Trump Tariff Shortfall Helps Push Federal Deficit $200 Billion Higher Than Expected

Jacquelyn Martin/AP photo

President Donald Trump’s tariffs are bringing in far less money than previously projected, helping push the expected federal deficit for fiscal 2026 up by $200 billion, according to a new projection from the Congressional Budget Office.

In the agency’s monthly budget review, released on Monday, the CBO revealed it now expects the federal government to run a $2.1 trillion deficit in fiscal year 2026, up from the $1.9 trillion it projected in February.

A major factor behind the revision is weaker-than-anticipated tariff revenue following the Supreme Court’s February decision striking down tariffs Trump imposed under the International Emergency Economic Powers Act. Despite the administration imposing other import taxes, the CBO estimates tariff and customs duty collections will come in roughly $250 billion below its earlier expectations.

The federal government has already returned a substantial portion of the tariff revenue it collected. As of July 31, U.S. Customs and Border Protection had given back around $100 billion of approximately $166 billion collected in tariff duties, according to a court filing cited by The Hill.

During just the first 10 months of fiscal 2026, the government ran a $1.8 trillion deficit, with revenues increasing $139 billion from the same period last year while outlays jumped $308 billion.

Part of that spending increase resulted from payments scheduled for Aug. 1 being moved into July because the date fell on a weekend. Without that shift, though, the CBO said the deficit through July would have been $1.7 trillion, or $71 billion more than during the same period in fiscal 2025.

Committee for a Responsible Federal Budget President Maya MacGuineas called the figures “astounding,” as noted by The Hill, adding, “We’re on track to surpass $2 trillion in borrowing this fiscal year despite not being in a recession. That is not normal.”

Rising spending on Social Security, Medicare and Medicaid accounted for roughly 86% of the yearly increase in outlays, while net interest payments on the public debt climbed another $117 billion.

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