The US Treasury Department grew last year with revenue from President Donald Trump’s double-digit taxes on imports from almost every country in the world.
But the money dried up after the Supreme Court struck down Trump’s biggest and boldest tariffs in February.
The question now is: Can the president’s trade team deliver on its promise to replace lost revenue?
A deadline is getting closer and closer.
After the Supreme Court setback, the president first turned to Section 122 of the Trade Act of 1974 to impose 10% tariffs worldwide. However, Section 122 only allows tariffs for 150 days. Trump’s tariffs expire on July 24th. Congress would have to extend those tariffs — something lawmakers are unlikely to do on Nov. 3 given voter discontent over the high cost of living.
But the administration has more permanent options: Section 301 of the same 1974 trade law allows the president to impose tariffs and other sanctions on countries found to be engaging in “unjustified,” “unreasonable,” or “discriminatory” trade practices. Trump used Section 301 to impose steep tariffs against China in his first term and is imposing them again – as recently as late Wednesday, when he announced 25% tariffs on some Brazilian imports, accusing the world’s 11th-largest economy of a host of unfair trade practices.
Trade lawyers and analysts are confident that the tariff-happy Trump administration will manage to beat the clock and replace Section 122 tariffs with higher Section 301 tariffs by the July 24 deadline. “They’re going to raise the tariff wall again,” said trade lawyer Ryan Majerus, a partner at King & Spalding and a trade official in Trump’s first administration and President Joe Biden’s.
Trump last year tested — and exceeded — the limits of his authority to impose import tariffs, a power the U.S. Constitution grants to Congress. He invoked the International Emergency Economic Powers Act (IEEPA) of 1977 to impose high tariffs on most countries in the world.
He justified the levies, which marked a stunning reversal of decades of U.S. policy in favor of lower tariffs and freer trade, by calling America’s longstanding trade deficits a national emergency.
The Supreme Court didn’t buy that, ruling in February that the president couldn’t use the emergency law to impose tariffs at all. The legal defeat meant the administration had to issue refunds to importers who had paid the duties.
As a result, the tariffs have gone from being a windfall to a burden on the Treasury, at least temporarily.
Import tax revenue peaked at over $31.4 billion last October. Then, after the Supreme Court ruling, it started shrinking – to $22 billion in March and April. As refund checks went out faster than revenue from Section 122 and other tariffs came in, the number turned negative: A small shortfall ($42 million) in May was followed by a loss of a whopping $25.6 billion in June.
Trump and Treasury Secretary Scott Bessent have vowed to use other judicial powers to make up for lost revenue.
Take Section 301, which gives the president the authority to impose and adjust tariffs in response to other countries’ trade practices. But the administration must first consider the procedural criteria — solicit comments and hold hearings. There are no restrictions on Section 301 tariffs. They expire after four years but are renewable.
So the president has flexibility in using the Section 301 tariffs. Trump can still change them — after overcoming procedural hurdles — but he can’t impose them on a whim or move them up or down, as he often did with the IEEPA tariffs. Uncertainty over Trump’s tariff policies is angering businesses and making them hesitant to make investments and make decisions because they don’t know what the trade rules will be.
A move to rules-based 301 tariffs would mean “there is less uncertainty, but no uncertainty,” said Sarah Bianchi, a former U.S. trade official and now chief international policy strategist at investment research firm Evercore ISI.
The Trump administration has resorted to two major Section 301 investigations in its campaign to replace lost tariff revenue. It accuses 60 countries, which account for 99% of U.S. imports, of not doing enough to address imports caused by forced labor. The other examines whether 16 U.S. trading partners — including China, the European Union and Japan — are overproducing goods, depressing global prices and putting American manufacturers at a disadvantage.
The administration has already decided what it will do about the forced labor issue. Citing Section 301, U.S. Trade Representative Jamieson Greer last month proposed tariffs — 10% for 16 countries and 12.5% for 44 — that are equal to or slightly higher than the 10% Section 122 tariffs they would replace. However, Greer’s office is still receiving public comments on the proposed tariffs and has not yet implemented them.
Nathaniel Halvorson, a partner at law firm Baker McKenzie and a former U.S. trade official, believes Greer’s office will be able to get the labor levies in place in a timely manner so that there won’t be much, if any, “daylight” between them and the expiring Section 122 tariffs. “They are actually working as quickly as is legally possible,” he said.
The government has not yet completed the other Section 301 investigation into alleged overproduction in 16 countries. Trade lawyer Majerus believes the government will likely propose further higher tariffs in this case in a month or two. He suspects they will not come into effect until after the midterm elections “for obvious reasons.”
Trump, who proudly calls himself a “customs man,” has made it clear he is seeking to reinstate the high global import tariffs he imposed in 2025. So the new 301 investigations look like a smokescreen and could be vulnerable in court, Bianchi said.
“Section 301 was fairly tenable legally,” she said. “But no one has tried to use this to basically introduce universal tariffs. I think there will be legal challenges.”
https://fortune.com/2026/07/16/trump-tariff-windfall-loss-section-301-deadline/
