By David Lawder
WASHINGTON, July 13 (Reuters) – Growing refunds from President Donald Trump’s tariffs, after they were ruled illegal, pushed the June federal budget deficit to $120 billion, the U.S. Treasury Department said on Monday, a sharp reversal from the $27 billion surplus in June 2025 that the administration touted as evidence of tariff success.
The Treasury reported gross customs duty collections of $23.6 billion but refunds of $49.2 billion, resulting in a net outflow of $25.6 billion for the month.
The refunds began flowing in May after the U.S. Supreme Court in February struck down Trump’s broadest and deepest global tariffs as illegal under the International Emergency Economic Powers Act. June refunds were more than double the $22 billion returned in May, which resulted in a slight outflow of $42 million.
In June 2025, as Trump’s tariffs were still ramping up, the Treasury reported net customs collections of $26.6 billion, pushing them above $100 billion for the first time in a fiscal year. At that time U.S. Treasury Secretary Scott Bessent said the budget results showed that the U.S. was “reaping the rewards” from Trump’s tariff agenda.
That agenda is in flux as a temporary 10% global tariff is due to expire on July 24 and the administration prepares new duties over what it sees as lax enforcement of anti-forced labor laws and excess industrial capacity.
A federal judge has warned that the government’s appeal of his order to refund all illegal tariffs was delaying payments. The May and June refunds constitute about $71 billion, or 42% of the $166 billion in IEEPA-based tariffs collected by the Customs and Border Protection agency that were subject to refunds.
A U.S. Treasury official declined to comment on the future path of tariff refunds.
REVENUES DROP
The June tariff refunds helped push down total June receipts by $31 billion, or 6%, to $496 billion compared to June 2025. The month is normally a significant revenue month due to quarterly tax payment deadlines.
Outlays for June were $616 billion, up $117 billion, or 23%, from the reported June 2025 total. But the Treasury said that June 2025 outlays were reduced by $97 billion due to calendar shifts in benefit payments.
On an adjusted basis, the June deficit was up $53 billion, or 79%, from the prior-year adjusted deficit of $67 billion.
The Treasury’s gross interest outlays for public debt in June rose $41 billion, or 28%, to $185 billion, but this figure was partially offset by a $10 billion, or 17%, increase in interest received by federal trust funds to $70 billion.
For the first nine months of the 2026 fiscal year, the deficit rose $29 billion, or 2%, to $1.367 trillion. Receipts for that period were up $143 billion, or 4%, to $4.151 trillion, while outlays rose $172 billion, or 3%, to $5.518 trillion.
Fiscal year-to-date customs receipts after refunds totaled $163 billion, compared to $108 billion in the same period of fiscal 2025.
(Reporting by David Lawder; Editing by Paul Simao and Sanjeev Miglani)
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