Economy

Can Trump’s Tariffs Solve the Government Shutdown? The Debate Over Billions in Revenue

Shutdown continues; high tariffs collected. Debate on using funds to pay furloughed workers ensues.

October 6, 2025, 9:35 AM

President Donald Trump points upward on the White House South Lawn, with a red tie and blue suit.

President Donald Trump points to the newly raised flag on the South Lawn of the White House upon his return on July 13, 2025. By Brian Jason / Shutterstock.com.

Executive Summary

An ongoing government shutdown has furloughed approximately 750,000 federal workers, with others working without pay, and suspended essential government functions due to a funding deadlock.

The Trump administration is collecting record tariff revenue, totaling $190 billion so far this year, with $31.7 billion collected last month, representing a 160% increase from the previous year.

While tariff revenue flows into a general Treasury fund, its allocation, including for furloughed employees, is frozen until Congress passes a funding bill, with neither party currently inclined to designate these funds for shutdown relief.

The Story So Far

The ongoing government shutdown is a result of a legislative deadlock between lawmakers over federal funding, leading to hundreds of thousands of federal employees being furloughed or working without pay. Concurrently, President Trump’s administration is collecting record levels of tariff revenue, but these funds are deposited into a general Treasury fund that is effectively frozen due to the shutdown itself, preventing their immediate use for relief without specific legislative action amidst a persistent political impasse.

Why This Matters

The ongoing government shutdown continues to furlough hundreds of thousands of federal employees and suspend essential services, despite President Trump’s administration collecting record tariff revenues. While these significant tariff collections could theoretically provide some relief, their allocation is currently frozen in a general fund, and both political parties remain unwilling to specifically direct them towards resolving the shutdown, underscoring the deep political impasse and the broader economic complexities of tariff policies.

Who Thinks What?

President Trump’s administration believes the government shutdown would end if Democrats passed a clean continuing resolution, implying that tariff revenue is not the direct solution to the impasse.

Democrats, represented by Senator Ron Wyden, argue that tariffs impose higher prices on Americans and generate only a small fraction of the revenue required for essential government services, suggesting they are not a viable solution for funding the government or alleviating the shutdown’s impact.

An ongoing government shutdown in the United States, which has left hundreds of thousands of federal employees furloughed or working without pay, continues as lawmakers remain deadlocked on funding. Amidst the impasse, President Donald Trump’s administration is collecting record levels of tariff revenue, sparking a debate on whether these funds could be utilized to alleviate the shutdown’s impact, despite current legislative hurdles.

Shutdown Impacts and Tariff Revenue

The government shutdown has led to the furlough of approximately 750,000 federal workers, with others working without compensation. Essential government functions, including various food and drug inspections, have been suspended as Republicans and Democrats fail to agree on a funding bill.

Concurrently, the Treasury Department reported significant tariff collections. Last month saw $31.7 billion in tariff revenue, contributing to a total of $190 billion collected so far this year. This figure represents a 160% increase compared to the same period last year.

On October 1, the initial day of the shutdown, the government collected $315 million from tariffs. By comparison, the estimated daily compensation for the furloughed federal workforce is roughly $400 million, according to Congressional Budget Office estimates.

Allocation and Political Standoff

The tariff revenue flows into a general fund managed by the Treasury Department, referred to as “America’s checkbook.” This fund is typically used to cover pre-existing government obligations, such as tax refunds. However, the fund and its incoming tariff revenue are effectively frozen until Congress passes a bill to fund the government.

While Congress and President Trump could theoretically pass a specific measure to designate tariff revenue for purposes like paying furloughed employees, neither party has shown inclination to do so. White House spokesperson Kush Desai stated that “all that needs to happen is the Democrats reopening the government by passing a clean continuing resolution.”

Conversely, many Democrats have expressed concerns regarding the tariffs themselves. Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, argued that the funds come at the expense of Americans facing higher prices due to the tariffs. He added that even President Trump’s tariff scheme generates only a small fraction of the revenue required for essential government services.

Looking Ahead

The ongoing discussion highlights the broader economic and political complexities surrounding tariff policies and government funding. While tariff collections represent a significant sum, their existing allocation and the persistent political divide present substantial obstacles to their use in resolving the current government shutdown.