Standard Chartered economists Dan Pan and Steve Englander reviewed how the US Supreme Court’s ruling against IEEPA tariffs affects US tariff receipts. They report that tariff income fell after the decision but stayed well above pre-Liberation Day levels.
They expect tariff revenue to be about USD 25bn in each of March and April, the first two months after the ruling. Current receipts are about 3.4x pre-Liberation Day levels, compared with more than 4x 2024 levels at the end-2025 pace when tariffs were fully in place.
At the current rate, they estimate the revenue loss from the IEEPA ruling at USD 60bn annualised. They also state that IEEPA tariffs made up over half of US tariff revenue.
They note that further declines are possible as remedies expire and reimbursements speed up. A 10% Section 122 blanket tariff introduced after the ruling has helped offset the shortfall, but it has a 150-day limit and is due to end on 24 July 2026.
We see that the recent Supreme Court ruling on IEEPA tariffs has introduced significant uncertainty into the US fiscal picture. While the initial drop in tariff revenue to $25 billion per month wasn’t as severe as some expected, it still represents a material risk to the budget. This situation requires us to be nimble and prepare for heightened volatility, particularly in currency and interest rate markets.
The Congressional Budget Office’s latest April projection now shows the fiscal deficit widening by another $50 billion for the year, directly citing the fall in tariff receipts. This potential for increased government borrowing could put upward pressure on Treasury yields, making interest rate derivatives a key area to watch. We should consider positions that would benefit from a steeper yield curve as the government looks to fund this unexpected shortfall.
The most critical date on our calendar is July 24, 2026, when the temporary 10% Section 122 tariff is set to expire. This tariff has been a crucial stopgap, and its removal without a replacement would create a fiscal cliff, likely weakening the US dollar. We are closely monitoring any legislative discussions for a long-term solution, as market sentiment will be highly sensitive to this news flow.
Market anxiety is already becoming visible, with the CBOE Volatility Index (VIX) creeping up to 19.5 this week from an average of 16 last month. This reminds us of the trade disputes in the late 2010s, where currency markets saw sharp swings based on tariff announcements. When we look back at the market stability of late 2025, it was partly supported by a strong and predictable revenue stream that is now in question.
This shift creates opportunities in specific equity sectors. We should be looking at options strategies that favour import-heavy industries, such as retail and consumer electronics, which stand to benefit from lower costs. Conversely, it would be prudent to hedge against weakness in domestic producers in sectors like steel and manufacturing that previously benefited from tariff protection.
The clear deadline in July suggests that trading volatility itself is a sound strategy. We can use options on major currency pairs like EUR/USD or equity index ETFs to position for a significant market move as that date approaches. A long straddle or strangle could be effective in capturing the price swing without needing to predict the exact direction.
