The U.S. Treasury, which last year swelled with billions from President Donald Trump’s double-digit taxes on imports, now faces a critical deadline as the administration scrambles to rebuild its tariff wall. Following a Supreme Court decision in February that struck down the largest of Trump’s import levies, the government has been racing against the clock to replace lost revenue, with a key set of temporary tariffs set to expire on July 24.
Supreme Court Ruling Triggers Revenue Drain
Last year, the Treasury experienced a significant influx of funds, with revenue from import taxes peaking at more than $31.4 billion last October. These tariffs, imposed by President Trump, targeted imports from “almost every country on earth,” as noted by AP economics writer Paul Wiseman. The administration had justified these levies by invoking the 1977 International Emergency Economic Powers Act (IEEPA), labeling America’s longstanding trade deficits a national emergency. This marked a stunning reversal of decades of U.S. policy favoring lower tariffs and freer trade.
However, the Supreme Court ruled in February that the president could not use the emergency powers law to impose tariffs at all. This legal defeat had immediate financial repercussions, forcing the administration to issue refunds to importers who had paid the levies. Consequently, what was once a windfall for the Treasury quickly turned into a drain. Revenue from import taxes dwindled to $22 billion in both March and April. The situation worsened in May with a small $42 million shortfall, followed by a substantial $25.6 billion loss in June, as refund checks outpaced new tariff collections.
The July 24 Deadline and Temporary Measures
In the wake of the Supreme Court setback, the administration initially turned to Section 122 of the Trade Act of 1974 to impose a global 10% tariff. However, Section 122 only authorizes tariffs for a period of 150 days. These temporary tariffs are slated to expire on July 24. Extending these measures would require congressional approval, a prospect deemed unlikely by analysts as the November 3 midterm elections approach, particularly amidst voter discontent over the high cost of living.
Shifting Strategy: The Power of Section 301
With the expiration of Section 122 tariffs looming, President Trump and Treasury Secretary Scott Bessent have vowed to utilize other legal authorities to recoup the lost income. The administration’s focus has now shifted to Section 301 of the 1974 trade law. This provision grants the president the power to impose tariffs and other sanctions against countries found to engage in “unjustifiable,” “unreasonable,” or “discriminatory” trade practices.
President Trump previously employed Section 301 to levy significant tariffs on China during his first term. The administration has already begun rolling out these measures again, with a recent announcement late Wednesday imposing 25% tariffs on some Brazilian imports, citing a host of unfair trade practices. Trade attorneys and analysts express confidence that the administration will manage to meet the July 24 deadline by swapping out the expiring Section 122 tariffs with more robust Section 301 measures. Ryan Majerus, a trade lawyer and partner at King & Spalding, who served as a trade official in both the Trump and Biden administrations, affirmed, “They’re going to raise the tariff wall again.”
Procedural Hurdles and Business Uncertainty
While Section 301 offers a more durable legal framework for tariffs, it comes with specific procedural requirements. The administration must first “check procedural boxes,” including collecting public comments and holding hearings, before imposing or adjusting tariffs. Unlike the IEEPA tariffs, which Trump often altered “on a whim,” Section 301 tariffs, though flexible, cannot be moved up or down without clearing these hurdles. They expire after four years but can be renewed, offering long-term stability once in place.
The consistent uncertainty surrounding Trump’s tariff policy has “vexed businesses,” leaving them hesitant to make investments and decisions due to unpredictable trade rules. Sarah Bianchi, a former U.S. trade official and now chief strategist of international political affairs at Evercore ISI, commented that a switch to the “rule-bound 301 tariffs would mean ‘there’s less uncertainty but not no uncertainty.'”
New Investigations Pave Way for Broader Tariffs
To replace the lost tariff revenue, the Trump administration has initiated two significant Section 301 investigations. One investigation targets 60 countries, collectively accounting for 99% of U.S. imports, accusing them of failing to adequately address imports created by forced labor. U.S. Trade Representative Jamieson Greer, invoking Section 301 last month, proposed tariffs of 10% on 16 of these countries and 12.5% on the remaining 44. These proposed levies are either equivalent to or slightly higher than the 10% Section 122 tariffs they are intended to replace. Nathaniel Halvorson, a partner at Baker McKenzie and a former U.S. trade official, anticipates Greer’s office will successfully implement these forced-labor levies in time, ensuring minimal “daylight” between the expiring and new tariffs, stating, “Really, they’re operating about as fast as legally possible.”
The second Section 301 investigation focuses on 16 U.S. trading partners, including economic giants like China, the European Union, and Japan. This inquiry examines whether these nations are engaging in overproduction, thereby driving down worldwide prices and disadvantaging American manufacturers. This investigation is not yet complete. Trade attorney Ryan Majerus expects the administration to propose additional substantial tariffs in this case, likely within a month or two, and suspects they will be “timed to take effect only after the midterm elections ‘for obvious reasons.'”
President Trump, who has proudly embraced the moniker “Tariff Man,” has made his intention clear: to reinstate the extensive, worldwide import taxes he had imposed in 2025. While Section 301 tariffs have historically proven “pretty legally durable,” according to Sarah Bianchi, the current administration’s expansive use of these investigations to potentially implement “universal tariffs” could face new legal challenges. Bianchi noted, “no one has tried to use it to basically put in place universal tariffs. I think there will be legal challenges.” The coming weeks will reveal whether the administration can successfully navigate these legal and political complexities to solidify its new tariff regime.
