Tariff Revenues = Rounding Error

The July numbers are in. Unlike the BLS data — which can get “seasonally adjusted” into something unrecognizable months later — the Congressional Budget Office’s tallies are final. What they report es lo que es. It is what it is.

In near real-time, we can see exactly how much Uncle Sam is hauling in from taxes and tariffs… and how much is pouring back out for the military, social programs, and, of course, the ever-growing interest on the national debt.

Even as President Trump touts record tariff revenues, the red ink flows on.

Turn Your Images On

Government continues to spend far in excess of what it brings in, even as tariffs rise. (Source: CBO)

July alone saw a $291 billion deficit — in one month. At this pace, annual deficits could easily run closer to $3 trillion. That money will either be printed or borrowed at rates north of 4%.

The Department of Government Efficiency (DOGE) hasn’t made much of a dent in spending, nor have sky-high tariff rates. Which leaves us with a stubborn reality: the deficit remains the single biggest long-term threat to the American success story.

~ Addison

P.S. Some companies are thriving under the shifting tariff regime — and from other Trump policies that are decidedly pro-growth. But “pro-growth” also means you need lower interest rates. At least in the Trump Great Reset playbook.

The tricky part? Government printing debt out of thin air usually means more inflation. Under normal circumstances, the Federal Reserve would be leaving rates unchanged in September… or even raising them.

Therein lies the pickle we’re in.

You can’t let interest payments on the existing debt swallow the government budget. This means that, in addition to “pro-growth” economic strategies, you need lower interest rates.

But lower interest rates also mean higher consumer prices for necessities like energy, food, housing, health care and tuition.

The bond market doesn’t like deficits or debt, either. Investors demand higher interest rates to lend the government money.

Like we said, it’s a pickle.

We’ll be digging into both sides of that equation — plus our latest research — in this week’s Grey Swan Live! on Friday, August 15, 2025… exactly 54 years since Nixon “closed the gold window.” Members will get the sneak peek before anyone else.

A special note to Grey Swan subscribers: This week’s Grey Swan Live! will be held on Friday at 11 a.m., not tomorrow. We’re in the middle of some new groundbreaking research – and will have even more details that afternoon. But our paid-up Fraternity members will get an early sneak peek at what we see developing.

Sneak Peek Grey Swan Live!
Friday, August 15, 2025
11am ET

We set up a “VIP access” hot list for non-paying members of the Grey Swan Investment Fraternity. To be reminded before Friday’s event, click on this link and add your name and e-mail to the list.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Even as President Trump touts record tariff revenues, the red ink flows on.

Turn Your Images On

Government continues to spend far in excess of what it brings in, even as tariffs rise. (Source: CBO)

July alone saw a $291 billion deficit — in one month. At this pace, annual deficits could easily run closer to $3 trillion. That money will either be printed or borrowed at rates north of 4%.

~ Addison

Therein lies the pickle we’re in.

You can’t let interest payments on the existing debt swallow the government budget. This means that, in addition to “pro-growth” economic strategies, you need lower interest rates.

But lower interest rates also mean higher consumer prices for necessities like energy, food, housing, health care and tuition.

The bond market doesn’t like deficits or debt, either. Investors demand higher interest rates to lend the government money.

Like we said, it’s a pickle.

Sneak Peek Grey Swan Live!
Friday, August 15, 2025
11am ET

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

The very moment The State enters the economy in any way, shape or form – to tax one group and subsidize another… to set the price of a single good or service… to impose itself on a single contract… to claim a monopoly on the production of money, to demand its fiat be used, and that others be prohibited… to require a license, permit or other permission… to put its flabby finger on a single scale… – is to simultaneously render property contingent and the market subject to force.

American household “wealth” — stocks, bonds, real estate, savings — has inflated by $60 trillion in just five years. A full $100 trillion since the 2009 crisis lows.

If you’re a glass-half-full guy, that’s the magic of staying invested through cycles.

If you’re glass-half-empty guy, you see the risk and ask: how much of the current $60 trillion could vanish just as fast in the next down cycle?

Year-to-date, over $80 billion has flowed out of small-cap U.S. stock funds. These are the companies that can include the proverbial next Nvidia or next Microsoft.

Many of these companies trade at far more reasonable valuations than Microsoft and Nvidia today. And their growth rates can be just as impressive. It’s easier for a small-cap company to double earnings than a company that’s already earning tens of billions per year.

It’s likely that investors won’t rediscover these stocks until the big-cap names falter. But for all our criticism of investor enthusiasm and high-flying valuations in the overall market today, small cap stocks are starting to look like a relative value, especially for more patient investors.

Stephen Miran’s appointment to the Federal Reserve isn’t just another personnel move—it’s the placement of Trump’s Reset architect inside the very institution that will help carry out America’s most ambitious economic overhaul in generations.

Without getting into the weeds, Miran, the mastermind behind what’s been dubbed the “Mar-a-Lago Accord,” outlined a comprehensive plan to flip the U.S. dollar’s reserve status from a burden into a bargaining chip. To turn America’s towering debt from an embarrassment into leverage. And to reorient the entire global economic structure in Washington’s favor.

American household “wealth” — stocks, bonds, real estate, savings — has inflated by $60 trillion in just five years. A full $100 trillion since the 2009 crisis lows.

If you’re a glass-half-full guy, that’s the magic of staying invested through cycles.

If you’re glass-half-empty guy, you see the risk and ask: how much of the current $60 trillion could vanish just as fast in the next down cycle?

Year-to-date, over $80 billion has flowed out of small-cap U.S. stock funds. These are the companies that can include the proverbial next Nvidia or next Microsoft.