Source: Fortune
Summary
The Congressional Budget Office (CBO) projects a $2.1 trillion deficit for fiscal 2026, up from the $1.9 trillion forecast in February. The increase is largely due to a $250 billion drop in tariff and customs-duty collections, resulting from the Supreme Court’s ruling that the Trump administration lacked authority to impose tariffs under the International Emergency Economic Powers Act. Stronger-than-expected income and payroll tax collections have cushioned some of the blow, but the government’s revenue streams are still tracking $25 billion below projections.
Our Reading
The announcement sounds familiar.
The numbers tell one story: a $200 billion hole in this year’s budget, largely due to the Supreme Court’s ruling. The scramble to replace lost tariff revenue has been a study in improvisation. The scale of the reversal shows up starkly in the monthly data, with net customs-duty collections flipping negative as refunds tied to the Supreme Court ruling began flowing in May. The government is now refunding more in tariffs than it collects. The CBO expects the new tariff regime to recoup only a substantial share of what was lost.
As the government’s fiscal picture deteriorates, the time to act is now.
Author: Evan Null
