In a bold statement on August 17, 2025, President Donald Trump claimed that revenues from his administration’s tariffs on imports would not only help pay down America’s staggering $37 trillion national debt but could even generate enough surplus to issue dividends to citizens.
Speaking to reporters, Trump emphasized, “The purpose of what I’m doing is primarily to pay down debt, which will happen in very large quantity.
But I think there’s also a possibility that we’re taking in so much money that we may very well make a dividend to the people of America.”
While the president’s optimism highlights the record-breaking tariff collections under his policies, recent Treasury data and expert analyses paint a starkly different picture.
Tariff revenues, though at all-time highs, fall far short of covering even the monthly interest on the national debt—let alone reducing the principal.
As the US debt surpassed $37 trillion on August 11, 2025, economists warn that tariffs alone cannot reverse the country’s fiscal trajectory without deeper structural reforms.
The Trump administration’s tariffs have indeed generated substantial income for the federal government.
According to the latest Monthly Treasury Statement for July 2025, customs duties—a primary component of tariff revenues—totaled $27.7 billion, marking a record high for the month.
This represents a dramatic 252% increase from July 2024, driven by escalated tariffs on a wide range of imports, including goods from key trading partners.
Year-to-date through July 2025 (the first 10 months of fiscal year 2025), customs duties have surged by $70 billion, or 112%, compared to the same period last year.
Independent projections estimate that tariffs could bring in $2 trillion to $3 trillion over the next decade, providing a meaningful revenue stream amid widening budget deficits.
However, these figures must be contextualized against the scale of America’s fiscal challenges.
Monthly tariff collections of around $25 billion to $28 billion are now triple what they were late last year, but they remain a small fraction of overall government receipts, which topped $338 billion in July alone.
Soaring Interest Costs Outpace Tariff Gains
The national debt’s interest burden tells a more sobering story.
For the first 10 months of fiscal year 2025, net interest outlays totaled $847 billion, an increase of $60 billion (or 8%) from the same period in 2024.
This equates to an average monthly net interest cost of approximately $84.7 billion year-to-date.
Projections from the Congressional Budget Office (CBO) earlier in 2025 estimated annual net interest for the full year at around $952 billion, or about 3.2% of GDP—a near-record level.
With rising interest rates (the average rate on federal debt reached 3.352% as of July 2025, more than double the low of 1.556% in January 2022), these costs are accelerating.
To illustrate the mismatch:
| Metric | July 2025 Amount | Annual Projection/Context |
|---|---|---|
| Tariff Revenues (Customs Duties) | $27.7 billion | $2-3 trillion over 10 years (est.) |
| Net Interest Outlays (Monthly Avg. YTD) | ~$84.7 billion | $952 billion (full FY2025 est.) |
| National Debt | $37 trillion (as of Aug 11) | Growing by ~$1.8 trillion annually (est.) |
| Coverage Ratio | Tariffs cover ~33% of monthly interest | Insufficient to reduce principal |
Sources: US Treasury, CBO, independent analyses.
This data underscores that July’s tariff haul covered less than one-third of the average monthly interest payments, leaving no room to chip away at the $37 trillion principal.
Economists Sound the Alarm
Leading economists have been quick to debunk the notion that tariffs can meaningfully reduce the debt.
Joao Gomes, a professor at the Wharton School, told Fortune that while tariffs might “slow the pace of debt accumulation,” the idea of paying down the debt is “greatly overstating it.”
He noted that the government requires about $1.8 trillion in net new borrowing annually, and even optimistic tariff projections would only modestly narrow that gap.
Desmond Lachman, a senior fellow at the American Enterprise Institute and former IMF official, was more direct: “To say that he’s going to raise maybe $300 billion is a drop in the ocean in relation to the amount of red ink they’ve got.”
Lachman highlighted the dangerous debt trajectory, warning that markets “aren’t dumb” and can see through unsubstantiated claims.
Other experts echo this sentiment.
A report from the Yale Budget Lab estimates tariffs could generate over $2 trillion from 2026-2035 but warns of short-term income losses for households.
The Penn Wharton Budget Model projects that Trump’s tariffs could reduce long-run GDP by 6% and wages by 5%, with a middle-income household facing a $22,000 lifetime loss.
Even conservative voices, like Oren Cass of American Compass, offer nuanced support for tariffs as a tool for revitalizing manufacturing but caution against overreliance for debt reduction.
Overall, consensus among economists is that tariffs may slow debt growth but won’t reverse it without cuts to spending or tax reforms.
Market Reactions and Broader Implications
Investor confidence remains mixed.
Gold prices have risen 27% over the past year amid fiscal uncertainty, though Treasury yields have stayed stable, indicating no immediate panic in bond markets.
Foreign creditors hold about 26% of the debt, and any perceived fiscal irresponsibility could raise borrowing costs further.
The Conference Board has declared a “debt crisis is here,” urging bipartisan reforms like fiscal committees and Social Security adjustments.
Meanwhile, the administration points to declining debt-to-GDP ratios and “record tariff revenues,” but underlying math suggests only modest relief.
As Gomes summarized, “The idea that somehow the debt is gonna go down … is just unimaginable.
We’ll never get that much revenue.”
With the US adding a trillion dollars to the debt every few months, Trump’s tariff strategy, while innovative, appears insufficient to turn the tide without comprehensive fiscal overhaul.
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