The US government recorded a lower budget deficit in January 2026 compared to the same period last year, amid a surge in tariff revenue.

Total revenue from customs duties collected through tariff rates reached $30 billion in the month, bringing the cumulative revenue from the beginning of the fiscal year to $124 billion, 304% higher than the same period in 2025.

President Donald Trump first imposed these tariffs in April 2025, with a flat tariff applied to all goods and services imported into the U.S., along with a series of retaliatory tariffs applied individually to each country. Since then, the White House has negotiated with trading partners, rolling back some of the harshest tariffs while maintaining a tough stance in its statements.

In November 2025, the U.S. Supreme Court heard oral arguments challenging the legal basis President Trump used to justify these tariffs. The initial ruling was expected in January. However, the Supreme Court has yet to issue a decision, and the White House fears that an unfavorable ruling could force the U.S. to repay the tariffs collected to date.

Speaking at a recent oil and gas conference in Houston, Texas, former U.S. Trade Representative Robert Lighthizer suggested that the Supreme Court would likely reject some of the tariffs imposed under the International Emergency Economic Powers Act (IEEPA). He argued that the IEEPA is the easiest and best tool for imposing tariffs. He added that the Trump administration has other tools, but the application process is more complex.

Tariffs have helped slow the increase in the budget deficit. According to the US Treasury Department , in the fourth month of the fiscal year, the deficit was approximately $95 billion, a decrease of about 26% compared to the same period last year.

As of now, the federal budget deficit stands at $697 billion, a 17% decrease compared to the same period in fiscal year 2025. After calendar-adjusted adjustments, the deficit reduction is 21%.

Interest expenses on the US's $38.6 trillion national debt continue to be a burden on national finances. Total net interest payments for the month reached $76 billion, exceeding all other expenses except Medicare (the federal health insurance program for those 65 and older), Social Security, and medical care. Year-to-date, total interest expenses reached $426.5 billion, up from $392.2 billion in the same period last year.

Source: VTV

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