Trump administration races the clock to rebuild US tariff wall knocked
down by Supreme Court
[July 17, 2026] By
PAUL WISEMAN
WASHINGTON (AP) — The U.S. Treasury last year swelled with revenue from
President Donald Trump’s double-digit taxes on imports from almost every
country on earth.
But the money dried up after the Supreme Court struck down the biggest
and boldest of Trump’s tariffs in February.
The question now is: Can the president’s trade team make good on its
promise to replace the lost revenue?
A deadline is approaching rapidly.
After the Supreme Court setback, the president turned first to Section
122 of the Trade Act of 1974 to impose 10% tariffs globally. But Section
122 only authorizes tariffs for 150 days. Trump’s expire on July 24.
Congress would have to extend those tariffs — something lawmakers are
unlikely to do as the Nov. 3 midterm elections approach amid voter
discontent over the high cost of living.
But the administration has more durable options: Section 301 of the same
1974 trade law permits the president to impose tariffs and other
sanctions against countries found to engage in “unjustifiable,”
“unreasonable” or “discriminatory” trade practices. Trump used Section
301 to impose big tariffs on China in his first term and is rolling them
out again — as recently as late Wednesday when he announced 25% tariffs
on some Brazilian imports, charging the world’s 11th-biggest economy
with a host of unfair trade practices.
Trade attorneys and analysts are confident the tariff-happy Trump
administration will manage to beat the clock and swap out Section 122
tariffs with bigger 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 in President Joe Biden's.
Trump last year tested – and exceeded – the limits of his authority to
impose import taxes, a power the U.S. Constitution gives Congress. He
invoked the 1977 International Emergency Economic Powers Act (IEEPA) to
slap big tariffs on most of the world’s countries.
He justified the levies, which marked a stunning reversal of decades of
U.S. policy in favor of lower tariffs and freer trade, by labeling
America’s longstanding trade deficits a national emergency.
The Supreme Court didn’t buy it, ruling in February that the president
couldn’t use the emergency powers law to impose tariffs at all. The
legal defeat meant the administration had to send refunds to importers
that had paid the levies.
As a result, tariffs have at least temporarily gone from a windfall to a
drain on the Treasury.
Revenue from import taxes peaked at more than $31.4 billion last
October. Then, after the Supreme Court ruling, it started dwindling – to
$22 billion in both March and April. As refund checks went out faster
than revenue from the Section 122 and other tariffs came in, the number
turned negative: A small ($42 million) shortfall in May was followed by
a whopping $25.6 billion loss in June.
Trump and Treasury Secretary Scott Bessent have vowed to use other legal
authorities to recoup the lost income.
Enter Section 301, which gives the president power to impose – and
adjust – tariffs in response to other countries’ trade practices. But
the administration must first check procedural boxes – collecting
comments and holding hearings. There are no limits on Section 301
tariffs. They expire after four years but can be renewed.
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Shipping containers are seen ready for transport at the Guangzhou
Port in the Nansha district in southern China's Guangdong province,
April 17, 2025. (AP Photo/Ng Han Guan, File)
 So the president has flexibility in
how he uses the Section 301 tariffs. Trump can still change them —
after clearing procedural hurdles — but he can’t impose or move them
up or down on a whim as he often did with the IEEPA tariffs.
Uncertainty over Trump's tariff policy has vexed businesses, leaving
them hesitant to make investments and decisions because they don't
know what the trade rules are going to be.
A switch to rule-bound 301 tariffs would mean "there’s less
uncertainty but not no uncertainty,’’ said Sarah Bianchi, a former
U.S. trade official who is now chief strategist of international
political affairs at the investment research firm Evercore ISI.
The Trump administration has turned to two big Section 301
investigations in its campaign to replace lost tariff revenue. One
accuses 60 countries, accounting for 99% of U.S. imports, of failing
to do enough to crack down on imports created by forced labor. The
other is investigating whether 16 U.S. trading partners — including
China, the European Union and Japan — are overproducing goods,
driving down worldwide prices and putting American manufacturers at
a disadvantage.
The administration has already decided what it wants to do about the
forced labor issue. Invoking Section 301 last month, U.S. Trade
Representative Jamieson Greer proposed tariffs — 10% on 16 countries
and 12.5% on 44 — that are the same or slightly higher than the 10%
Section 122 levies they would replace. But Greer's office is still
receiving public comments on the proposed tariffs and has not
imposed them yet.
Nathaniel Halvorson, a partner at the Baker McKenzie law firm and a
former U.S. trade official, expects Greer’s office will manage to
get the forced-labor levies in place in time so that there won’t be
much, if any, “daylight’’ between them and the expiring Section 122
tariffs. “Really, they’re operating about as fast as legally
possible,’’ he said.
The administration has not yet completed the other Section 301
investigation into alleged overproduction by 16 countries. Trade
attorney Majerus expects the administration to propose more big
tariffs in that case, likely in a month or two. He suspects they
will be timed to take effect only after the midterm elections “for
obvious reasons.’’
Trump, who has proudly called himself “Tariff Man,’’ has made it
clear that he is seeking to bring back the big, worldwide import
taxes he’d imposed in 2025. So the new 301 investigations look like
a pretext to do that and might be vulnerable in court, Bianchi said.
“Section 301s have been pretty legally durable,” she said. “But no
one has tried to use it to basically put in place universal tariffs.
I think there will be legal challenges.’’
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