The U.S. Treasury Department on Monday reported a $120 billion federal budget deficit for June after refunding $49.2 billion in tariffs that were later ruled unlawful, marking a sharp reversal from the $27 billion surplus recorded in June 2025.
Tariffs are taxes imposed on imported goods. The June deficit was driven largely by refunds issued after the U.S. Supreme Court struck down President Donald Trump‘s emergency tariffs imposed under the International Emergency Economic Powers Act (IEEPA), according to Reuters.
Refunds Outpace Collections
The Treasury collected $23.6 billion in customs duties during June but refunded $49.2 billion, resulting in a net customs outflow of $25.6 billion for the month. The refunds were more than double the roughly $22 billion returned in May.
The refunds also reduced total June government receipts by $31 billion, or 6%, to $496 billion, while federal outlays reached $616 billion. On an adjusted basis, the June deficit rose 79% from a year earlier.
The June refunds stem from the Supreme Court’s February ruling that President Donald Trump lacked authority under the International Emergency Economic Powers Act (IEEPA) to impose the sweeping emergency tariffs.
Earlier this year, Customs and Border Protection launched a refund portal covering roughly $166 billion in duties, with only importers of record eligible to file claims. Most refunds are expected to remain with companies rather than consumers, rather than flow directly back to households.
Legal Fight Continues
The refund process remains tied up in court. The Trump administration has appealed a federal court order that expanded refund eligibility beyond the companies that originally challenged the tariffs, seeking to limit who can reclaim the invalidated duties.
At the same time, the administration continues pursuing a broader tariff strategy. Treasury Secretary Scott Bessent has defended what he described as a “reboot” of the tariff program, saying the current framework relies on a temporary 10% global tariff while officials prepare additional trade measures under other legal authorities.
For the first nine months of fiscal 2026, the federal budget deficit totaled $1.367 trillion. Fiscal year-to-date customs receipts after refunds stood at $163 billion, compared with $108 billion during the same period a year earlier.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock/ Jack_the_sparow
