Businesses can apply for customs duty refunds. Will consumers see it?
Companies are not required to share tariff refunds with customers, but some have said they plan to pass on some relief.
U.S. importers who paid duties that the Supreme Court ruled illegal in February are working to secure refunds from the federal government, but shoppers who paid more likely won’t be refunded.
Two months after the U.S. Supreme Court struck down tariffs imposed last year by President Donald Trump under the International Emergency Economic Powers Act of 1977, U.S. companies that paid those fees will be able to apply for refunds through the new Customs and Border Protection agency. These refunds could total about $166 billion, with more than 330,000 importers paying duties on more than 53 million shipments, according to court filings.
Much of the tariff costs were borne by businesses, but at least some were passed on to shoppers through higher in-store prices. Still, Jackson Wood, director of industry strategy for Descartes’ Global Trade Intelligence business, said consumers are unlikely to see direct refunds or price reductions across the board.
“These tariff payments have left a big hole in their income statements, so getting those tariff payments back will really help make their business healthier,” Wood said. “It is unlikely to provide much relief to U.S. consumers for the foreseeable future.”
Prices are likely to continue rising in the coming months due to new tariffs imposed by the Trump administration and soaring oil prices due to the Iran war.
How will customs duty refunds affect consumers?
The two companies promised to take some form of redress if consumers receive refunds.
“But we haven’t heard from anyone else,” said Rohit Tripathi, vice president, industrial and CPG, manufacturing at RELEX. “Prices are unlikely to fall in the short term.”
FedEx said it would issue refunds to customers if it acted as a customs broker as soon as it began receiving refunds, which could take some time. The first phase of the refund process, which began on April 20, is limited to “some uncleared entries” and packages older than 80 days, according to Customs and Border Protection. The agency added that refunds will not be issued until 60 to 90 days after the importer’s request is received.
In March, Costco CEO Ron Vacris said the refunds collected by the grocery giant would be passed on to members through lower prices and better value, but added that the future impact of the tariffs “remains very fluid.”
Shikha Jain, partner and head of North American consumer at consulting firm Simon Kuchar, said companies are aware that some consumers are holding back on spending and may lower prices to lure customers back. But that usually doesn’t happen, she added.
“If you lower your prices, you’re not going to see as much product in your store, you’re not going to see as much foot traffic, and it’s just going to eat into your bottom line and your bottom line,” Jain said. “While this may not be the best answer for consumers who are still struggling, we are finding that there is some disconnect between what retailers expect from price reductions and how actual consumer behavior results.”
What’s next after tariffs?
After the Supreme Court struck down the IEEPA tariffs in February, President Trump immediately took steps to impose a 10% tariff on almost all items imported into the United States.
The president did this under another authority, Section 122 of the Trade Act of 1974. The article authorizes the president to impose tariffs to address large trade imbalances, as long as they expire within 150 days. These will come into effect on February 24 and expire at the end of July.
From there, the Trump administration plans to reinstate tariffs closer to IEEPA levels, said Drew DeLong, director of corporate strategy at Kearney Foresight, a division of global management consulting firm Kearney.
This includes leveraging Section 301 of the Act, which requires inspection but allows the administration to impose tariffs in response to actions by foreign governments that burden or restrict U.S. commerce.
In March, U.S. Trade Representative Jamison Greer announced several Section 301 investigations into China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.
“If you are a company today and lower your prices based on IEEPA levels, your tariffs will go back to the previous IEEPA levels, and then you have to take action again,” DeLong said. “I think most people will be waiting to see how 301 develops.”
Contact Rachel Barber at rbarber@usatoday.com and follow her at X @rachelbarber_
