U.S. Treasury Department said on July 13 that the June U.S. budget deficit had risen to $120 billion, reports Reuters. That represents a sharp reversal from the $27 billion surplus in June 2025 that the administration touted as evidence of tariff success.

According to The Guardian, a Treasury department official said the deficit was almost entirely because of the U.S. Supreme Court decision in February that ruled the majority of tariffs introduced by President Donald Trump in April 2025 under the International Emergency Economic Powers Act (IEEPA) were illegal, prompting a massive surge of refunds.

According to the budget data, the U.S. has paid out $81 billion in tariff refunds so far this fiscal year, which started in October 2025, compared with $5 billion during the same period last year.

The U.S. administration’s current temporary 10% global tariff, which is in addition to a range of other tariffs, is due to expire on July 24. However, new tariffs are in the offing. At the beginning of June, the U.S. Trade Representative announced a new set of tariffs of between 10% and 12.5% on more than 99% of U.S. imports, asserting that trading partners had failed to fully prohibit the importation of goods produced with forced labor.

Read More: Will Trump’s New Tariffs Wipe Out Importers’ IEEPA Refunds?

The agency justified the new tariffs under Section 301 of the Trade Act of 1974, which allows the U.S. government to impose tariffs and other trade restrictions in response to what it declares to be “unjustifiable,” “unreasonable” or “discriminatory” trade practices.

Trump has long been a proponent of tariffs on U.S. imports as a way of reviving American manufacturing, leveraging better trade deals out of other nations, and closing the deficit in the federal budget. But, says the Guardian, the deficit, which had become a little smaller last year thanks to the tariff income, is now growing again. It hit $1.367 trillion in the first nine months of the fiscal year, up 2%.

In June, Trump also threatened a 100% tariff on European countries, including the U.K., that pursue a tax on the biggest U.S. tech companies.

The U.K. has a 2% digital services tax that applies to large social media platforms, search engines and online marketplaces, including Apple, Google and Amazon. France, Spain and Italy impose a digital services tax of 3% on large companies working in their countries.