When the Supreme Court ruled late last month that most of the tariffs imposed by Trump’s second administration in 2025 were illegal, it left a loophole for the Treasury Department.
The White House has relied on about $300 billion in annual revenue to fund a range of policies, from tariff rebates to corporate tax write-offs in the Beauty Act.
But the court ruling threw a wrench into the job: A judge ruled that the government could not impose tariffs under authority under the International Emergency Economic Powers Act (IEEPA), and a raft of tariffs imposed on Liberation Day and earlier in 2025 were struck down.
Trump and his team quickly rallied to impose sweeping 10% tariffs on trading partners around the world, and while details remain scant, authorities still believe the Treasury Department’s bottom line has taken a hit.
In a report released yesterday afternoon, the Congressional Budget Office (CBO) began calculating the cost to the Treasury Department of the IEEPA ruling. CBO Director Phillip Swagel reported that the primary deficit over the next decade, which does not take into account changes in the economy, will increase by $1.6 trillion compared with pre-ruling projections.
Of course, lower revenues mean a renewed reliance on borrowing: The Congressional Budget Office estimates that interest payments will be $400 billion higher between 2026 and 2036 than previous projections, which already suggested net interest costs would exceed $2.1 trillion annually by 2036.
Overall, the post-ruling deficit is $2 trillion higher between 2026 and 2036 than before the Supreme Court decision.
There are some upsides, too, Swagel noted: “In the recent outlook, we expect trade policy changes since January 2025 to temporarily increase inflation, reduce real investment, lower real GDP levels, and reduce employment. The end of IEEPA tariffs will blunt these effects.”
However, the Congressional Budget Office said those estimates were not part of the president’s subsequent announcement on global tariff levels.
According to the Presidential Proclamation of February 20, a 10% surcharge will be imposed on items imported into the United States under Section 122 of the Trade Act of 1974, effective February 24 for a period of 150 days. President Trump later posted on social media that it would, in fact, be 15% – although formal legislation has not yet been released.
As a result, the Committee for a Responsible Federal Budget (CRFB) calculated that a 10% tariff would generate $35 billion in revenue over 150 days, rising to approximately $50 billion if a 15% tariff were implemented. If Congress extends the legislation or reflects it through other channels, the tariffs would generate more than $900 billion in revenue between 2026 and 2036 at a 10% rate, or $1.3 trillion at a 15% rate, the committee wrote.