The U.S. Treasury collected $23.6 billion in customs duties in June and sent $49.2 billion back out in tariff refunds.
That gap, a net customs outflow of $25.6 billion, helped push the federal budget deficit for June to $120 billion, the U.S. Treasury Department‘s monthly statement confirmed on July 13.
In June 2025, the government posted a $27 billion surplus, driven in part by customs revenue flowing in under President Donald Trump’s tariff regime, according to Yahoo Finance.
That revenue stream has now reversed, and the fiscal consequences are mounting faster than most analysts anticipated heading into the second half of 2026.
Tariff refunds surged past $49 billion in a single month
The June refund total of $49.2 billion more than doubled the roughly $22 billion the Treasury returned in May, when U.S. Customs and Border Protection had only recently launched its drawback portal on April 20, Yahoo Finance reported.
May’s numbers were nearly a wash, with refunds and revenue both near $21.9 billion, producing a net loss of just $42 million.
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June demolished that balance, with refunds outpacing collections by more than two to one after the Supreme Court’s February 20 ruling struck down the broad tariffs Trump imposed under the International Emergency Economic Powers Act.
About $71 billion of the estimated $166 billion in IEEPA tariff collections has already been refunded over May and June, according to the CATO Institute, with the balance still being worked through the drawback process.
The Trump administration has appealed the Court of International Trade’s order requiring refunds to all affected importers, arguing the ruling amounts to an impermissible universal injunction that extends relief beyond parties who filed suit, Morgan Lewis noted.
Fiscal year 2026 deficit now exceeds last year’s pace
Through the first nine months of fiscal year 2026, running from October through June, the cumulative federal deficit reached $1.367 trillion, a 2% increase compared with the same period a year earlier.
Total receipts over that stretch rose 4% to $4.151 trillion, while outlays climbed 3% to $5.518 trillion, the Treasury data showed.
The deficit had been narrowing in prior months thanks to rising tax collections from a solid labor market and initial customs revenue from the tariff regime, but June’s refund surge flipped that trajectory, Bloomberg reported.
Analysts flag the refund program as a growing fiscal risk
The Evercore team characterized the payouts as a short-term drag, noting that the administration is pursuing replacement tariff authority that could eventually push annual customs revenue above $300 billion.
Evercore ISI analyst Matthew Aks says tariff refunds now significantly affect markets, fiscal policy, and the economy, Transport Topics reported.
The refund program has become large enough to be macroeconomically, fiscally and market-significant this year.
Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, offered a sharper assessment in a July 9 statement.
“We will likely borrow $2 trillion or more this fiscal year, a huge figure given that the economy keeps growing and unemployment is low,” MacGuineas said.
Bessent pledges tariff revenue will recover under new legal authority
Treasury Secretary Scott Bessent told CNBC on June 24 that import duty rates will return to pre-Supreme Court levels once pending Section 301 trade investigations under the Trade Act of 1974 conclude.
“The tariff rates are going to go back to exactly where they were,” Bessent said, adding that the Treasury expects only a minimal decline in tariff revenue for the full fiscal year.
The Atlantic Council estimated in June that a Section 301 tariff regime could generate up to $169 billion annually at 2025 import levels, roughly comparable to what the invalidated IEEPA duties collected.
How growing deficits could affect your borrowing costs
The link between a swelling federal deficit and your monthly expenses runs through the bond market and the interest rate environment it shapes.
Heavier government borrowing means more Treasury securities flooding the market, which can push yields higher as investors demand higher returns to absorb the added supply.
Rising Treasury yields tend to lift borrowing costs across the economy, from 30-year fixed mortgage rates to credit card interest charges, all of which are benchmarked directly or indirectly to government bond yields.
Gross interest payments on federal debt reached $185 billion in June alone, a 28% jump from a year earlier, according to the Treasury’s Monthly Treasury Statement, underscoring how servicing more than $39.4 trillion in national obligations compounds as the deficit grows.
Related: Trump’s tariff refunds are coming, but not to your wallet yet
