U.S. Tariff Revenue Hits Record High But Still Far Below Debt Interest

$PNUT

$1MBABYDOGE

The U.S. Treasury stated on Monday that the federal government's budget surplus in April was $258 billion, the second-largest surplus on record, second only to the $308 billion in 2021, an increase of 23% year-on-year, or about $49 billion more, after a deficit of $160.5 billion last month. This mainly reflects strong tax revenue in the last month of the tax season and record revenue from import tariffs.

The Treasury Department reported that the total tariffs for April amounted to $16 billion, an increase of about $9 billion compared to the same period last year, far exceeding the historical record of $9.6 billion two years ago. The net tariff total for the first seven months of this fiscal year is $63 billion, compared to $48 billion in the same period last year.

The significant increase in tariffs occurred in the month Trump announced reciprocal tariffs. Budget results show that the U.S. earned slightly more than $500 million daily from tariffs in April. Trump stated last month that tariffs bring in $2 billion per day to the U.S. Treasury.

On the other hand, high interest rates pose a heavy burden on U.S. finances. In April, net interest payments on the U.S. $36.2 trillion national debt reached $89 billion, second only to Social Security expenditures, ranking as the second highest of all expenditure items. So far this fiscal year, cumulative net interest payments amount to $579 billion, also the second highest item of all expenditures.

Although the U.S. still has a large budget deficit, record revenue from tariffs in April has somewhat alleviated the deficit pressure, preventing further expansion of the budget deficit. April is usually a month of fiscal surplus due to the income tax filing deadline in the middle of the month.

However, this new revenue may decrease. President Trump is seeking trade agreements with multiple countries. On Monday, China and the U.S. reached an agreement, with both sides agreeing to significantly reduce tariffs within 90 days, lowering rates by 115%.

Next, tariff revenue will decrease, while interest on U.S. Treasury debt remains high and may continue to rise. The cold numerical comparison may prompt President Trump to change policies again.

Most analyses point to the erratic nature of U.S. reciprocal tariff policies. This major policy of Trump has always had two forces pulling against each other: the pursuit of fiscal revenue and the return of manufacturing. This will lead to long-term high tariffs, or the aim of establishing a fairer trade system, meaning current measures are merely a 'strategy of promoting peace through war.'

Policy swings are also tearing apart the consensus on economic narratives. From firmly believing that American exceptionalism will drive economic growth to worrying about recession or even stagflation; from viewing the U.S. as the global economic engine to seeing it as a drag; from believing that globalization will continue in a more controllable manner to fearing system fragmentation. Even the once unshakeable status of the dollar as a reserve currency and the credibility of U.S. financial markets are now facing unprecedented scrutiny.

More importantly, although tariff cuts exceeded expectations, they have not been completely eliminated. Non-food imported goods will continue to face some degree of price inflation for Americans. Even Apple is beginning to consider raising iPhone prices.

Meanwhile, tariffs on other important manufacturing countries like Vietnam are only suspended, not completely excluded. The escalation of the trade war may have been avoided, but the impact of tariffs on consumers has not been lifted.

In summary, the chaos caused by Trump's erratic tariff policies has only just begun.

Statement of work: Personal opinion, for reference only.