The U.S. government refunded $33.4 billion in tariffs to businesses in July, sending total repayments above $100 billion since the Supreme Court invalidated President Donald Trump's sweeping emergency tariffs and adding another source of pressure to a federal budget already headed toward a $2 trillion-plus annual deficit.
Treasury Department data showed the government collected $24.8 billion in customs duties during July, meaning refunds exceeded collections by nearly $9 billion. It marked the third consecutive month in which tariff repayments were larger than the amount of new duties flowing into federal coffers.
The reversal stems from the Supreme Court's Feb. 20 decision rejecting tariffs imposed by Trump under the International Emergency Economic Powers Act, or IEEPA. The 1977 law grants presidents broad powers during national emergencies, but the court's ruling required the government to return duties that had been improperly collected under Trump's use of the statute.
Refunds began accelerating after the federal government opened a tariff repayment portal in late April. Businesses that had paid the affected duties have since received more than $100 billion over three months:
- May: Nearly $22 billion refunded
- June: $49.1 billion refunded
- July: $33.4 billion refunded
The repayment program is changing the fiscal arithmetic surrounding Trump's trade policy. Tariffs had been expected to generate substantial additional revenue for Washington, but the court-ordered refunds have reduced the net contribution at a time when federal borrowing remains elevated.
The Treasury Department reported a budget deficit of just under $1.8 trillion for the first 10 months of fiscal 2026. The Congressional Budget Office now expects the shortfall to reach $2.1 trillion by the time the fiscal year ends Sept. 30, roughly $200 billion more than the agency projected in February.
The CBO attributed a significant portion of that deterioration to tariff receipts falling short of earlier assumptions. The changing outlook illustrates how quickly the government's revenue expectations shifted after the Supreme Court decision transformed previously collected duties into liabilities that must be returned to importers.
"We are about to hit the milestone of $40 trillion in gross national debt," Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said Wednesday. "Although action is long overdue, it is never too late to start correcting course."
The government has collected roughly $154 billion in net tariff revenue since the fiscal year began Oct. 1, 2025, according to the supplied figures. That compares with $135.6 billion over the corresponding period a year earlier, leaving the government with a relatively modest year-over-year increase after refunds are incorporated.
More repayments could still be coming. About $166 billion in duties and interest could ultimately qualify for refunds, potentially keeping the issue on Treasury's balance sheet well beyond the initial surge in payments.
Meanwhile, gross monthly tariff collections have weakened from their earlier peak. Customs duties reached $31.35 billion last October but have recently been running at roughly $20 billion to $25 billion a month.
