Days after the Supreme Court struck down the administration’s emergency tariffs, President Trump rolled out a new set—this time under Section 122. The legal hook is different, but the game is the same. Tariffs are reshaping the federal budget while sidestepping regular order in Congress. And that’s not good.

Last year, International Emergency Economic Powers Act (IEEPA) tariffs drove customs duties to historic highs, producing what looked like a windfall of tariff revenue. As we wrote then, that “windfall” was already in limbo at the Supreme Court. Now the Court has ruled, those tariffs are gone—and the administration is trying to replace them with a different emergency-style authority.

The administration imposed a 10 percent surcharge on imports from every country, applying to goods entered beginning February 24 and lasting until July 24—exactly 150 days, the statutory limit under Section 122.

The tariff is not a replacement for existing duties. It stacks on top of them. The new surcharge applies alongside normal tariff rates and other trade penalties, including Section 301 tariffs on Chinese goods. Imports already subject to Section 232 tariffs—such as steel, aluminum, and certain vehicles—are partly carved out. The surcharge generally does not apply to the portion of a product already covered by those tariffs, but it still applies to the rest of the value. Clear as mud?

For importers and consumers, the result is the same as before, higher effective tariff (read: tax) rates across large parts of the economy.

Here’s the budgetary problem. Section 122 tariffs are temporary by statute, with a hard 150-day limit unless Congress acts. They also arrive under fresh legal clouds after the Court’s rejection of the White House’s use of emergency tariff powers. For these tariffs to produce long-term revenue, Congress would have to keep extending them—again and again. That’s not going to happen.

Legal Clouds

The pivot to Section 122 does not solve the administration’s legal problem—it just moves it. In Learning Resources v. Trump, the Supreme Court ruled that IEEPA—a sanctions law—does not authorize the president to impose tariffs. The Court emphasized that tariffs are taxes, and taxation belongs to Congress unless lawmakers clearly delegate that authority. Score one for the Constitution.

Section 122 lets a president impose temporary import surcharges, but only in specific, short-term emergencies that Congress spelled out—like a severe balance-of-payments crisis or a threat to the stability of the dollar. It was never meant to be a general-purpose tool for managing ongoing trade deficits or reshaping trade policy. Yet, in the executive order, the administration argues those conditions are met, pointing to large and persistent trade deficits, a worsening U.S. international investment position, and risks to long-term economic stability.

The provision dates back to the early 1970s, when the global monetary system was under strain. At the time, the United States operated under the post–World War II Bretton Woods system, where other countries pegged their currencies to the dollar and the dollar was convertible to gold at a fixed rate. As dollars accumulated overseas, they began to outstrip U.S. gold reserves, raising the risk that foreign governments could demand conversion and drain those reserves. In response, President Nixon ended gold convertibility and imposed a temporary import surcharge in 1971. Congress later wrote Section 122 into law in 1974 to preserve a limited version of that emergency authority for future crises of that kind.

The United States no longer operates under a gold-based system, and modern trade deficits do not pose the same risk of a dollar or reserve crisis. Section 122 was designed for rare monetary emergencies, not persistent trade imbalances. Using it now to justify broad tariffs stretches the law beyond its original purpose and treats a long-running condition—the U.S. has run a trade deficit every year since 1976—as if it were a sudden crisis. A trade deficit, by itself, is not evidence of an economic emergency. It often reflects the strength of the U.S. economy and the willingness of foreign capital to invest here, not a sudden threat to the dollar or financial stability.

More than 20 states have already challenged the tariffs in the Court of International Trade, arguing the tariffs exceed the law’s limits. If the courts conclude the statute’s balance-of-payments trigger has not been met—a very real possibility—the administration could once again be forced to refund illegally collected taxes.

But even if the courts order refunds, actually returning the money is likely to be slow, complex, and costly. The government lacks an efficient system to automatically reimburse importers and potentially owing billions more in interest as delays mount. The reimbursements aren’t going to land in the pockets of consumers that ultimately paid – at least some – of the tariff cost so undoing them after the fact, again, doesn’t remove the harm. Making matters worse, the federal government is fighting those reimbursements.

From a budget perspective, it’s the same problem as before. These are taxes on imports, paid by U.S. businesses and consumers. And the revenue they generate can vanish as quickly as it appeared. Replacing one legally dubious tariff scheme with another and expecting a different result starts to look like the definition of insanity.