US May budget deficit shrinks but customs collections turn negative due to tariff refunds
US May budget deficit shrinks but customs collections turn negative due to tariff refunds
By David LawderThu, June 11, 2026 at 1:18 AM UTC
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A general view of the U.S. Capitol building in Washington, D.C., U.S., May 12, 2026. REUTERS/Elizabeth Frantz
By David Lawder
WASHINGTON, June 10 (Reuters) - The U.S. budget deficit for May fell $23 billion or 7% to $293 billion due largely to prior-year calendar shifts in benefit payments as both outlays and receipts fell, with the latter taking a big hit from refunds of President Donald Trump's emergency tariffs, the Treasury Department said on Wednesday.
But taking into account calendar shifts of some June 2025 payments into May that year, the Treasury said the adjusted May budget deficit at $293 billion would be an increase of $71 billion or 32% from the prior year.
Customs duty refunds totaled $21.97 billion in May against gross customs collections of $21.93 billion, making for net customs outflows of $42 million for the month, the Treasury said. Net customs receipts for May 2025 totaled $22.17 billion, reflecting the first month of Trump's global tariffs imposed under the International Emergency Economic Powers Act.
Those duties were declared illegal by the U.S. Supreme Court in February, and the U.S. Customs and Border Protection agency in May began the first refunds of some $166 billion collected from IEEPA-based tariffs.
Customs receipts have become a significant source of monthly Treasury receipts over the past year, reaching a peak of $31.3 billion in October 2025, but more recently in the low $20 billion range. The Trump administration is proposing to rebuild its broad tariffs under different legal authorities, including duties related to weak enforcement of anti-forced labor laws of 10% or 12.5% on 60 major trading partners.
Fiscal year-to-date gross customs receipts totaled $220.7 billion, with refunds of $32.1 billion, up from year-earlier gross receipts of $86.1 billion and refunds of $4.75 billion.
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Total receipts for May fell $36 billion or 10% to $336 billion compared to May 2025, while outlays fell $59 billion, or 9% to $628 billion.
May outlays were boosted by a $40 billion, or 44%, jump in Treasury debt gross interest payments to a record $133 billion.
A U.S. Treasury official said that higher interest expense was largely driven by an increase in the amount of debt outstanding, rather than the increase in interest rates. The average interest rate on U.S. debt increased to 3.35% in May from 3.29% in May of 2025.
The net increase in interest rates, after interest received on U.S. trust funds, was $21 billion for the month.
The budget deficit for the first eight months of the fiscal 2026 year starting October 1 totaled $1.246 trillion, a decline of $118 billion or 9% on an unadjusted basis. On an adjusted basis, the year-to-date deficit would have declined just $24 billion, or 2% from the prior period.
Fiscal year-to-date receipts rose $174 billion, or 5%, to $3.656 trillion, while outlays were up $56 billion, or 1%, to $4.902 trillion. Both figures were records for the year-to-date period, a second Treasury official said.
(Reporting by David Lawder; Editing by Andrea Ricci and Ed Davies)
Source: “AOL Money”
