The US Treasury Department reported a federal budget deficit of $120 billion for June, a dramatic reversal from the $27 billion surplus recorded in June 2025, after the government reinstated tariffs on billions of dollars later ruled illegal by the US Supreme Court.
The June budget results underscore how President Donald Trump’s tariff strategy continues to impact federal finances even months after the Supreme Court struck down most of the administration’s emergency import duties. Although tariffs increased government revenue last year, required refunds are now putting pressure on revenues and pushing the deficit even higher.
Tariff rebates exceeded customs collections in June
The biggest factor in the budget deficit in June was the government’s tariff refund program.
The government collected $23.6 billion in tariffs in June but refunded $49.2 billion to importers, leading to a net customs outflow of $25.6 billion for the month, according to the Treasury Department.
Repayments in June were more than double the roughly $22 billion issued in May; This underlines the increasing pace of repayments.
Supreme Court ruling forces government to pay debts to importers
The refunds stem from the U.S. Supreme Court’s February decision that struck down most of the global tariffs Trump imposed under the International Emergency Economic Powers Act (IEEPA).
In a 6-3 decision, the court concluded that the administration overstepped its authority by imposing broad emergency tariffs using the 1977 law. As a result, the government agreed to refund businesses that paid the invalid taxes, including interest.
Customs officials estimate that approximately $166 billion in tariffs collected from approximately 330,000 importers are eligible for refunds.
Tariff refunds have significantly impacted the government’s monthly finances.
The Treasury said total revenues in June fell $31 billion, or 6%, to $496 billion, while federal spending reached $616 billion. June is typically one of the government’s strongest revenue months due to quarterly estimated tax payments.
On an adjusted basis, the June deficit increased by 79% compared to the same month the previous year.
More than $80 billion in refunds were issued this fiscal year.
The June payments bring total tariff refunds to nearly $81 billion for the first nine months of fiscal 2026, which begins in October 2025.
This compares with just $5 billion in customs duties refunded during the same period the previous year.
Looking at calendar year 2026 alone, the government has refunded just over $77 billion since January, according to Treasury data.
Despite the refunds, fiscal year-to-date customs revenues after refunds still amounted to $163 billion, compared to $108 billion in the same period in fiscal 2025.
The legal fight over additional repayments continues
The refund process remains the subject of ongoing litigation.
The Trump administration appealed a federal court ruling that expanded the scope of the refunds beyond the companies that initially objected to the tariffs. Administration officials are trying to limit which importers can reclaim overridden duties.
Meanwhile, a federal judge warned that the government’s objection was slowing payments to eligible businesses.
As of the end of June, U.S. Customs and Border Protection had authorized more than $104 billion in refunds, but a significant portion remained in legal proceedings.
Companies largely hide refund money
While the refund program represents one of the largest import duty refunds in U.S. history, most of the money is expected to remain with businesses rather than consumers.
Earlier this year, Customs and Border Protection launched a refund portal that allows registered importers to file claims for approximately $166 billion in invalid tariffs.
Many companies have indicated that they plan to use rebates to offset higher operating costs rather than giving discounts directly to consumers.
“We expect some more pressure on the business from a commodity standpoint,” PepsiCo CFO Steve Schmitt said on this week’s earnings call. “We are also awaiting requests for refunds on tariffs paid last year to help offset some of the commodity pressures we have and allow us to continue to play offense.”
McCormick & Company also said the tariff rebates will help offset higher costs associated with commodities and freight following multiple price increases last year.
Some companies say refunds could help slow price increases. While consumers are unlikely to receive direct payments, many businesses say refunds could help limit future price increases.
BJ’s Wholesale Club said it planned to use tariff rebates to lower its members’ prices, while other retailers suggested additional cash could ease some inflationary pressures by offsetting rising input costs.
Some analysts have described the refunds as an “incidental stimulus” for businesses, providing windfall liquidity for companies after absorbing billions of dollars in tariff costs.
But many executives say these benefits are offset by higher energy, commodity and transportation costs.
Management continues to pursue a new tariff strategy
Despite the Supreme Court defeat, the Trump administration continues to pursue an expanded trade agenda.
Treasury Secretary Scott Bessent described the current approach as a “reboot” of the tariff program, focusing on a temporary 10% global tariff while the administration develops additional trade actions using other regulatory authorities.
Officials are also preparing new tariffs targeting issues such as forced labor and excess industrial capacity, after the IEEPA decision limited the administration’s previous strategy.
Federal budget deficit continues to exceed $2 trillion
In the first nine months of fiscal year 2026, the federal budget deficit reached $1.367 trillion, an increase of nearly 2% compared to the same period the previous year.
Federal revenues rose 4% to $4.151 trillion, while government spending rose 3% to $5.518 trillion.
Interest costs also continued to rise. The Treasury reported that gross interest payments on the national debt reached $185 billion in June alone, while total interest expenses exceeded $1 trillion for the fiscal year.
Fiscal watchers have warned that the latest budget figures show increasing pressure on federal finances.
“We are on track to borrow $2 trillion or more this fiscal year, with $1.4 trillion in the first nine months of fiscal 2026, including $120 billion in June alone,” said Maya MacGuineas, chair of the Committee for a Responsible Federal Budget.
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John Dealbreuin came to the United States from a third world country without knowing anyone and with only $1,000; Guided by an immigrant dream. He reached his retirement number in 12 years.
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