US Tariff Refunds Hit US$49 Billion, Trade Shifts to Mexico

In June, the US Treasury issued US$49.2 billion in customs refunds while collecting US$23.6 billion in gross duties, leaving a net customs deficit of roughly US$25.6 billion, its monthly budget statement shows. That disbursement was more than double the approximately US$22 billion paid out the previous month, when incoming duties and refunds roughly cancelled each other out and produced a net outflow of only US$42 million.

The June numbers reflect the accelerating pace of refunds stemming from the Supreme Court's Feb. 20 ruling that invalidated the sweeping tariffs President Donald Trump had levied under the International Emergency Economic Powers Act. The pace of repayment quickened in May, after the government launched a claims-processing portal in late April.

That customs drain contributed to a US$120 billion federal deficit for June, reversing the US$27 billion surplus posted in June 2025. Overall June revenue fell US$31 billion, or 6%, to US$496 billion compared with the year before. Through the first nine months of fiscal 2026, the deficit climbed to US$1.367 trillion, already exceeding the total gap for all of fiscal 2025, as the Committee for a Responsible Federal Budget pointed out.

Combined, the two months of refunds add up to around US$71 billion, or about 42% of the US$166 billion in IEEPA-based duties that US Customs and Border Protection collected and is now obligated to return to importers, per Reuters. Because the administration keeps broadening the tariff categories that qualify for repayment via the portal, additional firms are likely to submit claims in coming months.

Monthly duty collections hit a high of US$31.35 billion last October and have generally declined since, although June ticked up by about US$1.7 billion over May. The administration has further reduced its take by granting exemptions, with the latest carve-outs applying to fertilizer imports from Morocco and to agricultural machinery.

Brandon Lord, CBP's Executive Director of Trade Programs, said the agency had processed US$35.5 billion in refunds via its CAPE portal as of early May, spanning more than 8 million import entries and including interest on the initial duties. Firms such as Oshkosh and Basic Fun had already received partial disbursements by then, with Basic Fun CEO Jay Foreman noting that money was coming through, if only in small early installments. 

Mexico Positioned to Gain from Redirected Trade

The shifting US tariff picture is redrawing supply routes, and Mexico is among the economies drawing benefit. BBVA Research found that US imports fell by about 2% for every percentage-point increase in the tariff applied to a given product and country, implying that directly affected imports may have dropped roughly 14% under an average increase of about seven points. Rather than curbing overall US demand, the duties largely rerouted where goods originate, with Mexico, Taiwan, Vietnam, Thailand, India, and Indonesia capturing share from Chinese suppliers.

Mexico's position rests on its proximity to the US market, established manufacturing base and preferential access under the USMCA. It became the largest US trading partner in goods in 2023, overtaking China, and stands to expand beyond automotive output into electrical equipment, data-center components and electronics assembly as buyers shorten supply chains.

The gains carry conditions. Mexico paid US$22.988 billion in tariffs at US customs in the 12 months through April 2026, and its ability to absorb redirected trade will hinge on infrastructure, energy, security and regulatory constraints, along with the outcome of the USMCA review that Economy Minister Marcelo Ebrard is negotiating.