Trump’s Tariffs Will Still Cost Households
Erica York (VP Tax Foundation) discusses Trump’s imposing tariff, there being struct down and his reimposing other tariffs using Section 122 of the Trade Act of 1974. The president then has the authority to impose temporary restrictions such as tariffs or quotas on goods from other countries based on specific conditions. The temporary surcharge cannot exceed 15%.
Erica York is presenting an additional view and issues remaining from Trump’s executive order. Households will still be penalized from higher prices mostly.
Trump’s Tariffs Will Still Cost Households $700 This Year
On Friday, the Supreme Court ruled that “IEEPA does not authorize the President to impose tariffs.”
President Trump responded by signing an executive order that would impose a 10 percent tariff on all countries under Section 122 with exemptions, effective February 24, 2026. The tariff is scheduled to expire after 150 days unless extended by Congress. Then on Saturday, he increased that tariff to 15 percent.
The Supreme Court ruling was welcome news, but the economic pain is far from over.
- $1.2 trillion. Tax Foundation modeling finds that this new tariff would apply to $1.2 trillion worth of imports on an annual basis, or about 34 percent of total goods imported.
- $700. The Trump tariffs amounted to an average tax increase per US household of $1,000 in 2025. Now, with the IEEPA tariffs being ruled illegal, the President’s remaining new tariffs under Section 232 combined with the temporary Section 122 tariffs will result in a household burden of $700 in 2026.
- 12.1 percent. The average statutory rate applied to US imports will be 12.1 percent while the temporary 15 percent Section 122 tariffs are in effect. It will drop to 6.7 percent after they expire. We estimate it would have been 13.8 percent in 2026 if IEEPA remained in place.
- 1971. When looking at the combined effect of all the tariffs, the average effective tariff rate (customs duties revenue as a share of goods imports) rises to 6.0 percent—the highest since 1972. This rate was 7.7 percent in 2025.
- -0.2 percent. With IEEPA struck down, we estimate that the remaining Section 232 tariffs imposed in 2025 and the temporary Section 122 tariffs will raise $668 billion in revenue from 2026-2035 on a conventional basis and reduce US GDP by 0.2 percent, all before foreign retaliation.
Even with IEEPA off the table, the President is not abandoning his vision of higher tariffs on US imports. The White House has pivoted to another authority that permits tariffs for “balance of payments” problems, but that is clearly unjustified as the US has no balance of payments crisis. The process pertaining to refunds is still unsolved, it’s not clear how—or rather if—Congress will respond. In all, the dust is not close to settling, and we know that importers, business owners, workers, and consumers will ultimately be left with more questions than answers.
But the Supreme Court ruling makes clear that Article I still matters. Though the trade war is not over, this decision was an important one for the future of our country’s fiscal powers.