2026 budget deficit goes over $1 trillion in February. And it'll be higher in March

The official numbers come out from the US Treasury tomorrow, but the Congressional Budget Office has already released its budget numbers through February, and we are already at a 13-figure budget deficit for FY 2026.

The U.S. Treasury’s borrowing showed no signs of slowing as the U.S. headed deeper into fiscal year 2026, with the Congressional Budget Office (CBO) reporting that another $1 trillion was added to the federal deficit in the first five months of the year….

Of course, with more borrowing comes higher interest costs on the debt. Between October 2025 (when the 2026 fiscal year started) and February, the Treasury spent an additional $31 billion on net interest on public debt, compared to the prior year. As a result, in just five months, the Treasury forked out a total of $433 billion to service public debt, which is now nearing $38.9 trillion.

The CBO said that outlays for interest increased “because the debt was larger than it was in the first five months of fiscal year 2025 and because of higher long-term interest rates.” It added: “Declines in short-term interest rates partially mitigated the overall rise in interest payments.”

Despite the eye-watering sums, the deficit was actually an improvement on last year’s borrowing. For the same period (October 2024 to February 2025), the government needed to borrow an additional $142 billion compared to this year’s figure.

The CBO mentions that the reason the deficit has shrunk by that $142 billion vs 2025 is because of an 11% increase in receipts through February.

But that progress on reducing the deficit is likely to end in a few months. One reason why is that the thing that has caused some of that increase in goverment receipts was recently ruled illegal by the US Supreme Court. Trump's tariff policy led to an increase in customs duties for the first 5 months of this fiscal year that outpaces the year-to-date increase in individual income taxes and payroll taxes.

Now those tariffs won’t be collected (although Trump threw a tantrum after the SCOTUS decision and claimed he put in new and higher tariffs) and may have to be paid back. The CBO mostly ignored Trump's new tariffs, and recently explained the fiscal costs of SCOTUS' decision..

CBO has regularly updated Congress about how changes in tariff policy affects projected revenues. In a November blog post and in The Budget and Economic Outlook: 2026 to 2036, we discussed the effects of trade policies in place as of November 2025. On February 20, 2026, the Supreme Court ruled that the Administration could not impose tariffs under the authority of the International Emergency Economic Powers Act (IEEPA). The Administration terminated those tariffs shortly after. (Other tariffs imposed last year, such as the product-specific tariffs implemented under section 232 of the Trade Expansion Act of 1962, remain in effect.) Revenue collected under IEEPA authority accounted for roughly 50 percent of the approximately $300 billion in total customs duties collected between January 2025 and February 20, 2026.

As a result of that ruling, we estimate the following:

The effective tariff rate (ETR) on imported goods is lower by 8 percentage points.
Primary deficits, not accounting for changes to the economy, will be $1.6 trillion larger over the 2026–2036 period than they were in the projections we reported in February.
Less tariff revenue means that the federal government needs to borrow more, so outlays for interest will be $0.4 trillion higher than previously projected. That results in an increase in total deficits of $2.0 trillion over the 2026–2036 period.

Another item that’s going to grow the deficit is Trump/GOP Tax Scam 2.0. Most of that hasn't shown up in the budget numbers yet, because the amount of income taxes withheld from paychecks has never changed. But many of the new provisions kicked in for tax year 2025, so there will likely be larger income tax refunds as people file. That’s certainly been the case so far, as the IRS says the average tax refund is up by $360 and total refunds have increased by $11.7 billion through the end of February.

This increase in refunds will likely grow to something a lot more than $11.7 billion during March, but it also likely will increase the deficit as those refunds are paid out. Too bad for Trump/GOP that the higher gas and oil prices we've already seen will offset a lot of the extra money being sent back in refunds.

"Bloomberg Economics estimates that the oil breakeven price for the OBBB Act's tax refunds is $83/barrel ... meaning oil at $83 would be enough to wipe out the average gains to households coming from refunds" (via Schwab / Gordon)

[image or embed]

— Nicholas Brown (@nicholasabrown.bsky.social) March 10, 2026 at 12:31 PM

Add in the increased health insurance premiums and other higher costs that people are already dealing with in 2026, and I'm not counting on the bump in economic activity that GOPs were hoping for in tax filing season. But the deficit will still go up from the higher refunds.

