after increases in rates.
Total receipts for the first 11 months of fiscal 2025 rose US$300 billion or 7 per cent to a record US$4.691 trillion, while outlays rose US$376 billion or 6 per cent, to a record US$6.664 trillion.
Social Security outlays were up US$117 billion or 8 per cent to US$1.513 trillion as a result of cost of living adjustments and increases in the number of beneficiaries, while Treasury debt interest rose US$76 billion, or 7 per cent to US$1.124 trillion, and Department of Education spending fell US$111 billion or 44 per cent to US$140 billion due to cuts to federal student aid and elementary and secondary education programmes. REUTERS
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