Trump’s illegal tarrifs could end up bloating U.S. debt by $1.7 trillion

A major ruling hits the federal budget hard

The Supreme Court struck down President Trump’s tariffs in February, and the price tag for the federal budget is becoming clearer.

A new analysis from the Committee for a Responsible Federal Budget (CRFB), a nonpartisan fiscal watchdog, estimates the ruling will cost the government about $1.7 trillion in lost revenue through 2036.

Replacement tariffs are already in place, but analysts say they fall well short of closing the gap.

Court rules Trump overstepped on tariffs

On Feb. 20, 2026, the Supreme Court ruled 6-3 in Learning Resources Inc. v. Trump that the International Emergency Economic Powers Act does not give the president the power to impose tariffs.

Chief Justice John Roberts wrote the majority opinion, joined by Justices Sonia Sotomayor, Elena Kagan, Neil Gorsuch, Amy Coney Barrett, and Ketanji Brown Jackson.

Justices Clarence Thomas, Brett Kavanaugh, and Samuel Alito dissented. The ruling wiped out the “Liberation Day” tariffs and levies on China, Canada, and Mexico.

The ruling erases trillions in expected revenue

CRFB released its updated estimate on March 4. The watchdog projects the ruling will cut federal revenue by about $1.7 trillion through fiscal year 2036, assuming the government refunds tariffs already collected.

Without refunds, the loss drops to around $1.6 trillion, a figure the Congressional Budget Office (CBO) matched independently.

The Yale Budget Lab and Tax Foundation put their estimates slightly lower, at about $1.5 trillion and $1.4 trillion. CRFB’s first rough estimate, released the day of the ruling, was $1.9 trillion.

Debt was already climbing before the ruling

Even before the court ruled, the national debt was not in good shape.

The CBO’s February 2026 baseline already projected a nearly $1.9 trillion federal deficit for fiscal year 2026 and debt reaching 120% of GDP by 2036.

Interest payments on the debt have now passed $1 trillion a year and keep rising. The national debt has been growing by about $8 billion a day over the past year.

As of early February 2026, total gross national debt stood at about $38.6 trillion.

Lost tariff revenue pushes debt toward $58 trillion

CRFB now projects the national debt could climb to about 125% of GDP, or roughly $58 trillion, by fiscal year 2036 without the IEEPA revenue.

That compares to a previous baseline of about 120% of GDP, or around $56 trillion, which had assumed the tariffs would stay in place.

Annual deficits could reach about 7.1% of GDP, or roughly $3.3 trillion, up from the prior projection of 6.7%, or about $3.1 trillion. CRFB called the tariff revenue a “bright spot in an otherwise gloomy fiscal picture.”

Replacement tariffs bring in far less money

Hours after the ruling, Trump announced a 10% global tariff under Section 122 of the Trade Act of 1974. The next day, he raised it to 15%.

Section 122 had never been used before and allows tariffs of up to 15% for 150 days.

CRFB estimates the 10% rate would generate only about $35 billion over that window, replacing about 52% of what the IEEPA tariffs would have raised in the same period.

At 15%, the number rises to roughly $50 billion, covering about 77% of the near-term loss.

White House and fiscal watchdog clash publicly

Treasury Secretary Scott Bessent said on Fox News that tariff revenue would be “virtually unchanged” in 2026 thanks to the replacement tariffs.

He also personally attacked CRFB President Maya MacGuineas, saying she “should be ashamed.”

MacGuineas pushed back, noting that CRFB actually supports the administration’s goal of using tariff revenue to improve the fiscal outlook.

CRFB, the Tax Foundation, the Yale Budget Lab, and CBO all project the replacement tariffs will raise significantly less than the IEEPA tariffs did.

Judge orders refunds for tariff payments

On March 5, Judge Richard Eaton of the U.S. Court of International Trade ruled that importers who paid IEEPA tariffs are entitled to refunds.

He ordered U.S. Customs and Border Protection to stop collecting the now-illegal tariffs and start processing reimbursements. More than 2,000 companies have filed lawsuits seeking refunds, including Costco and FedEx.

Trade experts estimate the government could owe as much as $175 billion, though Bessent put the figure closer to $130 billion. Customs officials say the process could require reviewing more than 70 million entries.

States file new lawsuit against Section 122 tariffs

On March 6, a coalition of 24 state attorneys general sued to block the Section 122 tariffs.

The suit, filed in the U.S. Court of International Trade, argues Trump is misusing the law, which was meant for narrow balance-of-payments emergencies, not broad trade policy.

Oregon, Arizona, California, and New York are leading the effort. The states say the tariffs violate the Constitution’s separation of powers.

Trump’s own Justice Department had argued in an earlier filing that Section 122 did “not have any obvious application” to trade deficits.

What Americans pay depends on what comes next

American households were already paying about $1,300 more per year due to tariffs in 2026, according to the Tax Foundation.

The Section 122 tariffs keep many import costs high, so consumer prices are not expected to drop much in the near term.

The 150-day Section 122 clock started Feb. 24, meaning the tariffs would expire around late July 2026 unless Congress votes to extend them. That vote would come just months before the 2026 midterm elections.

CRFB urged Congress to pass enough new revenue or offsets to fully replace the lost IEEPA money.

This article was created with AI assistance and human editing.

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