Treasury refunds $22 billion in Trump tariffs, offsetting May duty collections – Firstpost

The US Treasury refunded nearly $22 billion in tariffs collected under President Donald Trump’s trade measures in May, effectively wiping out the government’s customs duty revenue for the month and highlighting the growing fiscal impact of a Supreme Court ruling against a key component of Trump’s trade policy.

According to a Treasury Department statement, the refunds were roughly equal to the amount of tariff revenue collected during May. As a result, net customs duty receipts slipped into negative territory, falling by about $42 million — the first such occurrence in Treasury data compiled by Bloomberg dating back to 2015.

The repayments stem from a Supreme Court decision that found Trump lacked the authority to impose certain tariffs under the International Emergency Economic Powers Act (IEEPA), a law that grants the president broad powers during national emergencies.

Following the ruling, the administration began processing refunds to importers who had paid the disputed duties.

The scale of future reimbursements remains uncertain. The administration has appealed a court order that would require it to refund all importers who paid the approximately $166 billion in tariffs collected under IEEPA authority. Until the legal process is concluded, businesses and policymakers remain unsure about the final cost to the federal government.

Treasury Secretary Scott Bessent told lawmakers during a congressional hearing last week that the government would return the money to companies that had paid the tariffs. However, federal agencies have argued that they cannot reopen and refund final tariff payments without explicit court authorization.

The refunds come as tariff revenues had emerged as a significant source of government income during the 2025 fiscal year. Collections from import duties, which peaked in October, helped narrow the budget deficit and provided a temporary boost to federal finances amid elevated borrowing costs.

Despite the May refund payments, the US budget deficit improved over the first eight months of the fiscal year. Treasury data showed the deficit narrowed to $1.25 trillion, down 9 per cent from the same period a year earlier.

However, mounting interest costs continue to weigh on federal finances. The government paid $133 billion in interest on its debt in May, a 44 per cent increase from the same month last year, underscoring the growing burden of servicing the nation’s record debt load.

Tax collections also presented a mixed picture. Individual income tax withholdings along with Social Security and Medicare payroll taxes rose to $286 billion in May from $247 billion a year earlier. Corporate tax receipts, however, fell 67 per cent compared with the same month in 2025.

While Bessent has argued that tariffs imposed under other legal authorities could generate comparable revenue in 2026, some of those measures have yet to be fully implemented. Businesses, meanwhile, continue to grapple with uncertainty surrounding US trade policy after years of shifting tariff regimes and ongoing legal challenges.

Looking ahead, federal deficits are expected to widen again. The Congressional Budget Office projected in February that the US budget deficit would reach $1.85 trillion in fiscal 2026 and rise further to $1.89 trillion in 2027, reflecting higher spending obligations and rising interest costs.

The latest tariff refunds underscore how legal challenges to Trump’s trade policies are beginning to reverberate through the federal government’s finances, potentially reducing a revenue stream that had become increasingly important in recent years.