(Bloomberg) -- The U.S. budget deficit widened to $738.6 billion in the first eight months of the fiscal year, a $206 billion increase from a year earlier, despite a revenue boost from President Donald Trump's tariffs on imported merchandise.
The shortfall was 38.8% 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 Oct. 1, a revenue increase of 2.3% hasn't kept pace with a 9.3% rise in spending.
As Trump ratcheted up the trade war with China with higher levies on imports from the Asian nation, the U.S. recorded $4.9 billion in customs duties in May, bringing the total to $44.9 billion in the first eight months of the fiscal year -- almost double the same period a year earlier. Trump has repeatedly boasted that the U.S. 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 $897 billion this fiscal year, from $779 billion last year, and rise to more than $1 trillion in 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 $207.8 billion, up 41.5% from the same month last year. The forecast in a Bloomberg survey of economists was $202.5 billion.
To contact the reporter on this story: Sarah McGregor in Washington at smcgregor5@bloomberg.net
To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Scott Lanman
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