U.S. tariff revenue hits historical high, yet falls far short of saving economy

Muhammad Zamir Assadi

U.S. tariff revenue has reached a historic high. The country’s Customs and Border Protection last week announced record-breaking $200 billion in collected between Jan. 20 and Dec. 15, 2025, “thanks to more than 40 executive orders put in place by President Donald Trump’s Administration.”

Yet the headline figure looks far less consequential in the context of America’s public finances. Total customs duties of $200 billion amount to barely one-tenth of the over $1.7 trillion federal budget deficit for fiscal year 2025.

Put differently, the deficit is more than nine times larger than total tariff revenue. Net interest payments alone—about $970 billion—are nearly five times higher than customs duties, while Medicare spending, at roughly $917 billion, also exceeds tariff revenue by a wide margin.

Tariffs cannot and will not fix the US trade deficit, nor can the ‘Fire-Ready-Aim’  strategy not backfire.

Looking from a bird's eye view of the economy, the situation is stark.

“While the tariff surge represents a significant policy shift, it's insignificant relative to the scale of the fiscal challenge facing the United States.” Ktrade Securities found in a recent research.

According to the think tank, the effects of the tariffs are in a nascent stage: As the global economy are still adjusting to Trump's tariffs, a process expected to continue for several more months as exporters, importers, and consumers negotiate over who will ultimately bear the burden of approximately $30 billion in monthly tariffs, U.S. inflation will continue, The Peterson Institute for International Economics estimates that inflation over the next year will be 1 percentage point higher than it would have been without the tariff hikes.

Food and energy showed the most dramatic and varied impacts, with all subcategories moved steadily upward throughout the period.

Households have suffered, and will continue to do so.

Tax Foundation studies earlier this month found that the Trump tariffs amount to an average tax increase per US household of $1,100 in 2025 and $1,400 in 2026, representing the largest US tax increase as a percent of GDP (0.47 percent for 2025) since 1993.

“Historical evidence and recent studies show that tariffs are taxes that raise prices and reduce available quantities of goods and services for US businesses and consumers, resulting in lower income, reduced employment, and lower economic output,” the Foundation says, citing a recent report by United States International Trade Commission (USITC) which confirmed near complete pass-through to import prices. In other words, US firms and final consumers bore the entire burden of tariffs.

In an effort to ease a cost-of-living squeeze exacerbated by tariffs, the Trump administration lifted import duties on dozens of grocery staples—including coffee, tea, bananas, oranges, tomatoes, beef, and spices—resulting in the first decline in tariff revenue in November since the duties were introduced in April. Data from the Bureau of Labor Statistics show that ground beef prices rose 11.5% in 2025 from a year earlier, while coffee prices surged 41.3%.

More dangerously, The U.S. economy increasingly depends on consumption by the rich. The top 10% of earners accounted for roughly half of all U.S. consumer spending, up from 36% three decades ago. Meanwhile, middle-class and lower-income Americans have their spending roughly in line with inflation, masking mounting financial pressures facing the rest of the population. Credit card debt hits all-time high, reaching $1.23T as of Q3 this year, a 6% increase from last year.

On a growing scale, the economy was sustained by a few tech and financial giants (Apple, Microsoft, Meta, JPMorgan, Goldman Sachs). The broader S&P 500 stagnated while tech and finance surged. Manufacturers have attempted to relocate supply chains to avoid tariffs, particularly in consumer-related industries such as toys, furniture, lighting, and apparel, which proves costly and disproportionately burden small to midsize manufacturers considering that companies operating in these sectors already face high leverage and narrow profit margins.

A Risk Asset

International investors are responding by creating one of the most consequential portfolio rebalancing in modern history. In a historic reversal, 2025 marks the first time in decades that central banks hold more reserves in gold than in U.S. Treasuries, signaling greater questioning around dollar hegemony and rising demand for geopolitical hedges.

“The real interest rates and broader macroeconomic factors are generally considered key long-term drivers of gold prices, rather than short-term events. Uncertainty prevails in the markets as investors are more focused on the U.S. fiscal outlook with expectations of a widening deficit seen as supportive for gold over the medium to long term,” the report points out.

In the digital realm, the flight from U.S. dollar dominance is increasingly reflected in the rise of Bitcoin. Macro factors like Federal Reserve interest rate cuts have pushed investors toward Bitcoin as an inflation hedge amid fears of currency devaluation attracting both retail and institutional buyers. 

Meanwhile, the U.S. dollar has weakened markedly in 2025, with the dollar index declining significantly in the first half of the year. This decline is linked to unpredictable and unfunded fiscal policies, including erratic tariff policies (Tariffs dividends) and tax reform debates, which have raised concerns about the Federal Reserve's independence and diminished the dollar’s reliability as a safe-haven asset. 

What’s ahead?

The immediate outlook is characterized by significant headwinds, the research notes. The IMF forecasts U.S. growth at 1.8% for 2025 a substantial 0.9 percentage point reduction from its January projection.

The medium to long-term consequences are even more concerning. Tariffs are expected to systematically decrease competition and stifle innovation across industries, leading to a measurable loss of aggregate productivity. This structural damage will create a persistent drag on the long-term growth potential of the U.S. economy, effects that could persist for years beyond the immediate tariff period.