* US posts $293 billion May deficit, up $71 billion on

adjusted basis

* May customs receipts turn negative due to refunds from

Trump's illegal tariffs

* US Treasury debt interest jumps $40 billion in May to

record $133 billion

*

(Adds details on growth of US Treasury interest expense,

paragraphs 9-10)

By David Lawder

WASHINGTON, June 10 (Reuters) - The U.S. budget deficit for

May fell $23 billion or 7% to $293 billion due largely to

prior-year calendar shifts in benefit payments as both outlays

and receipts fell, with the latter taking a big hit from refunds

of President Donald Trump's emergency tariffs, the Treasury

Department said on Wednesday.

But taking into account calendar shifts of some June 2025

payments into May that year, the Treasury said the adjusted May

budget deficit at $293 billion would be an increase of $71

billion or 32% from the prior year.

Customs duty refunds totaled $21.97 billion in May against

gross customs collections of $21.93 billion, making for net

customs outflows of $42 million for the month, the Treasury

said. Net customs receipts for May 2025 totaled $22.17 billion,

reflecting the first month of Trump's global tariffs imposed

under the International Emergency Economic Powers Act.

Those duties were declared illegal by the U.S. Supreme Court

in February, and the U.S. Customs and Border Protection agency

in May began the first refunds of some $166 billion collected

from IEEPA-based tariffs.

Customs receipts have become a significant source of monthly

Treasury receipts over the past year, reaching a peak of $31.3

billion in October 2025, but more recently in the low $20

billion range. The Trump administration is proposing to rebuild

its broad tariffs under different legal authorities, including

duties related to weak enforcement of anti-forced labor laws of

10% or 12.5% on 60 major trading partners.

Fiscal year-to-date gross customs receipts totaled $220.7

billion, with refunds of $32.1 billion, up from year-earlier

gross receipts of $86.1 billion and refunds of $4.75 billion.

Total receipts for May fell $36 billion or 10% to $336

billion compared to May 2025, while outlays fell $59 billion, or

9% to $628 billion.

May outlays were boosted by a $40 billion, or 44%, jump in

Treasury debt gross interest payments to a record $133 billion.

A U.S. Treasury official said that higher interest expense

was largely driven by an increase in the amount of debt

outstanding, rather than the increase in interest rates. The

average interest rate on U.S. debt increased to 3.35% in May

from 3.29% in May of 2025.

The net increase in interest rates, after interest received

on U.S. trust funds, was $21 billion for the month.

The budget deficit for the first eight months of the fiscal

2026 year starting October 1 totaled $1.246 trillion, a decline

of $118 billion or 9% on an unadjusted basis. On an adjusted

basis, the year-to-date deficit would have declined just $24

billion, or 2% from the prior period.

Fiscal year-to-date receipts rose $174 billion, or 5%, to $3.656

trillion, while outlays were up $56 billion, or 1%, to $4.902

trillion. Both figures were records for the year-to-date period,

a second Treasury official said.