Last week, multiple media outlets reported that according to the latest annual report from the U.S. Department of the Treasury, President Trump’s tariff policy has brought in an additional $118 billion in revenue for the government. This has helped to reduce the budget deficit for the fiscal year 2025 by $41 billion, marking the first decrease in the annual deficit since 2022.
The report highlights that one of the main reasons for the deficit reduction is the implementation of the new tariff policy. Tariff revenues for the fiscal year 2025 reached $195 billion, an increase of $118 billion from the previous year, setting a new historical high.
Michael Busler, a finance professor at Stockton University in New Jersey, pointed out that President Trump’s tariff policy aims to achieve two important goals. Firstly, to reduce the significant trade imbalance, and secondly, to strengthen the self-sufficiency in key industries in the U.S.
Busler emphasized that when President Trump took office, the U.S. faced an annual trade deficit of up to $880 billion, indicating that “the amount of U.S. imports far exceeds exports, leading to a continuous outflow of wealth.”
He explained that the reason for this phenomenon is that “the U.S. imposes only about a 2.5% tariff on imported goods, while many countries impose high tariffs ranging from 30% to 100% on U.S. goods.” This results in U.S. products being priced high in the international market, lacking competitiveness, while foreign goods easily flood the U.S. market due to low tariffs on foreign products.
In order to address this structural imbalance, the Trump administration implemented universal tariffs of about 15% on countries such as the UK and the EU. Busler stated that “while this policy may cause short-term supply chain disruptions, in the long run, it will significantly reduce or eliminate the trade deficit.”
Regarding strengthening self-sufficiency in key U.S. industries, Busler pointed out that “the Trump administration specifically imposed high tariffs on essential materials such as steel, aluminum, copper, and medical supplies to encourage domestic production of these products, reduce reliance on imports, and ensure national security.”
He stressed that the Trump administration is well aware that “while the current tariff measures may cause short-term pain, in the long run, they will lay a more solid foundation for the U.S. economy.”
Earlier this year, the Trump administration’s new round of tariff policies raised concerns in the market about inflation and economic slowdown. Critics believe that tariffs may lead to price hikes, harm consumer interests, and ultimately drag down economic growth.
In a report released earlier this month by the National Federation of Independent Business (NFIB), small businesses, while still maintaining relatively optimistic attitudes, saw a decline in optimism index for the first time in three months. Business owners’ primary concerns include rising inflation, supply chain disruptions, slowing sales, and labor shortages.
Professor Busler’s analysis suggested that “the current tariff policy has indeed caused supply chain tightness, weakening the confidence of some businesses.” However, he believes that from a structural adjustment perspective, this is a necessary pain to go through.
Busler stated, “In the long run, these adjustments will help the healthy development of the U.S. economic structure, but in the short term, they will indeed bring pain, especially for businesses that rely on imports.”
He cited examples like “single-use medical supplies, which fall into the category that the Trump administration aims to promote domestic production. For these types of companies, I recommend prioritizing partnerships with U.S. manufacturers.”
“Businesses in transition may face challenges. There is a limited number of U.S. manufacturers, and prices are relatively high,” he suggested, “Companies can also consider finding alternative supply sources from countries with lower tariffs.”
Busler expressed that “in the short term, many businesses will face pressure; however, those companies with creativity and resource integration capabilities will have a better chance of surviving and growing amid the changes.”
Looking ahead, Busler believes that the current challenges will gradually ease within a year. “I believe the impact of tariffs on the economy is temporary and limited.”
He also pointed out that “with OPEC and the U.S. increasing oil supply, energy and gasoline prices are expected to fall. Energy costs account for about 7% of the Consumer Price Index (CPI), and as oil prices drop, the overall inflation rate is likely to decrease. It is expected that by the same period next year, the inflation rate may drop to 2%.”
While there are signs of price increases in some goods, reports suggest that the overall impact is gradual. The Federal Reserve recently stated that they expect price increases to be temporary and may further cut interest rates in the future to stabilize the economy.
According to Treasury Department data, as of the end of September, at the close of the fiscal year, total revenue for the U.S. fiscal year 2025 reached $5.2 trillion, a 6% increase from $4.918 trillion in 2024, setting a historical record; total spending amounted to $7 trillion, a 4% increase.
Expert Bio
Michael Busler is a finance professor and chairman of the finance program at Stockton University in New Jersey. He is a free-market economist and a public policy commentator, providing economic policy analysis and recommendations to the government and media for a long time.