The $825 Billion Tariff Gap, Jul 28

RachelTrump said it plainly: We're going to pay off our national debt and maybe substantially reduce it with these tariffs. That's the promise. Substantially. CRFB's new math: $950 billion through 2036. That's the whole total? That's it. Fortune's calling it an $825 billion shortfall

JordynWow.

Rachelagainst what he promised.

JordynOn a $39 trillion debt.

RachelForty per cent. gap; Fortune's number, not mine.

JordynOkay, real talk, call that a canyon. Welcome to Red Flag, everybody, where promises meet spreadsheets. Jordyn, tell them what else we've got. There's also a $166 billion refund order CBP has to process.

RachelMm-hmm.

JordynBy hand. By hand? 4.4 million labor hours, they're claiming. We'll get into it. Plus, Wyden's got a bill nobody in leadership wants to... To schedule a vote on. Quiet GOP dissent meet a locked counter.

RachelRight.

JordynThere's also a spice company and a watch company suing over these new tariffs, a second refund bill stacking right on top of that hundred and sixty six billion dollars, and we're each owning up to where we got tariff durability wrong this year. Playfully, friendly fires coming for both of us this week. So let's start with that nine hundred and fifty billion dollar number.

RachelRemember, show your work, Rachel. Happy to. Here's where CRFB got it. CRFB put out an estimate Thursday. Tariffs raise about nine hundred and fifty billion dollars through twenty thirty six.

JordynOh, I remember, we're going to be so rich, energy.

RachelRight. Well, the receipt just landed. The Committee for a Responsible Federal Budget put out an estimate Thursday. Tariffs raise about nine hundred and fifty billion dollars through twenty thirty six.

JordynWait, that's the whole haul against a thirty nine trillion dollar debt? Debt?

RachelThat's it." Fortune framed it Friday as a forty per cent shortfall on the plan.

JordynSo somewhere between pay off the debt and collect a sliver of a tax something

RachelRight.

Jordyngot lost.

RachelAxios pegged the gap specifically at eight hundred and twenty five billion dollars less revenue than the White House projected. That's not a rounding error. Not even close. So here's my question for the whole episode: did the GOP actually reclaim its

Speaker 3government?

RachelDid it claim its taxing power from the courts, or did it just agree to collect less of a tax it never had the authority to impose?

JordynIn the first place-" Loaded start.

RachelSo what do the numbers behind that nine hundred and fifty billion dollars actually say? So, building on that nine hundred and fifty billion dollar number, let's run the actual variance report. Axios reported Friday the new tariffs bring in about one hundred and five billion dollars a year, replacing roughly sixty percent of what the old IEEPA regime would have collected.

JordynWait, only 60%? So four and ten dollars just evaporate?

RachelGone. And CRFB's math says that's the difference. The difference between nine hundred and fifty billion under Section 301 and Section 338 versus one point seven trillion the emergency tariffs were projected to raise through twenty thirty six. That's not a rounding error. That's a canyon, right? And here's the kicker. CRFB says debt lands at one hundred and twenty two percent of GDP by twenty thirty six instead of one hundred and twenty. Two points doesn't sound like much when you say it fast. Two points of GDP is trillions of dollars, Jordyn. Nobody in this Administration is reading that number out loud.

JordynOkay, real talk. What about the new stuff? The Brazil tariff? The Canada one?

RachelBrazil's the twenty five percent tariff. CRFB pegs it near fifteen billion dollars. Canada's proposed fifty percent Section 338 about forty billion.

JordynSo combine that's what, like fifty five billion against an eight hundred and twenty five billion dollar hole?

RachelIt's a tip jar next to a mortgage payment.

JordynI mean, I'll take any silver lining.

RachelIt's not a silver lining. It's a rounding error dressed up as a policy win.

JordynFair, but at least someone's collecting something.

RachelSure, if the goal was ever revenue and not just looking like they're doing something.

JordynAnd

RachelRight.

Jordynthat's the scoreboard nobody wants to read.

RachelExactly; the shortfall's only half the ledger, too.

JordynWait, there's a second half?

RachelOh, there is a second half-money already collected that has to go out the door.

JordynOh, refunds? Oh, I want to hear this.

RachelSo flip that shortfall around-because half the hole isn't lost revenue, it's money already spent that now has to come back. Wait, give back how much? The Court of International Trade ordered about $166 billion in refunds on those IEEPA tariffs. Fortune is now citing estimates creeping toward $175 billion once interest lands.

