This week, the Trump administration intensified its ambitious push to recoup roughly $1.6 trillion in tariff revenue that was nullified after the Supreme Court struck down several of the president’s import taxes.
Experts suggest that while recovering this lost income—which the White House relied on to counterbalance the massive, multi-trillion-dollar expense of its tax cuts—is feasible, it will be difficult. To implement new levies, the administration must utilize alternative legal authorities that involve lengthy and intricate procedures, during which U.S. firms can request exemptions. It may take several months or longer to determine the actual revenue generated by these replacement tariffs.
“I wouldn’t bet against this administration managing to restore, on paper at least, the effective tariff rate they previously held,” stated Elena Patel, co-director of the Urban-Brookings Tax Policy Center. However, she noted that the new strategy will “make it simpler for parties to challenge the tariffs, placing a significant asterisk next to the revenue figures until everything is resolved.”
On Wednesday, U.S. Trade Representative Jamieson Greer announced that the administration would probe 16 economies—including the European Union—to determine if their state subsidies for excessive industrial production are harming U.S. manufacturing. Greer indicated that the inquiry would also encompass China, South Korea, and Japan.
Furthermore, he mentioned a second investigation involving dozens of nations to assess whether their refusal to prohibit goods produced through forced labor constitutes an unfair trade practice detrimental to the U.S. This probe will also target the EU and China, along with Mexico, Canada, Australia, and Brazil.
Both inquiries are proceeding under Section 301 of the 1974 Trade Act, mandating that the administration consult with targeted nations, conduct public hearings, and permit affected U.S. industries to provide feedback. A hearing regarding the factory capacity probe is scheduled for May 5, while the forced labor investigation hearing will take place on April 28.
This stands in stark contrast to the emergency authority President Donald Trump utilized during his first year in office, which permitted him to instantly levy tariffs on any country at almost any rate solely through an executive order.
Shortly following the Supreme Court’s ruling, Trump enacted a 10% tariff on all imports using a different legal basis, though this levy is limited to 150 days. Although the president has stated his intention to increase it to the maximum 15%, he has not yet done so. Approximately two dozen states have already filed challenges against these new tariffs. The administration hopes to finalize its Section 301 investigations before the 10% duties lapse.
This initiative highlights the significant emphasis the Trump White House places on tariffs as a source of revenue, particularly as the federal government confronts massive annual budget deficits projected for decades. Conversely, prior administrations employed tariffs more sparingly, primarily to shield specific industries.
Erica York, vice president of federal tax policy at the Tax Foundation, observed that the initial investigation encompasses approximately 70% of imports, whereas the second one would cover almost all imports.
“Such broad scope implies that the objective is not to tackle the immediate issues, but rather to reconstruct a comprehensive tariff mechanism,” she remarked.
Trump views tariffs as a method to compel foreign nations to effectively fund U.S. government services, despite all recent economic studies—including research from the Federal Reserve Bank of New York and Harvard University economists—concluding that American businesses and consumers bear the cost of these duties. During his State of the Union address last month, Trump even promoted his tariffs as a possible substitute for income tax, a shift that would revert the U.S. tax system to the late 19th century.
Trump also intends for tariffs to finance the tax cuts he extended through major legislation last year. According to the latest estimates from the nonpartisan Congressional Budget Office, this tax cut legislation is projected to increase the national debt by $4.7 trillion over ten years, while all of Trump’s tariffs—including those unaffected by the court ruling—were expected to offset roughly $3 trillion, or two-thirds of that amount.
Per the CBO, the court’s February 20 ruling prohibiting the imposition of emergency tariffs wiped out approximately $1.6 trillion in anticipated revenue over the coming decade.
Certain tariffs implemented by Trump remain in effect, such as prior levies on China and Canada established following earlier Section 301 probes. The administration has also applied tariffs to specific goods like steel, lumber, and automobiles. The Tax Foundation estimates that these, along with the 10% tariff in place for part of this year, should generate approximately $668 billion over the next ten years.
“It will require a very complex patchwork of these other investigations to compensate for the (lost) tariffs,” York stated.
The administration’s actions are also notable for their heavy reliance on tariffs to boost government income. Trump has additionally asserted that these duties aim to bring manufacturing back to the U.S., and he has utilized them as leverage in trade negotiations.
“What makes this truly distinct,” explained Kent Smetters, executive director of the Penn Wharton Budget Model, “is that it marks the first instance where tariffs are primarily utilized as a revenue-generating tool.”
Meanwhile, Patel contends that revenue generation could be achieved more reliably and directly by Congress. Statutes such as Section 301 are traditionally designed to tackle specific trade policy issues regarding individual nations.
“It is not intended to serve as a revenue source,” she said. “If the goal is to generate revenue via tariffs, then Congress should implement a broad-based tariff.”