Hundreds of thousands of federal government employees are currently experiencing furloughs or are engaged in work without compensation amid the ongoing government shutdown. Essential operations, such as numerous food and drug inspections, are currently halted due to a stalemate between Republicans and Democrats regarding government funding. In the interim, the government is accruing unprecedented amounts of tariff revenue, a point of pride often highlighted by President Donald Trump. The tens of billions of dollars represent a minor fraction of the overall funding required for government operations. However, they may provide some relief from the impacts of the shutdown, albeit temporarily, as legislators continue to be in disagreement.
In the previous month, the Treasury Department disclosed that tariff revenue reached $31.7 billion, resulting in total tariff collections of $190 billion for the year to date, which represents a 160% increase relative to the corresponding period last year. On October 1, the inaugural day of the shutdown, the government amassed $315 million from tariffs, as reported in the Treasury Department’s daily statement. In contrast, the total daily compensation for about 750,000 federal employees who were furloughed during the shutdown is estimated to be around $400 million, as per the Congressional Budget Office’s assessments. The revenue generated from tariffs is allocated to a general fund overseen by the Treasury Department. The Treasury designates that account as “America’s checkbook,” as it serves to settle certain pre-existing governmental obligations, including the distribution of tax refunds. However, the Treasury’s general fund, along with all the tariff revenue being directed into it, remains effectively immobilized until legislation is enacted to finance the government.
Congress and Trump might circumvent that by enacting a measure that allocates the tariff revenue for a designated purpose, such as compensating furloughed employees. However, neither party seems particularly inclined towards that option. “We don’t need any novel solutions to reduce the blow of the Democrats’ government shutdown — all that needs to happen is the Democrats reopening the government by passing a clean continuing resolution as they’ve done many times before,” White House spokesperson Kush Desai stated.
Many Democrats are currently navigating the implications of tariffs as a novel avenue for government revenue generation. There is a prevailing belief that the allocation of these funds is occurring at the cost of numerous Americans, who are facing or have already encountered increased prices for goods as a result of the tariffs. “Congress should repeal Trump’s trade taxes and provide Americans with some relief, rather than entrench high tariffs and elevated prices,” stated Sen. Ron Wyden. He stated: “On top of that, even Trump’s bloated tariff scheme brings in only a small fraction of the revenue needed to fund the military, national parks, highways, federal law enforcement, and other essential government services.” Wyden stated “Trump’s tariffs are the problem, not the solution.”