So here's the thing about tariffs: they're supposed to raise money. But what happens when the courts say your tariffs are illegal and you have to come up with a replacement plan? According to a new analysis, the math doesn't quite work out.

The Trump administration's replacement tariff will generate only a fraction of the revenue lost after the Supreme Court struck down most of its 2025 levies, leaving the federal government staring at a potential $1.7 trillion hole over the next decade.

Here's how we got here. After the court ruled in February that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful, President Donald Trump invoked Section 122 of the Trade Act of 1974 to impose a temporary 10% broad-based import tariff. Trump has since announced plans to raise it to 15%, though that change has not yet been formally enacted.

A Bigger Gap Over The Decade

The Committee for a Responsible Federal Budget (CRFB), using the Congressional Budget Office's tariff model, estimated in a report released Wednesday that the 10% tariff will raise roughly $35 billion over its 150-day legal window — about half the $65 billion the IEEPA tariffs would have raised in the same period. At 15%, that figure rises to $50 billion, covering about three-quarters of the shortfall.

But here's where it gets interesting. If Congress were to make the Section 122 tariff permanent — or the administration replicates it through other legal authorities — CRFB estimates revenues of $925 billion at 10% or $1.3 trillion at 15% through 2036. That still falls $400–$800 billion short of fully replacing lost IEEPA revenue.

Furthermore, the Supreme Court's ruling against tariffs imposed under the IEEPA will reduce federal revenue by $1.7 trillion through FY 2036, assuming collected tariffs are refunded, CRFB estimates.

The fiscal damage is meaningful. CRFB projects the national debt could reach 125% of GDP, or $58 trillion, by 2036 under the current temporary tariff scenario, versus 120% under the baseline that assumed IEEPA tariffs held. The annual deficit would widen to $3.3 trillion from $3.1 trillion.

Court Orders Tariff Refunds

The CRFB projections land as the U.S. Court of International Trade ordered the government to refund potentially billions in tariffs to importers, stating that these tariffs were unlawfully collected.

"President Trump's tariffs were generating meaningful revenue amid a bleak fiscal outlook. However, relying on uncertain legal authorities or temporary measures can undermine the stability of enacted tariffs," CRFB wrote.

"We encourage policymakers to enact revenue or offsets sufficient to fully replace lost IEEPA revenue, and to codify these changes – whether from tariffs or other sources – into law."