The US budget deficit is reported to have shrunk for the 2025 fiscal year, supported by the highest tariff collection in history that helped offset the growing number of federal government debt payments, the US Treasury Department announced on Thursday.
In a year filled with global trade tensions and high funding rates, the US government recorded a deficit of $1.78 trillion, a decrease of about $41 billion or 2.2% compared to the 2024 fiscal year.
While that amount is still at historically high levels, the deficit figure could have been worse if not supported by a large increase in customs duty revenue and a September budget surplus of $198 billion.
According to the report, tariffs imposed by President Donald Trump were the main contributor to the annual tariff collection of $202 billion, a 142% increase from the previous year.
September alone saw tariff payments reach $30 billion, a 295% jump from the same period in 2024.
Trump previously implemented new import tariffs despite opposition from some who feared the move would increase inflation and squeeze consumers.
The move, however, also hurt domestic demand and slowed economic growth.
For the fiscal year ending in September, the US government collected $5.2 trillion in revenue, while total spending exceeded $7 trillion, keeping the country's fiscal position in a persistent but slightly narrowing deficit.