And oh yeah, this month's military adventures against Iran also have a cost. The Center for Strategic and International Studies estimated that the first 4 days of the war cost $3.7 billion, and 1 week later, that price tag would be at around $10 billion at the same pace. Granted, we could still pay for that without adding to the military budget, because the US Department of Defense is already getting $41 billion in additional funding for Fiscal Year 2026 from Trump/GOP’s Big Bunch of Bollocks that got signed into law in July.

But here's Wisconsin Congressman/Insurrectionist Asshole Scott Fitzgerald saying that he expects a supplemental funding bill for the war in the "near future", which would add even more to the deficit to pay for this idiocy!

So those are three items that are likely to raise our deficit well past the $1 trillion that it's already at for FY 2026, and last month's CBO estimates of a $1.85 trillion deficit when the fiscal year ends on Sept 30 already will likely need to be revised higher.

We haven't seen the massive deficits cause inflation by itself, or a major increase in interest rates because so much debt that needs to be taken up. But if you're pissing off a large amount of the world, and you lose possible buyers of debt as a result, that'll raise rates. And if you're printing money like it's going out of style, it's not going to do much to slow inflation past the 2.5%-3% range we were in before oil prices went through the roof.

Anyone who still thinks GOPs are better on the economy or on "fiscal responsibility" in 2026 is an absolute fool. And there isn't a good way out of this situation.

I'm a fan of Bucky, but not of Bucky's Bailout Bill

If you are one of the five regular readers of this place, you know I bleed Cardinal and White as a two-time graduate of the University of Wisconsin-Madison. And I let out several “YEAH”s as I watched Bucky finish a surprisingly strong regular season in men’s basketball by spoiling Purdue’s Senior Day.

"It's my last go-round in March so I'm trying to make it special." - Nick Boyd

There were plenty of shoutouts and positive vibes for @BadgerMBB after the win over Purdue. pic.twitter.com/hfx7j5NqYz

— CBS Sports College Basketball 🏀 (@CBSSportsCBB) March 7, 2026

That's the good stuff, and why I still love college sports. I still feel pride when I see the alma mater on TV, and I understand how it introduces many others into what I think is the best place in America to get a college education. Be real, you don’t want to be an Ivy League sociopath, and Badger grads have more fun and are much better socially adjusted while still getting nationally strong academics.

I bring this fandom and school pride up as a preface to the discussion of Assembly Bill 1034 in the Wisconsin Legislature – aka “The Bucky Bailout Bill”. As the bill explains, this allows for general taxpayer dollars to pay off the debt of athletic facilities for each of the UW System’s 3 Division 1 programs – with the overwhelming majority going to Bucky’s school.

Under current law, a portion of program revenues that are appropriated for debt service on certain UW System facilities is allocated for the payment of 40 percent of the principal and interest costs for maintenance of UW–Madison intercollegiate athletic facilities. The bill eliminates that allocation and instead appropriates $14,600,000 annually in general purpose revenues to UW–Madison to finance debt service for such maintenance costs.

Additionally, the bill appropriates $200,000 annually in general purpose revenues to finance debt service for maintenance costs of the UW–Milwaukee Klotsche Center and $200,000 annually in general purpose revenues to finance debt service for maintenance costs of the UW–Green Bay soccer complex. (later changed to UWGB’s Phoenix Sports Field and Athletic Complex).

The argument being made by Badger Athletic Director Chris McIntosh is that the $14.6 million Bucky doesn’t have to pay for the facilities would then get plowed back into payments for players, and to ensure funding for the sports that aren’t money-makers on the campus.

When asked in a Senate Committee hearing last week, McIntosh says it is necessary to get this in place before the Legislature goes on its 10-month paid vacation later this month, because Badger Athletics isn’t able to keep up with other Big Ten programs on resources – particularly in football.

