(Nov 13) : The US budget gap widened to US$404 billion in October, up 42% from the same period a year earlier, Treasury Department data showed Thursday. 

In the first month of the fiscal year that began Oct. 1, government spending rose 12%, to US$773 billion, and tax receipts declined by 9%, to US$369 billion. 

Higher spending on the military, healthcare and interest on the debt pushed up government outlays last month. Bigger tariff and corporate tax refunds weighed on tax receipts, though tariff refunds have slowed since the summer. Overall, tariff revenue dropped roughly 39% from October 2025, to US$19.2 billion.

The Treasury estimated the US budget gap will widen slightly this year to roughly US$2.2 trillion, the report showed.

The government recorded a US$1.99 trillion shortfall in the last fiscal year, as spending far outpaced federal tax collection and rising interest rates sent government debt costs soaring. That pushed the annual deficit to roughly 6% of gross domestic product. 

Treasury Secretary Scott Bessent has said he wants to bring the annual US deficit down to 3% of GDP but hasn’t proposed specific plans for cutting spending or boosting revenues, except through higher tariffs. Bessent has said that if the US continued growing at the same pace as the third quarter of 2026, the federal government could grow its way out of the current deficit. 

Most economists have dismissed that argument, saying the US would need more than 8% sustained economic growth to meaningfully decrease the deficit. President Donald Trump has also floated large spending increases, including calling for a US$350 billion bump in defense spending.

On tariffs, the Treasury projected that the US would bring in US$464 billion custom duties this fiscal year, an estimate that exceeds the current pace of collection under existing tariffs.

Last year, the department collected less than half of the US$404 billion it projected in tariff revenue, after the Supreme Court in February overturned a large swath of Trump’s tariffs, forcing the administration to refund roughly US$166 billion of so-called IEEPA duties to importers.

As of Nov. 5, Customs and Border Protection has sent approximately US$128.4 billion in refund payments — which include interest — to Treasury for disbursement, according to a court filing.

After the Supreme Court ruling, Trump vowed to restore tariff revenue and quickly put in place temporary global tariffs while his administration prepared more durable duties under Section 301 of the Trade Act of 1974. 

A new set of tariffs linked to forced labor came into force on goods from more than 60 economies over the summer, just as the temporary duties expired. Trump also recently imposed duties on billions worth of goods imported from Canada under a never-before used tariff authority.

The administration is also expected to roll out another set of Section 301 duties on imports from several major trading partners related to excess industrial capacity in the next few months.

uploaded by Isabelle Francis