US budget deficit surges to $738.6bn despite Trump tariffs
The shortfall in the first eight months of the fiscal year was 38.8% more than the same period last year
The US budget deficit widened to $738.6 billion (Dh2.7tn) in the first eight months of the fiscal year, a $206bn increase from a year earlier, despite a revenue boost from President Donald Trump’s tariffs on imported merchandise.
The shortfall was 38.8 per cent more than the same period a year ago, the Treasury Department said in its monthly budget review released on Wednesday. So far in the fiscal year that began on October 1, a revenue increase of 2.3 per cent hasn’t kept pace with a 9.3 per cent rise in spending.
As Mr Trump ratcheted up the trade war with China with higher levies on imports from the Asian nation, the US recorded $4.9bn in customs duties in May, bringing the total to $44.9bn in the first eight months of the fiscal year – almost double the same period a year earlier. Mr Trump has repeatedly boasted that the US is taking in billions in dollars through the tariffs, though importers in America are actually paying the levies.
Even so, those extra funds have failed to keep the budget gap from increasing under Trump, driven by a combination of Republican tax cuts that will add up to about $1.5 trillion over a decade, and increased government spending. The deficit is forecast to reach $897bn this fiscal year, from $779bn last year, and rise to more than $1tnin fiscal 2022, according to the Congressional Budget Office.
The White House has said the tax cuts will pay for themselves by creating more revenue through faster and sustainable economic growth.
In May, the fiscal deficit increased to $207.8bn, up 41.5 per cent from the same month last year. The forecast in a Bloomberg survey of economists was $202.5bn.
Updated: June 13, 2019 07:32 AM