“While I appreciate and would prefer a longer timeline, sadly that's not an option for us,” McIntosh said. “If this bill doesn't pass in this session and has to be pushed off into the future, it will continue to put tremendous financial strain on athletics and on the university. We will have our backs up against the wall financially by the time that this would come forward in 2027.”

When Sen. Julian Bradley (R-New Berlin) asked for more clarity on that topic, McIntosh admitted some sports may be on the chopping block.

“Either we will need to reevaluate our expectations on the success of our sports,” McIntosh said, “or we will need to reevaluate how they're supported or how many of them exist.”

In watching the two committee meetings that Mac testified at, he mentioned that football drives around 80% of the Athletic Department’s revenue, and that it requires another $10 million -$15 million to be competitive in football in 2026, on top of the $20.5 million that NCAA schools get to distribute among all its student-athletes.

It wasn’t mentioned, but the fact that Badger football has gone 9-15 overall and 5-13 in the Big Ten over the last 2 years led to declines in game attendance and concessions over that time. And given the panicky emails and phone calls I keep getting, will likely result in a significant decline in season ticket renewals for this Fall.

Other parts of the Bucky Bailout bill specifically mention that student-athletes can’t get NIL payments through the taxpayer funding, nor can they be paid to endorse activities such as tobacco products, vaping, gambling, or substances that are banned for athletic competition….or the law. It also explains that NIL agreements do not make the student-athlete an employee of either a UW System school, and an amendment extended that non-employee status to private colleges and universities in the state (which explains why Marquette University has lobbied in favor of it).

The other key part of the Bucky Bailout Bill is that it allows athletic departments to keep private the details of payments to athletes and their related negotiations.

To protect competitive interests and student privacy, records relating to any of the following in the custody of the board, an institution, or other formally constituted subunit of the board are not subject to public inspection, copying, or disclosure under s. 19.35:

1. Any term or detail of an agreement or proposed agreement for the use of a student-athlete’s name, image, or likeness.

2. Generation, deployment, or allocation of revenue generated by an intercollegiate athletic program that are the subject of reasonable efforts under the circumstances to maintain the secrecy of the records, when competitive reasons require confidentiality.

Which also explains why the bill wants to segregate NIL and athletic department funds from the taxpayer dollars being used to pay off the debt of the facilities. Because if you’re using public dollars to pay these players, you can’t argue that you have to hide what they make for “competitive reasons”.

But I’m sorry, I can’t see how normal people can justify giving $14.6 million in tax dollars for student-athlete payments when the Madison campus announced last October that it would lay off 31 employees and not fill another 156 positions due to budget cuts. In addition, UW-Madison has had $27 million in research grants taken away from it by DOGE dweebs and other Trumpkins this year.

Help them first.

If you’re going to give tax dollars to make UW-Madison more competitive, give it to the researchers, workers and the non-athlete students over trying to bail out an Athletic Department. That's what they do at dumbfuck Southern "schools" where FUTTTBAWWWL is more important than book-learning, and while I want Bucky to win, I don't ever want UW-Madison or the State of Wisconsin to be like those places.

Feb jobs losses regresses us back to 2025's stagnant job market

If you thought January’s six-figure gain in jobs was the sign of a rebound for the economy in 2026 (something I told you to be cautious about at the time), you got slapped into a rough reality with the jobs report for February.

The US economy lost 92,000 jobs in February, Labor Department data released Friday showed, sharply missing economists' expectations and stalling the nascent hiring growth that started the year.

The unemployment rate edged up to 4.4%, while the share of people who have been without work for 27 weeks or more as a percentage of all unemployed hit 25.3%.

Economists surveyed by Bloomberg had anticipated 55,000 new positions after January's surprise print of 130,000 payrolls. Those gains were also revised lower by 4,000 positions, while December's previously reported addition of 48,000 jobs was updated to a loss of 17,000 — a combined culling of 69,000 roles from the last two employment reports.

It was especially shocking to see one sector in particular have a negative number in this report.

