Although they have roiled markets, there’s no question that President Donald Trump’s trade policy actions have boosted the federal government’s customs revenues. The good news is this additional money coming in will help reduce the national deficit as well.
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In January, before 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.
However, as a result of the tariff hikes, through July the revenue totaled $136 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. And with the tariffs that are in place today, that could go up to 5% or perhaps even higher," said Shai Akabas, the vice president of economic policy at the Bipartisan Policy Center, to NPR [1].
Now the CBO says this means there will be a greater budgetary effect as well.
“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,” said the recent report from the federal agency.
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 in our complex economic system. The CBO says the changes in the tariffs will shrink the size of the U.S. economy due to reduced investment and productivity and make goods more expensive.
Ultimately, someone has to pick up the tab. In many cases, that ends 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 $37.4 trillion in federal debt. But it’s worth noting that the Big Beautiful Bill, recently signed into law, comes 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 the 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.
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 [3].
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 among others. Ultimately, these price hikes mean 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,” said the Center for American Progress [4]. The Yale Budget Lab has said the new tariffs will cost American households $2,400 on average in 2025 [5].
Read more: Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
As the effects of tariffs unfold, it’s helpful not to panic buy. Although 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 product 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 beauty 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. For example, 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.
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[1]. NPR. "How Trump’s tariffs are bringing in new revenue, and how it will be spent"
[2]. Newsweek. "Donald Trump Gives Update on Tariff Rebate Check for Americans"
[3]. Rolling Stone. "Treasury Secretary Admits Trump’s Tariffs Are Paid by Americans"
[4]. The Center for American Progress. "8 Ways Trump’s Turbulence Tax Is Costing the Economy"
[5]. Yale Budget Lab. “State of U.S. Tariffs: August 7, 2025”
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