Page 288 - DCAC Feb 2026 Files

Tariffs, Interest Costs, & Federal Debt

The 2025 Federal Budget
USD Trillions • US Federal spending has recently surpassed
outlays on defense as a percentage of GDP given
the steady relative decline in defense spending

over the last 75 years and the rise in interest
expense during the current Fed policy cycle.

Federal Interest Payments & Defense
Federal Interest Payments & Defense Spending as
Spending as % of GDP
% of GDP

16%
14%

12%
10%

8%
• A substantial increase in tariff revenue
led to a decline in the budget deficit 6%
relative to 2024. Tariff revenue 4%
increased 135% in 2025 ($200 Billion in 2%
2025 vs $85 Billion in 2024) 0%
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
*Social insurance (the navy blue box in the right column of the
Interest as % of GDP Defense as % of GDP
graph) includes Social Security and Medicare taxes
Sources: Left: BEA, CBO, Treasury Department, J.P. Morgan Asset Management; Reflects actual FY 2025 government receipts and outlays based on data sourced from the Treasury Department. Data as of 12/31/25,. Right: Federal Reserve Economic
Data. Data as of 12/31/25.
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