Healthcare, the one sector that has been gaining amid otherwise stagnant job growth, saw job losses of 28,000 in February amid strike activity, the Labor Department said. Shruti Mishra, an economist at Bank of America Securities, had noted in a research report previewing the jobs data that a massive strike among Kaiser Permanente healthcare workers in California and Hawaii could weigh on February’s payroll growth, since 31,000 employees walked off the job.

Still, health care had been averaging a gain of more than 35,000 jobs a month over the previous 12 months, so it’s still a significant change, and worth seeing if that is the start of something, or a one-month blip.

That said, I don’t think these job losses mean we suddenly fell into a recession in February, as much as I think it’s a seasonally-adjusted regression to the norm from January’s unbelievable numbers. If you take the gain of 126,000 jobs from January and then subtract the loss of 92,000 here, you get a total gain of 34,000 jobs between the 2 months. That’s an average gain of 17,000 a month, which is actually more than what we averaged in 2025 (now at a downwardly revised average of less than 10,000 jobs a month).

But this report also illustrates how an already-slowing jobs market from 2024 and early 2025 had gains grind to a halt starting in April 2025, when Trump announced his “Liberation Day” tariffs. In fact, the US had more jobs then than we do now.

In the household survey, the slight increase in the unemployment rate to 4.4% reflected an increase in the number of unemployed by 203,000 combined with a near-zero increase in the labor force (+18,000). But the February report from the Bureau of Labor Statistics also included later-than-normal annual updates of the population assumptions for that survey. And the official report told of this interesting adjustment.

Table A shows that the adjustment decreased the estimated size of the civilian noninstitutional population age 16 and over in December by 231,000. However, the adjustment increased the number of people not in the labor force by 1.2 million and decreased both the total civilian labor force and the -5- number of employed people by 1.4 million each. The adjustment lowered the labor force participation rate by 0.4 percentage point and lowered the employment-population ratio by 0.5 percentage point. The adjustment had little effect on the total unemployment level (+15,000), and the unemployment rate was unchanged.

So nearly 1.5 million fewer men in the population and 1.6 million fewer men working than what was assumed, but the increased female population doesn’t translate into that many more women working. And in both cases, those adjustments mean a smaller percentage of Americans were actually working than what we thought – to the lowest non-COVID levels in since 2015.

It also means that the size of the labor force and number of people working in America is smaller than what we thought it was this time last year. Which also may mean our capacity for job growth is even more limited for job growth in 2026 (especially if we keep ICEing immigrants).

Lastly, average hourly wages had a solid increase for February, but raises for everyday non-supervisory workers are lagging

In February, average hourly earnings for all employees on private nonfarm payrolls rose by 15 cents, or 0.4 percent, to $37.32. Over the past 12 months, average hourly earnings have increased by 3.8 percent. In February, average hourly earnings of private-sector production and nonsupervisory employees rose by 9 cents, or 0.3 percent, to $32.03.

And the year-over-year increase for nonsupervisory employees is also below the overall average, at 3.7%. That's back to pre-COVID levels, but in a time where inflation is higher than it was pre-COVID.

In summary, January’s good jobs report was a seasonally-adjusted illusion that masked the fact that we’re in a jobs market that has near-zero job growth, with demographics getting less favorable to break that stagnation. Unemployment is higher than it was a couple of years ago, but it also hasn’t jumped in a way that it would in a recession.

So if there isn’t some kind of inflation shock from a stupid war and/or a declining stock market, we should stay on the slow-growth trend we were in for the second half of 2025. I mean, it’s not like something’s happened over the last week to change that outlook, is there?

Hoo boy....

The data shows Iran-related price spikes at the pump are greed, not economics.

After a week of bombing Iran and related Middle Eastern strife, you may have noticed an increase of prices at the pump. AAA sure has.

It's a similar straight-line jump in prices to what we saw 4 years ago after Russia invaded Ukraine on Feb. 24, 2022, and the Biden Administration and much of the rest of the Western World placed sanctions on Putin's oil-rich country. In that case, prices went up by 70 cents in the first 2 weeks of March, nearly 20% higher than what they were before the invasion.

