A $1.7 trillion fiscal gap after tariffs are struck down
A recent analysis warns that the Trump tariff revenue loss resulting from a Supreme Court decision could significantly worsen the United States’ long term fiscal outlook. According to projections from the Committee for a Responsible Federal Budget, eliminating the tariffs could remove about $1.7 trillion in federal revenue through 2036.
The think tank estimates that the lost income may push the national debt to roughly $58 trillion by the middle of the next decade if current spending trends remain unchanged. That would represent about 125 percent of U.S. gross domestic product by fiscal year 2036, compared with a previous projection of $56 trillion, or 120 percent of GDP, when tariff revenues were assumed to remain in place.
The ruling invalidated tariffs imposed under the International Emergency Economic Powers Act, a statute that the administration had used to justify broad duties on imported goods. Fiscal analysts had incorporated the tariff proceeds into long term deficit projections, making the decision a meaningful shift in the country’s revenue outlook.
CRFB also projects that federal deficits could reach 7.1 percent of GDP by 2036, or about $3.3 trillion annually. That compares with an earlier estimate of $3.1 trillion under assumptions that the tariffs would remain in force.
Temporary tariffs offer only partial relief
In response to the ruling, the Trump administration quickly turned to Section 122 of the Trade Act of 1974, a rarely used provision that allows the president to impose temporary import surcharges for up to 150 days.
The White House implemented a 10 percent emergency tariff under the law and signaled that the rate could increase to 15 percent. However, the CRFB analysis suggests that the temporary measure would recover only part of the lost revenue.
At a 10 percent rate, the tariff would generate about $35 billion over its 150 day window, replacing just over half of the approximately $65 billion that would have been collected under the previous tariff framework during the same period.
A higher 15 percent rate could bring in about $50 billion, covering roughly 77 percent of the near term shortfall. Even so, the temporary measure does not fully compensate for the larger revenue gap projected over the next decade.
Could Congress turn temporary tariffs into a long term fix?
The fiscal outlook could improve if lawmakers decide to extend the tariffs or replicate them under different legal authorities. According to CRFB estimates, making the Section 122 tariff permanent at a 10 percent rate would generate roughly $925 billion through 2036.
A 15 percent rate would raise about $1.3 trillion during that period. Even under that scenario, policymakers would still need to identify an additional $400 billion to $800 billion in new revenue to fully replace the projected losses from the original tariffs.
The analysis highlights the importance of legislative action rather than relying solely on executive authority. The think tank argues that tariffs established through congressional law are less vulnerable to legal challenges than those implemented under emergency powers.
A political dispute over the fiscal impact
The projections have already sparked a dispute between the fiscal watchdog group and senior administration officials. After the Supreme Court ruling, CRFB President Maya MacGuineas warned that the loss of tariff revenue could add nearly $2 trillion to federal deficits over the next decade.
Treasury Secretary Scott Bessent publicly criticized the estimate during a television interview, arguing that federal revenue would remain stable because new tariffs had already replaced the invalidated ones.
MacGuineas responded that the organization supports the idea of using tariffs to strengthen the federal balance sheet, noting that the earlier tariff framework had been one of the few sources of new revenue in an otherwise difficult fiscal environment.
Complicating the situation further, the U.S. Court of International Trade recently ruled that importers may be entitled to refunds on tariffs collected in 2025 following the Supreme Court decision. If those reimbursements occur, the fiscal impact could become even more significant.
CRFB noted that its $1.7 trillion estimate assumes such refunds will take place. Without them, the projected revenue loss would be slightly smaller, at around $1.6 trillion.
The group urged lawmakers to act quickly to replace the lost income and stabilize the federal fiscal outlook. Without new revenue measures or spending adjustments, analysts warn the Trump tariff revenue loss could further accelerate the growth of the national debt over the coming decade.