JordynSo the illegal tariffs aren't just struck down, they're literally being mailed back. Checks and everything. CBP told the court manual processing runs about 4.4 million labor hours across roughly 53 million entries from over 330,000 importers. 4.4 million hours? That's basically a second federal agency just for the-

RachelAsks for paperwork. Somebody's building a whole career reconciling spreadsheets for a policy that lasted, what, a year? And that's the part nobody puts in the press release.

JordynRight.

RachelYou don't just lose the money you pay to unwind it. Exactly. They cashed the political win, spent the credit claiming it, and now they're mailing the bill to an army of customs clerks. Tariffs paying for themselves, just not the way anybody advertised. But I'm Tuss.

JordynBut the part that matters most, this refund only exists because the tariffs were never legal to begin with. So how many more statutes do they try before one sticks?

RachelOh, buckle up, because that search for a loophole didn't stop. Short timeline because this statute hopping deserves a highlight reel: February 20th, Supreme Court rules six to three in Learning Resources versus Trump. IEEPA doesn't give the president tariff power. Period.

JordynSame day they pivot to Section 122,

RachelWow.

Jordynthat Nixon-era emergency.

RachelMulti-surcharge nobody's touched since 1971.

JordynA flat 10% global, but 122 has a built-in cap, 150 days, no extension without Congress.

RachelAnd that clock hit zero Thursday, July 24th, right on schedule.

JordynWhich is exactly when the new Section 301 forced labor tariffs switch on.

RachelSection 301, one sentence, it's the you're using forced labor hammer. Suddenly 60 countries qualify?

JordynConvenient Techtimes put the coverage at roughly ninety nine per cent of everything we import-and no sunset clause this time!

Speaker 4No expiration date, that's the tell: three statutes, eighteen months; I E E P A one twenty two, three o one.

JordynThat's not trade policy.

Speaker 4That's a scavenger hunt for whichever legal hook survives the next lawsuit. And Congress just-watched.

JordynWhich sets up the real fight, because Treasury's own math on what this switch costs doesn't match what CRFB found.

RachelCHAPTER ONE

JordynBuilding on that statute case, let's test the receipt. Bessent went on Fox and said this straight up.

RachelOh, I remember this one.

JordynRates go back to exactly where they were; only a de minimis decline in 2026, virtually unchanged. His words.

RachelOkay, real talk, that's the tariff version of a serum promising results in one week. The label sounds great until you check the actual ingredients.

Jordyningredients. And the actual ingredients here are CRFB. They put replacement at under 60% of what IEEPA was pulling in.

Speaker 4Wait, Treasury says basically zero change, and the outside scorekeepers say $825 billion short through 2036? Through fiscal year 36, yeah. Same decade, wildly different math. That's not a rounding error. That's a different planet. Planet. So here's my actual question. Congress writes checks off somebody's number. Whose? Treasury's rosy one or CRFB's $825 billion hole? And that gap doesn't just sit there quietly. We tell you here who's actually writing the checks.

JordynBuilding on that number, let's talk about who actually pays it. Fortune broke down the new rates 10 to 12.5 percent. Canada, Mexico, UK get the low end.

Speaker 4And Japan, the EU and Korea are capped at 12.5. Sounds almost reasonable, right?

JordynSure, if you ignore that it's still a tax.

Speaker 4Exactly. And OK, real talk. Axios talked to the guy who runs collective horology. a watch retailer.

JordynOh, no.

Speaker 4He told Axios these Section 301 tariffs hamstring his business the exact same way the last two rounds did. No domestic substitute. You can't manufacture a Swiss movement in Ohio.

JordynWait, how much has that cost him?

Speaker 4Over $160,000, and the refunds from the earlier tariffs haven't even landed yet.

JordynOf course not!

Speaker 4My read is a tax paid at the border is still a tax paid by the buyer, lower rate, wider net. That's not a tax cut, that's a bigger basket.

JordynAnd here's the part that kills me from my supply chain days: these businesses have repriced their contracts three times in eighteen months; IEEPA rate, then Section 122, now this: three spreadsheets, three panics. Every repricing costs money before a single tariff dollar even hits Treasury. That's the invisible tax nobody puts in the CRFB model. And that watch guy?

RachelWow.

JordynHe's not just complaining on Axios. He's now a plaintiff. Shifting gears—that watch company, from last segment? They didn't just complain to Axios—they sued.

Speaker 4Wait, Collective Horology's an actual plaintiff now?

JordynStraight up—and a spice company right alongside it as co-plaintiff.

Speaker 4No way.