But just like the situation in 2022, we also know that all the oil that is in the gasoline at those pumps has been in this country for weeks and months. And even more so than in 2022, we should be suspicious of these price hikes, because gasoline is more plentiful now than it was 4 years ago.

And part of the reason gasoline is more plentiful is that gasoline usage is generally lower than it was for much of 2022.

"But Jake, what about oil prices now? Yeah, oil futures are up a lot this week, going over $80 a barrel for the first time since the Summer of 2024 before dropping down below $80 in overnight trading.

But see that APR '26 reference? That's for the price of oil in 2 months, not today.

Put it all together, and there is no supply-and-demand reason for gasoline to be spiking the way it is. It's a profit grab, and I'd like to see people like Wisconsin AG Josh Kaul publicly be saying that he will go after gas stations and other chains that use these war actions in Iran as a reason to take extra funds out of the pockets of Wisconsin drivers.

Now that doesn't mean there won't be real economic effects and warranted higher prices in the future. And the resulting inflation of costs and consumer products should end any talk of further rate cuts for any time in the next few months - especially as the year-over-year inflation rate likely goes back over 3%. But the current price increases at the pump? All speculation and greed.

PPI report shows inflation still a thing, and lower prices for farmers also aren't good

If you thought INFLATON WATCH might be fading in 2026, Friday's report on the Producer Price Index says product inputs were still getting more expensive for businesses in January.

The Labor Department reported Friday that its producer price index, which measures inflation before it hits consumers, rose 0.5% from December and 2.9% from January 2025. Economists had forecast a 0.3% increase for the month and 1.6% year over year, according to a survey by the data firm FactSet.

Excluding food and energy prices, which bounce around from month to month, so-called core wholesale prices rose 0.8% from December and 3.6% from January 2025 — both higher than forecasters had expected. The year-over-year increase in core prices was the biggest since March of last year.

Driving the increase was an uptick in the wholesale price of services, led by higher profit margins for retailers and wholesalers. The increase suggests that companies are passing along the cost of President Donald Trump's tariffs to their customers.

“Retailers’ tariff bill has come down marginally in the last few months, but they have continued to lift their selling prices,” Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, wrote in a commentary.

It seems odd that we’d still be seeing tariff effects starting to kick in 9 months after Trump first announced them, but when you see a 2.9% increase for January in business sales of “private capital equipment” (and 6.9% in the last 2 months) and a 2.4% increase for business sales of “personal consumption goods” (and 3.4% in the last 2 months), I can’t see what else it would be.

You dig into specific products, and it also looks like tariffs were hiking prices for some goods in January.

Change in Producer Prices, January 2026
Communication + Related Equip. +8.6%
Nonferrous Metals +4.9%
Iron and Steel Scrap +3.2%
Electronic Computers + Equip. +1.0%

On the positive side, food prices at the wholesale level dropped by 1.5% for January. And despite not fulfilling a number of promises over the last year, Trump can at least claim success in bringing down the price of eggs!

Change in Producer Prices, January 2026
Eggs -63.9% (!)
Fresh fruits and melons -10.5%
Oilseeds -7.7%
Fresh/dry vegetables -5.7%
Grains -5.6%
Dairy products -1.9%

Now, those price declines might not all be great if you’re a farmer and you’re getting less from your products (a common complaint from ag types about the tariffs, since they can’t sell as much overseas).

Sure enough, we saw farm bankruptcies go up in Year 1 of Trump 2.0, reaching the highest levels since….Trump 1.0. With Wisconsin having the largest increase in the Midwest.

We’ll see if those reduced food prices at the wholesale level translate into lower prices at the supermarket in the coming months, or if those companies grab higher profits as a result prices remain “sticky”.

What’s also concerning in the PPI report is that the 0.5% increase in prices for January would have been even higher, but gasoline dropped by 5.5% and energy overall went down by 2.7%. I don’t see that continuing for much longer given that oil futures had gone up by nearly $10 a barrel since the start of the year, even before we started bombing Iran this weekend on Israel's orders as Trump attempts to distract from the Epstein Files and his other Trump failures.

