The Supreme Court’s decision to strike down the bulk of President Donald Trump’s tariffs has created a consolation prize for an administration hell-bent on using tariff revenue to bolster the U.S. economy. While the loss of an estimated $300 billion per year in income from tariffs has disappeared, fewer tariffs mean U.S. consumers and firms can breathe a sigh of relief over some alleviated pricing and labor challenges.
A Congressional Budget Office (CBO) report published on Thursday estimated the termination of tariffs under the International Emergency Economic Powers Act (IEEPA) would grow the U.S. deficit by $2 trillion from 2026 to 2036 compared with baseline projections from when the tariffs were in place last year. That sum includes $1.6 trillion in primary deficits, as well as $400 billion in outlays for interest.
The loss of the IEEPA tariffs is a massive blow to the administration’s hopes of tariff revenue not just paying down the nearly $39 trillion national debt, but being used to give rebates to Americans and replace income tax.
However, CBO director Phillip Swagel noted lower levies would provide relief for U.S. companies and consumers battered by nearly a year of elevated import taxes, providing more opportunities to grow U.S. GDP.
