After the Supreme Court ruled that the International Emergency Economic Powers Act does not give President Donald Trump authority to impose tariffs, Trump implemented new tariffs citing Section 122 of the Trade Act of 1974.
Under the tariffs struck down by the court, Yale’s Budget Lab estimated that the typical household would spend $1,194 more due to Trump’s emergency tariffs.
But under the new 15% tariffs imposed under Section 122, typical U.S. households would spend about $1,042 if they remain in effect through the rest of the year.
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Yale’s Budget Lab assumes Americans would substitute some purchases because of tariffs. Without making substitutions, the emergency tariffs under the powers act cost the typical household $1,577 annually. Under 15% Section 122 tariffs, the annual cost to consumers would be about $1,315.
The Section 122 tariffs exclude certain critical minerals, energy products, agricultural goods, pharmaceuticals and electronics. Trump’s power to impose these tariffs is also likely to face legal scrutiny.
The administration contends that Section 122 allows the president to implement tariffs for up to 150 days without congressional authorization.
Trump has suggested that foreign governments pay tariffs, but in reality, they are paid by the importer when goods enter the United States. Many businesses have said the cost of tariffs would be passed along to consumers in the form of higher prices.
Some businesses, including FedEx and Costco, have sued the federal government in hopes of recouping some of the money collected under the powers act.
New York Gov. Kathy Hochul, a Democrat, has cited Budget Lab data in urging the government to issue refunds to residents. She called on the federal government to return $13.5 billion in tariff revenue to New Yorkers, saying the typical household in the state paid $1,751 more in the last year because of Trump’s tariff policy.
“These senseless and illegal tariffs were just a tax on New York consumers, small businesses and farmers — and that’s why I’m demanding a full refund,” Hochul said. “I’ll never stop fighting for New Yorkers, and that means staying focused on putting more money back in your pockets — not ripping it away.”
Trump has argued that the tariffs generate revenue for the government and reduce trade deficits with other nations.
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“So despite the disappointing ruling, these powerful country-saving (tariffs)— it’s saving our country — the kind of money we’re taking in,” Trump said.
