SCOTUS tariff decision is a major setback for President Trump’s economic policy
Last week, the Supreme Court issued a landmark ruling on presidential power, shattering the centerpiece of President Donald Trump’s economic policies.
The conversation about refunds has been reverberating across the country since the U.S. Supreme Court reversed many of President Donald Trump’s import tariffs in a Feb. 20 ruling.
A Feb. 23 report from the nonpartisan Tax Foundation said these tariffs would amount to about a $1,000 tax increase per U.S. household in 2025.
Now, can consumers expect to get most of that money back?
We asked several customs experts and the answer was a resounding “no.”
Here’s the problem. No matter how much of a burden these tariffs placed on American household budgets, consumers did not pay them themselves. The importer paid the price. Ultimately, costs were absorbed by many parties, including exporters, importers, wholesalers, retailers, and consumers.
“Consumers are not importers, so they have no legal claim for refunds,” said Stephen Cates, a financial analyst at Bankrate. “They just bought the product.”
But U.S. retailers may still find a way to return some of the huge tariff refunds to customers when they arrive.
Businesses are lining up to get tariff refunds
The reason Americans are talking about tariff refunds is because American companies are lining up to get tariff refunds. On February 23, shipping giant FedEx filed a lawsuit seeking to recover the duties it paid under the policy, which was struck down by a high court.
The case followed a Supreme Court ruling. In the months leading up to the decision, thousands of other companies filed lawsuits to recover their share of the estimated $175 billion in import taxes collected by the federal government.
Government officials said in court filings that they would proceed with refunds if the tariffs were lifted.
Observers are now predicting a flood of new lawsuits in the wake of the Supreme Court’s ruling. Justice Brett Kavanaugh wrote in a dissent that the refund process “is likely to be chaotic.”
“It doesn’t seem like the Trump administration is going to facilitate that process,” said Alex Jacques, director of policy and advocacy at the progressive group Groundwork Collaborative. “The mechanics of getting that money back to consumers is even more complex.”
But for those companies that paid the tariffs, at least a paper trail remains.
“Refunds for overpayments, like any other tax refund, will go to the person or entity that legally paid them,” said Erica York, vice president of federal tax policy at the Tax Foundation. “The government has these records.”
Refund of customs duties to consumers? “Infinite” opportunities.
Congress could also send tariff refund checks to consumers who paid taxes indirectly when they purchased more expensive products. But customs experts said the process would be far more cumbersome.
“It’s very unlikely that that will happen,” Bankrate’s Cates said.
“You think of companies like Costco,” he said. “How many millions of people bought these products last year? There’s no way you can logically imagine an operation that would give back $5, $10 to 10 million households. It’s impossible.”
Trump administration officials appear to agree.
In remarks at the Dallas Economic Club shortly after the Supreme Court’s decision, Treasury Secretary Scott Bessent predicted that the tariff refunds were unlikely to reach consumers, saying, “I felt the American people were not going to understand it.”
Retailers may offer voluntary tariff rebates
There may be another way.
Some rate watchers predict that retailers will launch a voluntary campaign to pass rate costs back to customers.
“Companies announced tariff increases to consumers,” said Scott Linthicum, an economist at the libertarian Cato Institute. “Thousands of emails like this were sent last year. There were a lot of small and medium-sized businesses, but there were also large corporations as well.”
Linthicome said that if the tariff refunds were sent to U.S. companies, it was not difficult to imagine the companies returning some of the funds to customers through tariff refund sales, retail credits or “checks in the mail for the price increases they imposed.”
Linthicum said retailers may offer tariff refunds under pressure from customers armed with old emails about tariff increases and the tariff premium on their receipts.
“Some companies are going to really piss off customers who are basically asking, ‘Hey, they charged me an extra $50. Where’s my money?'” Linthicum said.
Leading Democratic lawmakers, including California Governor Gavin Newsom and Illinois Governor J.B. Pritzker, have called on the Trump administration to refund tariffs to American families in response to the court ruling. Mr. Pritzker called for $1,700 for every family in the state.
So what happens to the $2,000 customs dividend check?
These demands build on the much-touted $2,000 tariff dividend checks that President Trump has repeatedly promised American families in 2025.
The idea behind the tariff rebates was to return some of the revenue from President Trump’s import taxes to low- and middle-income Americans.
An independent analysis has questioned whether there was enough customs revenue to cover the $2,000 dividend check. In light of the Supreme Court’s ruling, tariff experts say it is unlikely that U.S. consumers will receive tariff payments, refunds or rebates.
“Tasty rebate checks were never scheduled to be implemented and never will be,” said York of the Tax Foundation.
Tariff rebates would require an act of Congress, similar to the fiscal stimulus payments Congress authorized during the coronavirus pandemic.
Bankrate’s Kates said the chances of Congress passing the tariff dividend checks were “never high.” After the Supreme Court’s ruling, he said, “the bill has virtually no chance of passing Congress.”
Contributor: Bart Jansen, Reuters
