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Sandra Schidlo from Clearwater, Florida, asks:

Can the money from tariffs [legally] be used to lower the national debt?

The federal government raised about $195 billion in total tariff revenue for the 2025 fiscal year, with about $120 billion of that money coming from President Donald Trump’s new tariff policies, which include tariff rates of 10% to 50% on countries like Brazil, India and the United Kingdom. 

The Trump administration has proposed using tariff revenue to help pay off the federal deficit or national debt. President Donald Trump recently took to Truth Social to denounce people who are critical of tariffs, calling them “fools.” He also said that the country is raking in “trillions of dollars” that will be used to pay down the national debt. 

Commerce Secretary Howard Lutnick said Trump’s tariffs would “pay off our deficit” in a July interview with CBS’ “Face the Nation,” while Treasury Secretary Scott Bessent said tariff revenue would go toward the national debt in an interview with CNBC’s “Squawk Box.”  

“Tariffs can be a tool to raise government revenues, but the revenue is tiny compared with the federal budget,” said Reilly White, a finance professor at the University of New Mexico.

The national debt stands at about $38 trillion, with a capital T, while the government’s deficit for the 2025 fiscal year stood at about $1.8 trillion. A country’s deficit is the annual difference between the amount a government spends and the amount of revenue it pulls in. The debt is the overall amount of money the U.S. government owes, or the sum of all past deficits minus any surpluses. 

Not only is there a wide gulf between our existing debt and tariff revenue, but the Trump administration’s other policies may end up undercutting the money that’s been raised, like its $2,000 tariff check proposal and the tax reductions included in the One Big Beautiful Bill Act.  

Can tariff money be used to lower the national debt? 

Our tariff revenue goes into the U.S. Treasury’s general fund, the same place where our federal income taxes go. All of that money is fungible, which means there isn’t a separate fund that only includes tariff dollars. 

Any tariff revenue is an “indirect allocation” to reducing the deficit if those funds aren’t being spent on other budgetary items, said Jonathan Ernest, an economics professor at Case Western Reserve University. 

If tariff revenue decreases the difference between government outlays (such as Social Security expenses) and revenues, that means the government wouldn’t need to borrow as much. The national debt would then grow slightly slower, Ernest explained.

But if Trump wanted to directly devote money to paying down the debt, only Congress has the power to authorize and appropriate money from the general fund.

“Legally speaking, Congress could designate tariff revenue from the general fund for debt reduction. But Congress does not do this in practice,” White said. 

That’s because tariff revenue is so small and volatile, rising and falling depending on trade flows, White noted. 

Why tariff revenue won’t help significantly lower the national debt 

The U.S. hasn’t had a surplus in more than two decades. “It would take a lot of dollars to close that gap and fully reduce that deficit,” Ernest said.

Trump’s tariffs are expected to raise $4 trillion between 2025 and 2035, according to the Congressional Budget Office’s analysis of his tariffs as of August. But the One Big Beautiful Bill Act, which reduces taxes, is expected to cost about $4.1 trillion over a similar time period, according to the Bipartisan Policy Center. 

“We're just offsetting those tax cuts with tariff dollars, which isn't necessarily a more efficient way to raise funds,” Ernest said.

Trump has also proposed sending out $2,000 tariff dividends to low- and middle-income consumers. Those checks would amount to $300 billion — far more than the total tariff revenue we’ve pulled in this year. 

U.S. importers and consumers are the ones who end up paying for tariffs. Because higher prices reduce consumption, that slows economic activity, which can reduce other forms of tax revenue, Reilly White of the University of New Mexico said. Retaliatory tariffs from other countries can also cause U.S. exports to fall, which means less income for American producers and thus lower federal tax collections, White explained. 

“It’s really complicated, and [tariffs] are not the best tool that we can use to lower the deficit and lower the national debt,” White said. 

On top of all these issues, the U.S. may end up losing a significant portion of the tariff revenue it’s raised. About $90 billion in tariff revenue may have to be refunded if the Supreme Court rules that Trump did not have the power to impose sweeping tariffs on other countries. 

Congress began imposing tariffs on imports back in the 18th century to raise money because the government had no sources of income at the time to pay for the federal debt or national defense, said Douglas Irwin, a trade historian at Dartmouth, in a 2024 interview with Marketplace. 

But eventually, tariff revenue became insufficient. The Civil War was costly, and tariffs alone couldn’t be used to pay for it, Irwin said. And now, the U.S. spends trillions for programs like Social Security and allocates hundreds of billions on national defense. 

Having debt isn’t necessarily a bad thing – the U.S. might want to take out debt during downturns to help stimulate the economy. But having a high debt-to-gross domestic product ratio can be bad. If you have more debt than what you’re producing each year, then you might have to pay a high interest rate on the money you borrow. That’s because people will be uncertain that you can pay that money back, Ernest said.

Paying the interest on the national debt is also a huge expense, Ernest added. 

To lower the national debt, the U.S. could raise more taxes, lower spending and make sure the economy is growing faster than its debt. 

“That means you’ve got to invest in workforce participation,” White said.

Correction (Nov. 18, 2025): A previous version of this story misstated Reilly White’s title.