The Trump administration has intensified efforts to recoup about $1. 6 trillion in tariff revenue lost after the Supreme Court struck down a range of the president’s import duties, with officials turning to new investigations and legal provisions to impose replacement levies, according to news agency AP report.
Experts say recovering the revenue–which the White House had counted on to offset the multi-trillion-dollar cost of tax cuts–will be challenging, as the alternative tariff routes involve longer and more complex processes and allow US companies to seek exemptions. It could take months before the revenue impact of the new measures becomes clear.
“I wouldn’t bet against this administration being able to get back on paper the same effective tariff rate they had before,” said Elena Patel, co-director of the Urban-Brookings Tax Policy Center.
But the revised strategy will “make it easier for people to contest the tariffs, which is going to put a big asterisk on the revenue until all that is settled. ”
US Trade Representative Jamieson Greer said the administration will investigate 16 economies — including the European Union — over whether government subsidies are encouraging excessive factory capacity that disadvantages US manufacturing. The probe will also examine China, South Korea and Japan.
A second investigation will examine dozens of countries over whether their failure to ban goods made with forced labour constitutes an unfair trade practice harming the United States. That review will cover the EU and China as well as Mexico, Canada, Australia and Brazil.
Both inquiries are being conducted under Section 301 of the 1974 Trade Act, which requires consultations with targeted countries, public hearings and input from affected industries. Hearings on factory-capacity concerns are scheduled for May 5, while those on forced labour will be held April 28.
The approach contrasts with the emergency law Trump used in his first year in office, which enabled him to impose tariffs immediately through executive orders. After the court ruling, the president imposed a 10 per cent tariff on all imports under a separate legal authority, although it can remain in place only for 150 days. He has said the rate could be raised to the maximum 15 per cent, but has not yet done so. Around two dozen US states have already challenged the new tariffs.
The administration aims to complete its Section 301 investigations before the temporary duties expire. The effort highlights the growing importance the White House places on tariffs as a revenue source amid projections of large federal budget deficits in the years ahead.
Erica York, vice president of federal tax policy at the Tax Foundation, said the first probe covers about 70 per cent of imports, while the second could extend to nearly all of them.
“That breadth suggests the goal isn’t to address the issues at hand, but instead to recreate a sweeping tariff tool,” she said.
Trump has argued that tariffs can compel foreign countries to help fund US government services, though recent economic studies — including work by the Federal Reserve Bank of New York and Harvard University economists — suggest the costs are largely borne by American companies and consumers. In his state of the union address last month, he even presented tariffs as a potential alternative to income tax.
The administration is also seeking to use tariff revenues to offset the fiscal impact of tax cuts extended last year. According to the nonpartisan Congressional Budget Office, the legislation could add $4.7 trillion to national debt over a decade, while existing and proposed duties were projected to cover about $3 trillion of that cost.
The Supreme Court’s February 20 ruling eliminating emergency tariffs removed an estimated $1.6 trillion in expected revenue over the next decade, the CBO said. Some duties remain in place, including earlier tariffs on China and Canada imposed after previous Section 301 investigations, as well as product-specific levies on steel, lumber and cars. Combined with this year’s temporary 10 per cent duty, they could generate about $668 billion over the next decade, according to the Tax Foundation.
“It’s going to take a really big patchwork of these other investigations to make up for the (lost) tariffs,” York said.
Analysts say the administration’s reliance on tariffs is unusual compared with previous governments, which generally used them more narrowly to protect specific industries. Trump has also framed tariffs as a tool to encourage manufacturing to return to the United States and as leverage in trade negotiations.
“What makes this really different,” said Kent Smetters, executive director of the Penn Wharton Budget Model, “it is really the first time tariffs have been mainly used as a revenue raiser.”
Patel added that raising revenue through legislation would be more predictable. Laws like Section 301 are typically intended to address targeted trade policy concerns rather than broad fiscal objectives.
“It’s not supposed to be there to raise revenue,” she said. “If we want to raise revenue through tariffs, then Congress should impose a broad based tariff.”
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