I don't see it as a good sign when some types of businesses are paying higher prices on one end due to tariff effects and generally higher costs, while more farmers are going bankrupt for the few areas where costs are going down. And what's going to change these trends for the rest of 2026, besides weaker demand from more people losing their jobs in a recession?

Property taxes and schools. Time to separate the vouchers from all of it?

School funding and property taxes are usually important issues in state-level elections in Wisconsin. And a report from today from WalletHub illustrates why, as Wisconsin is back among the top 10 states in property tax rates.

The analysis says Wisconsin’s property tax rate averages 1.42% of value, although I will add that we drop to 16th when looking at property taxes paid on the median-priced home (at $3,792), because Wisconsin’s median home value of $266,500 is below the nationwide median of $332,700.

Of course, if your community has passed a referendum and/or has a high amount of property value, your property taxes may be quite a bit higher than the $3,792 median that WalletHub lists for Wisconsin (raises hand).

On the positive side, Wisconsin is among the 25 states that don’t have a property tax for vehicles, unlike lower home-tax Indiana (average assessment is $350 there), and several Southern and Western states.

Source: WalletHub

But even though we have no vehicle tax, we have high property taxes in Wisconsin, and a new lawsuit filed by several school districts and education organizations helps to explain why. Public school districts have less state assistance to operate their schools, while local revenues (property taxes, mostly) have had to make up some of the difference

In the 1999–2000 school year, public school district revenue broke down as 53.7% state, 41.6% local, and 4.7% federal. By 2023–24, the most recent year of available data, that mix had shifted to 45% state, 43% local, and 12% federal.

The state share notably declined, beginning in earnest after the 2008 recession, and has never fully recovered. Meanwhile, the local revenue share has increased, and the federal contribution has nearly tripled, driven largely by temporary pandemic relief funding.

In the 2 years since then, COVID-era federal assistance has declined significantly, but General Aids from the state were not increased for 2025-26 by the WisGOP Legislature, resulting in over 70% of Wisconsin districts having less state aid this year vs 2024-25. As a result, even more of K-12’s costs are going onto the property tax.

The lawsuit also mentions two other reasons that Wisconsinites are paying higher property taxes for K-12 schools.

Had revenue limits kept pace with inflation since the 2009–10 school year, today school districts would receive an additional $3,380 in revenue per-pupil.

Making matters worse, the Legislature has placed a significant additional strain on public education by creating and greatly expanding a competing system of largely unregulated and unaccountable voucher programs for private schools (“voucher schools”). These schools have expanded from educating 341 students in 1990 to over 59,000 students in the 2025–26 school year.

The insufficient revenue limits have led schools to go to referendum to exceed those revenue limits in order to keep operating at the same (or even reduced) level of services. And outside of Milwaukee, school vouchers for private schools are funded by taking away funds from the public school district that the child lives in. Even if the child never attended a day of public school in the district.

That’s $394 million being reduced from K-12 public schools to pay for these voucher programs, and also results in up to $394 million in additional property taxes to make up the difference.

Which is why I think this question in the latest Marquette Law School Poll of Wisconsinites is kind of BS.

This is a false choice, because the correct answer is “BOTH”. It’s wrong to say that the only way we have to raise funding for our community schools is through property taxes. If we added state aids, we could have added resources for the schools without having to raise property taxes.

And even if we don’t outright ban vouchers (we’ll file that idea away for the future), there is no reason that we need to be forcing property tax increases as a result of that program. Make the voucher program fully state funded, and stop penalizing home owners when we give money to parents so their kids can separate themselves from the schools in their community.

Based on what the Legislative Fiscal Bureau estimated earlier this month, making the state pay for all $394 million of the costs of vouchers would entirely cover Governor Evers' veto-based increase of $325 per pupil for Wisconsin school districts, and allow for $140 million in property tax relief on top of that. Seems like a win-win to me!

