This article adheres to strict editorial standards. Some or all links may be monetized.
Although they have roiled markets, there’s no question that President Donald Trump’s trade policy actions have boosted the federal government’s customs revenue. The good news is that this additional money coming in should help reduce the national deficit.
In January, before President Donald Trump’s tariffs were announced, the Congressional Budget Office (CBO) had projected that customs revenues would total $80 billion in fiscal year 2025, which is close to the average of the previous five years.
Must Read
- Real Estate: Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how
- Retirement: Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP
- Investing: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
Now, the U.S. Department of the Treasury reports that Trump’s customs duties have pulled in $195 billion. Almost $30 billion was collected in July alone, per Treasury reports.
"Historically, tariff revenue has never accounted for more than about 2% of total federal government revenues in the modern era.” Shai Akabas, the vice president of economic policy at the Bipartisan Policy Center, told NPR (1). “And with the tariffs that are in place today, that could go up to 5% or perhaps even higher."
Meanwhile, the CBO says this means there will be a greater budgetary effect as well.
According to a recent report from the federal agency:
“We project that increases in tariffs implemented during the period from January 6, 2025, to August 19 will decrease primary deficits (which exclude net outlays for interest) by $3.3 trillion if the higher tariffs persist for the 2025‒2035 period.”
When combined with the reduced need for federal borrowing, this tariff revenue will reduce federal interest costs by an additional $0.7 trillion. Ultimately, the report projected a combined total of $4 trillion in reduced deficits due to the tariff changes between now and 2035.
While these numbers look promising on the surface, there’s more at play. The CBO says the changes in the tariffs will shrink the size of the U.S. economy due to reduced investment and productivity while making goods more expensive.
Ultimately, someone has to pick up the tab. That could end up being the American consumer.
Of course, it’s also important to note that a U.S. appeals court has ruled that most of Trump’s tariffs were illegal. The administration has asked the Supreme Court to overturn the decision, but if it doesn’t, the revenues will have to be refunded.
Where will tariff revenue go?
Of course, extra income is a good thing. But it’s unclear where exactly it will go.
Trump has stated his goal of using the revenue to pay off federal debt. But he’s also mentioned that Americans could benefit in the form of a rebate check (2).
If the money is used to pay off debt, it could help make a small dent in the current total of $38.121 trillion in federal debt.
But it’s worth noting that the One Big Beautiful Bill Act came with a hefty price tag. It will cost an estimated $3.4 trillion over the next decade, says the CBO, which could offset much of the potential tariff revenue projections.
As tariff revenue pours in, it’s also important to consider who is actually footing the bill. On paper, the importer pays tariffs when importing goods.
But, in reality, businesses often try to pass these costs along to the end consumer, which in this case is American households.
You may have already found that tariff costs are impacting your wallet. In fact, the Yale Budget Lab (3) estimates that American households could lose $2,400 in buying power in 2025 alone. With inflation also taking its toll on budgets, it’s critical that you find ways to rein in your spending and ensure your money can go farther.
Enter Rocket Money, an app that makes budgeting and tracking your spending simple.
Rocket Money tracks and categorizes your expenses, providing a clear view of your cash, credit and investments in one place. It can even uncover forgotten subscriptions, helping you cut unnecessary costs and save potentially hundreds annually.
For a small fee, the app can also negotiate lower rates on your monthly bills, making it a valuable tool for keeping your finances on track in the face of higher costs due to tariffs.
Read more: Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’
How to protect your wallet from tariff impacts
Even Treasury Secretary Scott Bessent has admitted that Trump’s tariffs are being paid by American importers who can pass them off to consumers (4).
Some businesses have already announced their intentions to raise prices as a result of tariffs. A few notable examples include Walmart, Adidas, Home Depot and Best Buy. These price hikes suggest that American households will face higher costs for goods, putting pressure on already tight budgets.
“Trump administration policies are driving up consumers’ cost of living in four specific areas: new cars, health insurance, products for children, and cookout staples and other foods,” according to the Center for American Progress (5).
If you’ve noticed the climb in prices in these areas, you’ll want to find ways to bring your monthly bills down. One way to trim your budget is to re-evaluate your insurance expenses, especially your car insurance.
OfficialCarInsurance.com helps you instantly sort through the policies from providers in your area, including trusted names like Progressive, GEICO and Allstate. To get started, simply fill in some basic information, like the make and model of your car, and OfficialCarInsurance.com will provide a list of the top insurers in your area.
With rates as low as $29 per month, you can find coverage that suits your needs and potentially saves you hundreds of dollars per year. This could be a key step to easing the strain on your budget.
As the effects of tariffs unfold, it’s helpful not to panic buy. Although it might be tempting to stockpile your favorite imported goods, that can wreak havoc on your budget. Instead, stick to your regular cadence of purchases.
When you do make a purchase, consider looking for coupons or waiting for a sale. If you want to avoid a tariff-induced price hike, purchasing a domestic alternative could be an option in some cases.
For example, if you need a new piece of furniture, consider looking at domestically made options or even scouting out a second-hand steal to avoid tariff price spikes. Alternatively, seek out discounts and sales to potentially save on the exact item you have in mind.
If you’ve been holding off on a major purchase that’s coming down the pipeline, moving forward with it sooner rather than later could make sense. If your fridge is on the fritz, replacing it now could help you avoid potentially higher prices later.
But since no one can predict the future, it’s best to avoid going on a major shopping spree with the express intention of avoiding future tariff costs.
Finally, for those in or near retirement, cutting costs is even more critical. When you’re on a fixed income, big-ticket purchases need more consideration. Coupled with rising health care costs, uncertain markets and inflation, the new tariff prices can make it harder to stretch your savings — especially if you’re trying to plan for the decades ahead.
You might want to consider joining senior-focused organizations like AARP for discounts on almost everything — from prescriptions and dental plans to travel, entertainment and insurance.
AARP not only offers money-saving perks, but they can also help you make informed financial and health decisions.
AARP members get access to guides that can help you make the most of Social Security, choose the right Medicare plan and uncover other government benefits — potentially saving you thousands. For example, over a decade, AARP has saved $100 billion for members on Medicare prescription drug costs.
Sign up with AARP today, and you can get 25% off your first year.
What to read next
- ‘Hold on to your money’: Jeff Bezos issued a warning to rethink buying a ‘new automobile, refrigerator, or whatever’ — does it hold true today?
- Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich — and ‘anyone’ can do it
- Keeping too much cash in your bank account could be a costly mistake — here’s how to know if you’ve got too much
- I’m almost 50 years old and have nothing saved for retirement. What do I do? Don’t panic. Here are 6 easy ways to catch up (and fast)
Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
NPR (1); Newsweek (2); Yale Budget Lab (3); Rolling Stone (4); The Center for American Progress (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.