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.
- The Supreme Court has ruled that certain Trump-era tariffs are illegal and will result in refunds to companies.
- Businesses, not individual shoppers, are also eligible to apply for duty refunds.
- FedEx, UPS and Costco have said they plan to pass the savings on to customers, but some experts say most companies are unlikely to lower prices for consumers.
Businesses can now apply for tax refunds, but will shoppers actually see the savings?
The Supreme Court ruled in February that President Donald Trump’s administration does not have the authority to impose broad tariffs around the world under the International Emergency Economic Powers Act of 1977. The tariffs were expected to generate more than $2 trillion in revenue.
The Trump administration has begun processing billions of dollars in tariff refunds, which could total more than $160 billion. Here’s whether customs duty refunds will affect your wallet.
What is a customs duty refund? Why can businesses receive a refund?
Tariff refunds are payments made by the federal government back to companies that paid certain Trump-era import duties that the Supreme Court later ruled illegal.
According to the BBC, repayments could total more than $160 billion, making it one of the largest tariff rebate efforts in history.
However, AARP says businesses, not individual shoppers, are eligible to make claims, and there is no requirement or guarantee that businesses will pass that money on to consumers.
FedEx, UPS and Costco announce plans to issue refunds to customers
Companies like FedEx, UPS, and Costco are planning to issue refunds to customers.
Shipping companies UPS and FedEx said they were taking steps to refund some of the customs duties to customers. The companies said they have filed refund requests through U.S. Customs and Border Protection’s Integrated Control and Immigration Processing Refund System and will issue refunds to eligible customers once funds are released.
“Our intent is simple: If a refund is issued to FedEx, we will reimburse the IEEPA duties paid to the shippers and consumers who originally paid the charges,” FedEx said on its website.
Costco’s CEO told investors in March that the warehouse chain plans to pass on the tax refunds it collects to its members through lower prices and added value. AARP notes that the companies have not made clear their schedules.
Will other companies lower their prices if they receive a tariff refund?
That’s unlikely. Some experts believe that the average household has little or no direct savings.
Shikha Jain, partner and head of consumer for North America at consultancy Simon Kuchar, said businesses know some shoppers are spending less, but price cuts rarely have the effect retailers hope. “If you lower prices, you’re not going to see much in-store volume or foot traffic, and it’s just going to erode revenue and revenue,” Jain said.
Some consumers are filing class action lawsuits.
According to AARP, a successful class action lawsuit may be required for consumers to receive a refund. Shoppers have already sued Costco, FedEx and other retailers, claiming they should get their money back, the BBC reported.
