President Trump’s tariffs have helped tame the federal deficit, the Treasury Department reported Thursday, with an extra $118 billion in customs revenue limiting the damage from surging federal spending.
The government ended fiscal year 2025 with a $1.775 trillion deficit, a slight improvement on the previous year under President Biden.
Spending rose $275 billion to exceed a record $7 trillion. Revenue was up even more, $317 billion, to reach $5.235 trillion, also a record.
Treasury officials said the revenue increase was partly a result of the higher customs duties from Mr. Trump’s tariffs. Tariff revenue grew from $84 billion in 2024 to $202 billion, a 142% increase.
It’s a good thing, given the government’s ongoing spending issues. Payouts from the big entitlement programs, including Social Security, Medicare and Medicaid, rose by 8%, far outpacing inflation and totaling more than a quarter-trillion dollars in new spending.
Interest payments on the debt increased 7% to reach $1.2 trillion. That now tops every other federal program save for Social Security.
Spending would have been even higher but for provisions of Mr. Trump’s One Big Beautiful Bill Act, which recategorized some student loan spending, slicing more than $200 billion from Uncle Sam’s payout tally for the fiscal year.
The deficit — the difference between revenue and spending — is estimated to be 5.9% of gross domestic product, down from 6.3% in 2024.
That’s still much higher than what economists generally consider a sustainable rate, though it’s down significantly from the depths of the pandemic, when the deficit nearly reached 15% of GDP.
Treasury Secretary Scott Bessent said that with “continued fiscal restraint,” the government could reduce that figure to 3% by 2028, the end of Mr. Trump’s term.
“Strong private-sector-led growth alongside constrained federal spending means the deficit to GDP will take care of itself,” he said.
Budget watchdogs are less sold on that rosy future.
“While the deficit didn’t rise from last year, it didn’t fall either, and we continue to borrow far too much,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said when the first deficit estimate was released earlier this month. “We are on track to borrow nearly $2 trillion a year for the next decade. How can anyone think this is sustainable?”
The fiscal year began Oct. 1, 2024, and ran through Sept. 30, 2025, meaning 30% fell under Mr. Biden and 70% under Mr. Trump.
The final numbers show that Mr. Trump has been able to alter some key factors, especially with the tariffs. Treasury officials said the record customs duty revenue in September reflected the growing bite of the new trade policy and suggested an even bigger impact in fiscal year 2026.
Mr. Trump has also sought to trim spending through firings and buyouts in the federal workforce and orders to wind down entire offices and independent agencies.
Those attempts have yet to make much of a dent in spending because of timing late in the previous fiscal year and because so much of the federal budget is on autopilot.
The big entitlement programs and interest payments on the debt totaled $4.7 trillion, or two-thirds of all government spending last year.
By contrast, military spending, which draws the ire of congressional Democrats, rose by a relatively paltry 5%, to reach $868 billion. That worked out to 12% of federal spending last year.
Spending at the Environmental Protection Agency more than doubled in fiscal year 2025 as the Biden administration rushed to “Trump-proof” its spending by shoveling money out the door. One Biden EPA official compared it to “throwing gold bars off the Titanic.”
The Trump administration has moved to freeze the money and is attempting to claw it back. For now, it shows up as spent.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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