Potential Steel and Aluminum Tariff Changes Would Raise $70 Billion

The Wall Street Journal reported today that the Trump Administration could soon issue a presidential proclamation to modify the tariffs on steel and aluminum derivative products. Based on our understanding of the potential move, we estimate it would increase revenues by roughly $70 billion through Fiscal Year (FY) 2036.

Specifically, the reporting indicates that the Administration would decrease the tariff rate on steel and aluminum derivative products from 50% to 25% and apply the rate to the entire value of the products – rather than just the content of steel and aluminum as currently implemented. The proposed changes to tariff policy would help to recover some of the revenue lost following the Supreme Court’s ruling against tariffs imposed under the International Emergency Economic Power Act (IEEPA). We previously estimated that the Supreme Court ruling would reduce projected revenues by $1.6 trillion to $1.7 trillion, depending on if collected IEEPA tariffs are refunded; the proposed tariff changes would help offset some of that revenue loss.

While the proposed changes to tariff policy are encouraging, they are not nearly enough to put the nation on a sustainable fiscal trajectory. We encourage policymakers to further recoup lost IEEPA revenue amid a bleak fiscal outlook, either through alternative tariffs, other revenues, or spending cuts – ideally through legislative action.