Trump seeks to close $1.6 trillion revenue gap with raft of new tariffs

The Trump administration intensified efforts this week to recoup approximately $1.6 trillion in tariff revenue lost after the Supreme Court struck down a range of the president’s import taxes. Officials unveiled a two-pronged strategy targeting multiple economies through formal trade investigations that could potentially restore the administration’s tariff authority.

U.S. Trade Representative Jamieson Greer announced Wednesday that the administration will investigate 16 economies, including the European Union, China, South Korea, and Japan, over alleged government subsidies that create excessive factory capacity disadvantaging American manufacturers. A second investigation will examine dozens of countries to determine if their failure to ban goods made with forced labor constitutes an unfair trade practice harming U.S. interests.

Both inquiries will be conducted under Section 301 of the 1974 Trade Act, which requires consultation with targeted countries, public hearings, and comment periods from affected U.S. industries. The factory capacity investigation hearing is scheduled for May 5, while the forced labor hearing will take place April 28.

This methodical approach marks a significant departure from the emergency powers Trump previously utilized, which allowed him to impose tariffs immediately on any country through executive orders. The Supreme Court’s decision invalidated this approach, forcing the administration to pursue more complex legal avenues.

“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. However, she noted the new approach 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.”

Immediately following the Supreme Court ruling, Trump implemented a 10% tariff on all imports under separate legal authority, but this measure can only remain in place for 150 days. The president has indicated plans to increase it to 15%, the maximum allowed, though he has yet to do so. Already, approximately two dozen states have challenged these new tariffs. The administration aims to complete its Section 301 investigations before the 10% duties expire.

The first investigation covers roughly 70% of imports, while the second would encompass nearly all imports, according to Erica York, vice president of federal tax policy at the Tax Foundation. “That breadth suggests the goal isn’t to address the issues at hand, but instead to recreate a sweeping tariff tool,” she said.

Trump’s emphasis on tariffs as revenue generators represents a significant shift from previous administrations, which typically employed tariffs more sparingly to protect specific industries. The president has framed tariffs as a way to force foreign countries to help finance U.S. government services, despite numerous economic studies—including those from the Federal Reserve Bank of New York and Harvard University economists—indicating that American companies and consumers ultimately bear these costs.

In his recent State of the Union address, Trump even suggested tariffs could potentially replace income taxes, which would effectively return U.S. tax policy to its 19th-century structure.

The tariffs also play a crucial role in offsetting the fiscal impact of Trump’s tax cuts. According to the Congressional Budget Office, tax cut legislation is projected to add $4.7 trillion to the national debt over a decade. All Trump duties, including those not struck down by the court, were expected to offset about $3 trillion of that cost.

Some of Trump’s tariffs remain in effect, including previous duties on China and Canada imposed after earlier Section 301 investigations, as well as specific product tariffs on steel, lumber, and automobiles. Combined with the temporary 10% tariff, these measures should yield approximately $668 billion over the next decade, according to Tax Foundation estimates.

“It’s going to take a really big patchwork of these other investigations to make up for the lost tariffs,” York noted.

Kent Smetters, executive director of the Penn Wharton Budget Model, highlighted the unprecedented nature of the administration’s approach: “What makes this really different, it is really the first time tariffs have been mainly used as a revenue raiser.”

Patel argued that if revenue generation is the primary goal, Congress should handle it directly through legislation rather than repurposing trade policy tools. “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.”