When the Supreme Court ruled late last month that the majority of tariffs implemented by the second Trump administration in 2025 were illegal, it left something of a hole in the Treasury’s coffers.
The White House had been relying on the circa $300 billion-a-year in revenues to help fund a raft of policies, from tariff rebate checks to corporate tax writeoffs in the One Big Beautiful Bill Act.
But the court ruling threw a wrench into the works: The justices ruled the administration could not impose tariffs under the authority of the International Emergency Economic Powers Act (IEEPA), and the raft of duties imposed on ‘Liberation Day’ and earlier in 2025, were scrapped.
Trump and his team quickly rallied and imposed an all-out 10% duty on global trading partners, and while details remain sparse, authorities still believe the Treasury’s bottom line has taken a hit.
In total, deficits post-ruling are $2 trillion larger over the 2026 to 2036 period than they were before the Supreme Court decision.
There are some upsides, Swagel notes: “In the most recent outlook, we projected that changes in trade policy since January 2025 would temporarily raise the rate of inflation, reduce real investment, lower the level of real gross domestic product (GDP), and reduce employment. The termination of IEEPA tariffs dampens those effects.”
However, the CBO said that these estimations sat outside of the announcement that the President subsequently made about global tariff levels.
Still, both of these tracks leave a gap in the CBO’s prediction that IEEPA losses will knock $2 trillion off the Treasury’s income.
