"Tariff madman" Trump policy effective? Unexpected surplus in U.S. fiscal in June

On Friday, data released by the US Department of the Treasury showed that driven by a surge in tariff revenue and strong growth in fiscal revenue, the US federal government achieved a fiscal surplus of $2.7 billion in June 2025, marking the first June surplus since 2017 and offering a temporary relief from the worsening annual fiscal deficit. In the previous month of May, the US government recorded a huge deficit of $316 billion, bringing the cumulative deficit for the first nine months of the fiscal year to $1.34 trillion, a 5% increase compared to the same period last year. However, the Treasury Department noted that after adjusting for calendar factors, this number actually decreased slightly by 1% compared to last year. There are still three months left in this fiscal year, which will officially end on September 30. The appearance of this fiscal surplus was mainly due to a combination of increased revenue and reduced spending. Data showed that federal government revenue increased by 13% year-on-year in June, while spending decreased by 7%. In the first nine months of the fiscal year, fiscal revenue increased by 7% and spending increased by 6%. Among them, the surge in tariff revenue has been a focus. In June, customs tariff revenue reached $27 billion, an increase from $23 billion in May and a whopping 301% increase compared to the same period last year. As of now, cumulative tariff revenue for the fiscal year has reached $113 billion, an 86% increase compared to the previous year. The surge in tariff revenue is a result of the new extensive tariff policies implemented by the Trump administration since April. A basic 10% tariff is imposed on all imported goods, with additional tariffs applied to specific products such as steel, cars, etc. In addition, the Trump administration has introduced a "reciprocal tariff" mechanism, imposing higher retaliatory tariffs on multiple trading partners. Under this policy, federal fiscal revenue has substantially increased in the short term. However, the Trump administration is not stopping there. This week, the US government has sent letters to 23 countries, warning that if trade agreements are not reached with the US by August 1, they will face higher punitive tariffs. These countries include major trading partners such as Canada, Japan, South Korea, Brazil, and South Africa. Many countries will face new tax rates ranging from 25% to 50%. For example, Canada's rate will increase from 25% to 35%, Japan and Malaysia will also see an increase in rates. Brazil will be directly subjected to a 50% tariff. Trump attributes the increase in tariffs on Canada to the fentanyl smuggling issue, even though the country's involvement in this area is relatively small; while the measures against Brazil are seen as a retaliation for former President Bolsonaro's judicial issues. Reactions from various countries vary. Canadian Prime Minister Mark Carney said on social platform X that efforts will continue to reach an agreement by August 1; Japanese Prime Minister Shinzo Abe called the new tariffs "extremely regrettable", but expressed willingness to continue negotiations; the South Korean Ministry of Trade pledged to accelerate negotiation pace; Brazilian President Lula strongly opposed the US measures and said that certain cooperation projects with the US will be suspended under the country's "economic reciprocity law". Some developing countries in Southeast Asia and Africa expressed concerns, fearing that tariffs would make their products less competitive in the US market, affecting local employment. However, despite the short-term support from trade protectionism, deep-seated issues in US fiscal policy still remain. In a high-interest rate environment, US debt interest payments continue to rise. In June, the federal government paid a net interest expense of $84 billion, second only to social security spending, making it the second-highest among all fiscal expenditure categories. So far this year, cumulative interest expenses have reached $749 billion, and it is expected to exceed $1.2 trillion for the full year. The total US debt has reached $36 trillion, with debt interest itself becoming a heavy burden on the fiscal budget. Trump has repeatedly urged the Federal Reserve to lower interest rates as soon as possible to alleviate the pressure of debt interest, but Federal Reserve Chairman Powell remains cautious about inflation, especially concerned about the potential new round of price increases that may be triggered by high tariff policies. What is even more worrying is that the "Big and Beautiful" fiscal stimulus bill promoted by Trump was also passed by Congress earlier this month. According to the Congressional Budget Office (CBO), this bill will increase federal debt by $34 trillion over the next decade, further restricting fiscal space. Although fiscal revenue has been "relieved" in the short term due to the surge in tariffs, structural problems have not improved and have become more serious under the triple pressures of tariffs, interest, and large-scale spending. Analysts point out that while tariff policies may have short-term effects, if countries countermeasure or withdraw from existing trade arrangements, it will have far-reaching impacts on global supply chains, cross-border investments, and business operations. Additionally, if high tariffs combined with inflation pressures force the Federal Reserve to delay interest rate cuts, it will pose a greater challenge to the sustainability of US economic growth and debt.