Supreme Court Tariff Ruling Could Force U.S. Treasury to Borrow $1.6 Trillion, CBO Says
A recent decision by the Supreme Court of the United States may significantly reshape federal finances after striking down many tariffs introduced during the second administration of Donald Trump in 2025.
A Supreme Court decision overturning tariffs could push the U.S. Treasury to borrow $1.6 trillion and add $400 billion in interest costs by 2036, according to CBO estimates.
The ruling, delivered late last month, invalidated a large portion of those duties, leaving a notable shortfall in government revenue. The administration had expected tariffs to bring in roughly $300 billion annually, funds that were intended to support several initiatives, including tariff rebate payments and corporate tax deductions outlined in the One Big Beautiful Bill Act.
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However, the court determined that the administration lacked authority to impose those tariffs under the International Emergency Economic Powers Act. As a result, tariffs announced earlier in 2025—many introduced on what officials called “Liberation Day”—were cancelled.
Following the decision, the administration moved quickly to introduce a universal 10% tariff on trading partners around the world. Even with this measure, officials believe the federal government’s finances have already been affected.
An analysis released by the Congressional Budget Office examined the financial implications of the ruling. According to the report, primary deficits over the coming decade—excluding broader economic changes—will be $1.6 trillion higher than projections made before the decision.
Lower tariff revenue also means increased borrowing. The CBO expects interest spending to climb by an additional $400 billion between 2026 and 2036. Earlier projections already estimated annual net interest costs could exceed $2.1 trillion by 2036.
Taken together, the ruling increases projected federal deficits by roughly $2 trillion across the 2026–2036 period compared with earlier forecasts.
Still, the CBO pointed to certain economic benefits. In its latest outlook, the agency previously estimated that trade policy changes since January 2025 would temporarily increase inflation, reduce real investment, lower real GDP, and decrease employment. Ending the tariffs imposed under the IEEPA could ease some of those pressures.
The budget office’s projections, however, do not include the administration’s later announcement regarding a broader global tariff policy.
Under a presidential proclamation issued February 20, a 10% surcharge was placed on goods imported into the United States beginning February 24. The measure, enacted under Section 122 of the Trade Act of 1974, is scheduled to last 150 days.
Although the official proclamation lists a 10% rate, President Trump later suggested on social media that the tariff could be raised to 15%, though no formal legislation has been introduced to implement that increase.
Estimates from the Committee for a Responsible Federal Budget suggest a 10% tariff would generate about $35 billion during the 150-day window. If the rate rises to 15%, the revenue could approach $50 billion.
Looking further ahead, the committee estimates tariffs could produce more than $900 billion between 2026 and 2036 at a 10% rate. At 15%, the figure could reach approximately $1.3 trillion.
Even so, both scenarios still fall short of replacing the roughly $2 trillion revenue gap that the CBO associates with the removal of the IEEPA tariffs.
Meanwhile, Scott Bessent, the U.S. Treasury Secretary, has sought to reassure observers about the long-term revenue outlook. Speaking at the Economic Club of Dallas on February 20, he said new tariffs introduced under Section 122, alongside possible permanent duties under Sections 232 and 301, could leave tariff revenue “virtually unchanged” in 2026.
