The Supreme Court’s decision striking down President Trump’s broad tariffs on imports will cost the U.S. Treasury dearly, blowing a net $900 billion hole in the budget over the next decade after accounting for interest and replacement tariffs, according to the Congressional Budget Office.
Invalidating the tariffs means the government will take in about $700 billion less in customs duties. That includes refunds on the $166 billion in tariffs already collected before the justices struck them down.
Because the government is already running deficits, the $700 billion will add an extra $200 billion in debt service, leaving a total hole of roughly $900 billion that was not there when the CBO issued its February 2026 baseline projections.
“Those increases are largely driven by the removal of tariffs imposed under the authority of the International Emergency Economic Powers Act following the Supreme Court’s decision. The administration imposed new tariffs after the decision, but they are projected to raise less revenue,” CBO Director Phillip Swagel said in an analysis published July 31.
It was the latest grim fiscal news.
On Wednesday, the Treasury Department announced that the government had amassed more than $40 trillion in total debt.
It took 4½ years to amass the final $10 trillion, and in September 2017, the U.S. crossed the $20 trillion mark.
The CBO tariff news means the hole will grow faster than Congress’ official scorekeeper believed.
Last year, Mr. Trump imposed duties on most of the world, citing the International Emergency Economic Powers Act as his authority.
The result was consumers paying higher prices for goods, but revenue from the tariffs paid on those goods flooding into the Treasury.
Mr. Trump joked that his budget analysts were mystified by the improved revenue picture until he told them to look at the line for customs duties.
The windfall ended in February, when the Supreme Court ruled 6-3 that IEEPA does not authorize the president to impose tariffs.
Chief Justice John G. Roberts Jr., writing for a plurality of the court, said the court was not dealing with the financial aspects but rather the law.
“We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that IEEPA does not authorize the president to impose tariffs,” he wrote.
The justices said Mr. Trump does have tariff powers under other statutes that he could use.
He has also done so in the wake of the court decision, invoking Section 122 of the Trade Act of 1974 to impose a temporary 15% global tariff. That provision limits such tariffs to 150 days, and they expired July 24.
Mr. Trump then imposed new tariffs of 10% to 12.5% on goods from more than 60 countries under Section 301 of the Trade Act of 1974.
He also has new tariffs specifically imposed on Brazil, as well as higher tariff rates generally on steel, copper and aluminum products.
It was not enough to offset the loss of the original global tariffs.
This current fiscal year alone, the reversal will total a quarter-trillion dollars. That includes both lost revenue and the need to pay back tariffs previously collected.
The Treasury Department’s July monthly statement showed gross customs duties falling from nearly $28 billion in January, the last month before the court’s ruling, to $26 billion. The July figures, when offset by $36 billion in court-mandated refunds, resulted in a net monthly outflow of $9 billion.
Before the court’s ruling, analysts had anticipated a record $400 billion in tariff revenue this year.
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