The U.S. government in January incurred a smaller deficit than it had a year earlier, though tariff collections were soaring, and a reminder of how crucial a long-awaited Supreme Court ruling might be to the fiscal health of the federal government.
Customs duties collected based on tariffs amounted to $30 billion for the month, bringing the fiscal year-to-date total to $124-billion, or 304 percent higher than the same period in 2025.
President Donald Trump initially imposed the duties in April 2025 at an across-the-board rate on all goods and services imported to the U.S., as well as a menu of so-called reciprocal tariffs on each country.
Since that time, the White House has been negotiating with its trading partners, withdrawing on some of the more aggressive charges while maintaining tough talk on issues.
However, the Supreme Court held oral arguments on the challenge to the auspices upon which Trump justified the tariffs last November. The decision was supposed to be in January.
The high court is yet to make its verdict, and there is worry in the white house that the failure to do so will push the U.S. into refunding the duties it has already collected. The tariffs assisted in obtaining a dent in the budget deficit rate.
The Treasury Department reported that the shortfall is estimated at approximately $95 billion in the fourth month of the fiscal year, a decline of about 26 percent compared to the same period a year ago.
That would make federal red ink $697 billion in the first quarter of the year, or 17 percent less than the same period of federal fiscal 2025, calendar-adjusted figures not being available. The deficit reduction is at 21 percent with calendar adjustments.
Therefore, the interest on the $38.6 trillion U.S. debt continues to be a burden on the national finances. The net interest paid amounted to $76 billion in the month, compared with all other expenditures, except Medicare, Social Security, and health care.
Thus, gross interest has amounted to $426.5 billion year to date, compared with $392.2 billion the previous year.