Given that state aid to schools are the largest cost of state government, a lot of other areas of the state budget are at least indirectly affected by what happens with how we choose to fund K-12 education. But given that we will have a new Governor, new Assembly Speaker, and both houses of the Legislature up for grabs with fair maps for November, it sure seems like it's a great time to talk about how we can change from a status quo System that isn't working for either public schools or property taxpayers.

Trade and tariffs in 2025 - this really didn't work, did it?

As you may have heard, the US Supreme Court told Donald Trump on Friday that he had no right to go out and slap tariffs on country without having Congress pass a law allowing him to do so. And naturally, Trump responded by whining like a bitch and planning to put in new worldwide tariffs of 10%.... wait, 15% (go ahead and try, old man).

In light of that, we got information about what happened to the flow of imports and exports in 2025 in reaction to Tump's tariff plans, and as you'll see 2025 didn't have a very different trade deficit than 2024, and December saw the trade deficit go up compared to the lows of October.

Trade deficits were volatile throughout 2025 as importers responded to President Trump's shifting tariff announcements, which have upended the global landscape but haven't significantly dented the US trade deficit, at least so far.

The data released Thursday by the Commerce Department's Bureau of Economic Analysis also provided an annual tally for 2025, totaling trade in both goods and services at $901.5 billion. The total for 2024, the last year of Joe Biden's presidency, was $903.5 billion…. The new monthly reading, delayed by the recent government shutdown, was the second consecutive increase following October's trade deficit of just under $30 billion — the lowest figure seen since 2009, which Trump and his aides often touted.

The new December reading saw US imports fall by about $5 billion to $287.3 billion, while imports jumped by $12.3 billion to $357.6 billion. Goods imported in 2025 rose overall, despite Trump's tariffs, to a total of about $3.4 trillion last year.

I do think it's important to note that how we got to that deficit of just over $900 billion is very different when comparing 2024 and 2025.

That ballooning deficit for the first part of 2025 reflects front-running that American businesses did, trying to bring in more imports before Trump announced tariffs on those products, and then backing off after Trump made his infamous “Liberation Day” announcement in April.

Meanwhile, the value of US exports were larger in every month of 2025 than the same month was in 2024, even as some countries put on retaliatory tariffs on US products.

So that’s good news. I would also guess that the 10% decline in the US dollar in 2025 contributed to this increase in exports, since it makes American projects cheaper overseas.

In looking at the figures, December 2025’s trade deficit of $70.3 million was nearing the monthly amounts that we had for much of 2024, which ranged between $71 billion and $81 billion in every month between April and November. But for now, I’ll say that we are on trend for a lower trade deficit in 2026, with exports going higher in 2025 and imports being lower in the second half of 2025. That would seem to indicate the tariffs are working if you only care about reducing the country’s trade deficit.

Of course, that doesn’t mean the average American might be better off as a result of that smaller trade deficit. It’s indisputable that tariffs raise prices from what they otherwise would have been, which is where I remind you that the New York Fed said this month that 90% of Trump’s tariffs were paid for by American companies and consumers.

In addition, employment in manufacturing continued to slide in 2025, so businesses weren’t onshoring to the US as a result of tariffs (ignore any media events you see about “future activity”, read the numbers).

Lastly, tariff revenue offset some of the extra deficits caused by Trump Tax Scam 2.0 and related increases in spending on ICE and the military (and grifting) in Trump's first year. But it plateaued in the second half of the year has been declining in recent months, as imports dropped and some tariffs were removed.

Other than bringing in a little more revenue (but nowhere near enough to make up for tax cuts or increased spending elsewhere), what have Trump's tariffs actually helped our economy or standard of living? I can't see it, likely because there is no strategy to help American manufacturing or offset the extra costs of these policies for everyday Americans. But the senile fool in the White House is going to screech and double down on it anyway, and the gutless GOPs in Congress aren't doing anything to stop it.

So now we have to waste a lot more time and effort to tell them "NO, DO YOU NOT GET IT?", and to get the hundreds of billions of dollars back that were taken away by this idiocy (and the Supreme Court's dawdling on the issue) in 2025. And it is infuriating to us in the non-elite, reality-based world.