JordynLiberty Justice Center filed Burlap and Barrel versus Greer at the Court of International Trade on July twenty-fourth, the same day the new tariffs took effect.

Speaker 4Effect: A spice company and a watch company; not exactly a think tank's air-master.

JordynWhich is the point: these are Main Street importers, not lobbyists with lawyers on retainer.

Speaker 4So what's the legal argument?

JordynThe complaint says USTR set the rates first, then built the country findings afterwards to justify them. They're calling it backwards rule making.

Speaker 4Mm-hmm. Right.

JordynAnd the ask is big. Block enforcement plus refunds with interest.

Speaker 4Oh! refunds again!

JordynStack that on the one hundred and sixty six billion dollar IEEPA order and you've got a second refund bill compounding before CBP finishes processing the first.

Speaker 4Treasury's just piling up liabilities

JordynYeah.

Speaker 4nobody budgeted for.

JordynAnd Congress holds the power to stop all of this, so why hasn't it? it. Speaking of who actually writes the checks, Congress just got handed the pen back and barely picked it up.

Speaker 4Wait, what do you mean?

JordynSenator Wyden introduced the Congressional Trade Powers Reform Act on July 22nd. CNBC reported it faces long odds in a Republican-controlled Congress.

Speaker 4Long odds. Love that for dead on arrival. And it's not just Wyden. NBC News reported Rand Paul's been pressing his-

Jordynhis own party, asking why the party of lower taxes is defending what's basically a tax on imports.

Speaker 4Multiple GOP bills now require congressional approval before any new tariffs stick, so the dissonance bipartisan at least.

JordynOn paper, that's the problem.

Speaker 4No, listen, Article 1's just handed back by the court. Congress has the taxing power, and Congress said no thanks. Keep it.

JordynOr leadership just isn't scheduling the floor vote. That's a choice, Jordan, not gridlock. Somebody's

Speaker 4Right.

Jordynblocking the door.

Speaker 4A discharge petition could force it to the floor. Nobody's filing it.

JordynSo we've got a court win nobody's cashing.

Speaker 4Article one's just sitting there like a gift card nobody opened.

JordynOddly perfect! Speaking of things that age badly, wait till you hear who called this eighteen months out.

Speaker 4Oh, I already know where this is going.

JordynOkay, full disclosure time: eighteen months ago I said emergency powers might survive a legal challenge. I was wrong.

RachelWrong. And the court said so. Six to three.

JordynAnd I owe one too. I figured the tariff revenue number would hold up better than it actually did.

RachelFair. My durability call was off. But there's something that complicates this story. Grassley? Grassley. He's pushed his own trade review act for years. Same Article 1 argument long before this White House existed.

JordynSo this was cross-party skepticism from the start. Republicans flagged the statute problem early, too.

RachelWhich means the whole partisan resistance framing doesn't really hold up.

JordynYes, sometimes the boring constitutional nerds get it right.

RachelPainful but fair. You missed revenue, I missed durability. Matching energy.

JordynMatching energy. One admission apiece, no more.

RachelDeal. So what settles this next?

JordynRight.

RachelThat USTR excess capacity probe covering 16 trading partners is still open.

JordynMeaning another tariff tranche could land before this fight's anywhere near over.

Speaker 4BGHOST1hmm

RachelShifting gears, are USTR's excess capacity probe covering 16 trading partners is still open? Wait, so another tariff tranche could drop before the courts even rule? Exactly. The Congressional Research Service flagged Section 301 as exactly this kind of fallback authority. Okay, three things listeners can check themselves. One, does the Court of International Trade stop? Stop this Section 301 action. Two, do those refund checks from the IEEPA order actually reach importers not just sit in a queue? And three, does any tariff reform bill, Wyden's or otherwise, get an actual floor vote? Bookmark those. Six months from now we'll know which promise got kept—or which number got bigger. Okay, so if you take one thing from today, it's that the GOP didn't reclaim its taxing power. It just agreed to collect less of a tax it never had the authority to impose.

JordynExactly. And that GDP hit we talked about? Nobody's saying that number out loud.

RachelBecause it's not a rounding error.

JordynRight. My favorite moment, though, was watching Congress win its constitutional fight.

RachelAnd still not cash the check. A bill with actual GOP votes just sitting there, wild. Wild is the word. So watch those three things we flagged, the court injunction, the refunds, and whether that bill ever gets a floor vote. We'll be tracking all of it. If this got you thinking, send it to your one tariff-curious friend. Subscribe, leave us a rating, help the politically homeless find their people. Thanks for hanging out with us. See you next time.