By David Lawder
WASHINGTON (Reuters) -The U.S. government posted a $161 billion budget deficit for March, down 32%, or $76 billion, from a year earlier, a decline due largely to a calendar shift for benefit payments as receipts continued to grow, the Treasury Department said on Thursday.
The Treasury reported that net customs duties in March totaled $8.2 billion, a $2.1 billion increase from a year earlier and the highest since September 2022.
The increase is partly due to President Donald Trump’s tariff increases since February, a Treasury official said, noting that the March increase was double the pace of roughly $1 billion year-on-year increases during each of the prior five months.
But the budget results indicate that Trump’s recent statement that the U.S. was now collecting $2 billion a day from his tariffs is an overstatement.
The U.S. began collecting a 10% duty on Chinese imports on February 4, doubling the rate to 20% by March 4. On the same day, Trump’s 25% fentanyl-related tariffs on Canadian and Mexican goods that are not compliant with the U.S.-Mexico-Canada trade agreement’s rules of origin took effect.
The Treasury official said that there is typically about a one-month lag between tariff rate increases and higher collections.
The Treasury data does not distinguish between the duty sources. It said that for the first six months of the fiscal year, net customs duties totaled $43.6 billion, compared to $37.7 billion in the prior year’s October-March period.
SECOND-HIGHEST SIX-MONTH DEFICIT
The customs receipts were dwarfed by the $1.307 trillion U.S. budget deficit that the Treasury reported for the first six months of fiscal 2025, which started Oct. 1 – an increase of 23% or $242 billion, from a year earlier.
It was the second-highest deficit for the first six months of a fiscal year, after fiscal 2021’s record $1.706 trillion deficit, a gap that was inflated by COVID-19 induced spending increases and revenue reductions.
For March, receipts grew 11% or $36 billion from a year earlier to $368 billion, while outlays fell 7% or $40 billion to $528 billion, the Treasury said. But since March started on a weekend, $83 billion in benefit payments for the month were shifted into February. Without this shift, the March deficit would have been $244 billion, an increase of $24 billion or 11% from a year earlier.
March receipts were driven by a 10% increase in taxes withheld from paychecks, a 17% increase in non-withheld tax payments and a 13% increase in gross corporate taxes compared to a year earlier.
Fiscal year-to-date receipts rose 3% or $72 billion to $2.260 trillion, a record for the first six months of a fiscal year. Outlays also were a similar record, rising 10% or $315 billion to $3.567 trillion.
Increased six-month outlays were driven by higher spending on Treasury debt interest, up 12% from a year earlier to $582 billion, Social Security, up 9% to $808 billion and healthcare programs, up 11% to $901 billion.
The Treasury official said the weighted average interest rate for the month was 3.28%, up seven basis points from a year earlier, but a rate that has held steady for the past four months.
(Reporting by David Lawder; Editing by Andrea Ricci)
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