The Supreme Court’s ruling against the Trump tariffs imposed under the guise of the International
Emergency Economic Powers Act is a setback for President Trump’s trade agenda. It will tie his hands in negotiating better trade deals for the United States. But the Court’s decision is a victory for free trade, the rule of law and separation of powers. The ruling has created a heated policy debate about what comes next. What happens to the tariff revenues that were collected by the government under an illegal tax?

The logical extension of the ruling is that tariffs illegally collected need to be refunded to the businesses that paid them. The total revenues collected is estimated at roughly $120 to $175 billion. This will be a massive undertaking. Government estimates indicate that about 300,000 importers paid the tariffs. Already more than 2,000 tariff lawsuits have been filed with merchants and importers – including FedEx, Dollar General, Brooks Brothers, and Bausch & Lomb.

Our recommendation is that the government return the tariff revenues to the companies that directly paid them, if and when the companies that paid the tax request the refunds. Some will and some won’t. These refunds should be made expeditiously to avoid interest payments and lawsuits, which would only add unnecessary costs to the government and small businesses.

We also believe that businesses that receive the refunds should as a due diligence matter and as a customer relations matter, provide refunds or future discounts to reimburse the consumers who absorbed some of these costs.