US posts $27 billion budget surplus in June, the first June surplus since 2017

America just booked a $27 billion budget surplus in June, a rare sight not seen since 2017, according to the Treasury Department’s Friday report.

After bleeding $316 billion in red ink the month before, the U.S. government flipped the script, and the driving force was tariffs pushed by President Donald Trump.

The surprise surplus dragged the fiscal year-to-date deficit slightly lower, now sitting at $1.34 trillion, just 1% below this time last year. In June 2024, America ran a $71 billion deficit. The fiscal year ends September 30, which means there are still three months left for that number to move again.

But what turned June around wasn’t spending cuts alone, it was the sharp rise in money flowing into federal coffers, up 13% from a year earlier. Spending dropped 7% during the same window. On the year, receipts are up 7%, while outlays have climbed 6%.

Tariff revenue explodes while debt costs pile up

Customs duties alone brought in nearly the full amount of the surplus—$27 billion for June, up from $23 billion in May. That’s not a rounding error. Compared to last June, tariff income jumped a full 301%. For the fiscal year so far, customs duties have racked up $113 billion in total, marking an 86% increase year-over-year.

These numbers follow Trump’s blanket 10% tariffs on all imports, which he signed off in April, along with a wider set of what he calls “reciprocal tariffs” targeting several trade partners. Negotiations are ongoing, but the bills are already being paid.

The Treasury said the June figures also got a push from favorable calendar adjustments. Without those quirks, the government would’ve posted a $70 billion deficit instead. But even accounting for that, the tariff surge played a far bigger role in pushing the books into the black for the first time in seven years.

Despite the boost, America’s ballooning debt remains a heavy load. Net interest payments on the $36 trillion national debt came in at $84 billion for June. That’s down just slightly from May, but it’s still the second biggest expense after Social Security.

So far this year, the Treasury has spent $749 billion just to cover interest. By the end of the fiscal year, interest costs are expected to hit $1.2 trillion—making debt servicing one of the government’s most expensive obligations.

Trump has openly called for the Federal Reserve to lower short-term interest rates to ease the federal government’s financing pressure. But Fed Chair Jerome Powell isn’t rushing to follow that script. Powell has said that tariffs could fuel inflation, and until he sees more data, he’s staying cautious. The next chance for a possible rate cut isn’t expected until September.

Markets react as more tariffs hit allies and partners

Even with the surplus in the books, Trump is showing no signs of pulling back on tariffs. Earlier this week, his administration hit Japan with 25% duties and slapped Brazil with a 50% rate. All copper imports into America are now facing the same steep 50% charge, far above what analysts had predicted.

The tariffs didn’t stop there. Late Thursday night, the White House quietly added 35% tariffs on Canadian goods. Meanwhile, there’s been no update on the EU-U.S. framework agreement. A letter is expected to be delivered to Brussels, but as of Friday morning, nothing’s landed.

On Wall Street, traders didn’t exactly celebrate the surplus. After hitting record highs on Thursday, optimism started to wane by midday Friday. The Stoxx 600 index in Europe was down nearly 1% in London, and Dow Jones futures had slipped by 0.7%.

Investors seem less sure that the week’s gains can hold up under the weight of mounting tariffs and a spending plan that’s projected to dump another $3.4 trillion onto America’s debt pile over the next decade. That estimate comes from the Congressional Budget Office, referring to Trump’s latest spending bill, which just passed through Congress earlier this month.

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