Key insights
- Standard Chartered estimates a $60 billion annualized hit to U.S. tariff revenue following the Supreme Court's IEEPA ruling, equivalent to 0.2% of GDP. Temporary measures are cushioning the blow, but further revenue declines are possible after July 2026. Efforts to replace IEEPA tariffs face legal and political hurdles, potentially creating a drag on fiscal policy. This could modestly weigh on US equities.
Investing.com -- U.S. tariff revenue fell after the Supreme Court struck down the administration’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs, but the damage could deepen in the coming months as temporary fixes have a limited shelf life, according to Standard Chartered.
The bank’s economist Dan Pan said she expects tariff revenue to come in at around $25 billion in each of March and April, the first two months following the ruling. While that marks a drop from peak levels, revenue remains roughly 3.4 times pre-Liberation Day levels and is running below the pace seen at end-2025, when tariffs were at full swing and revenues were over four times 2024 levels.
At that run-rate, Pan estimated the annualized revenue hit from the IEEPA ruling at around $60 billion. "The drop is meaningful but much smaller than widely expected, given that IEEPA tariffs account for over half of U.S. tariff revenue," she wrote in a note. The tariff revenue drop is equivalent to about 0.2% of U.S. GDP."
The administration moved quickly to cushion the blow, imposing a 10% blanket tariff under Section 122 of trade law after the ruling. However, Pan said that "there is no perfect substitute after the 150-day limit runs out on 24 July 2026," at which point revenue could fall further.
The pace of reimbursements for tariffs already collected could also accelerate, adding to the fiscal drag.
Efforts to replace IEEPA through other legal authorities face significant hurdles. The administration has been expanding the scope of Section 232 tariffs — which cover steel, aluminum and copper — but is facing resistance from Canada and Mexico as USMCA renegotiations intensify.
Section 301 investigations are also underway, with the administration pushing to broaden their traditionally narrow scope.
Pan highlighted the structural challenge of that approach. IEEPA and Section 122 tariffs were blanket measures that were straightforward to administer, while Sections 232 and 301 are sector-specific and require more elaborate investigations and hearings.
The economist warned that "replacing fairly broad uniform tariffs with those that vary by sector and country will likely carry significant deadweight efficiency costs, but that looks to be the direction in which tariff policy is headed."