Should companies that paid illegal tariffs get a refund? – San Diego Union-Tribune

The Supreme Court recently ruled that many of President Donald Trump’s tariffs were illegal, setting off demands from businesses to get refunds.

The U.S. government collected more than $133 billion in tariffs that were struck down by the court, which didn’t provide guidance on whether or how those tariffs would be refunded.

Scott Lincicome, vice president of general economics and trade at the Cato Institute, wrote in The Wall Street Journal that refunds should be easy: “With almost all duty payments now made electronically, and with every IEEPA-related import assigned a specific tariff code, U.S. Customs and Border Protection could return most of the money owed to importers, with interest, at the push of a button.”

Still, the president vowed to find new ways to implement tariffs. He said during a news conference after the ruling that he would sign an order to impose a 10% global tariff under Section 122 of the 1974 Trade Act.

Question: Should companies that paid illegal tariffs get a refund?

Economists

James Hamilton, UC San Diego

NO: The Supreme Court was exactly right that the Constitution does not give the president the authority to impose tariffs entirely on his own. The Supreme Court was also exactly right not to order refunds. The company that paid the tariff often passed the costs on to somebody else. Sorting out who really paid and how to get them a refund is not something the courts should be pretending that they have the authority or omniscience to implement.

Caroline Freund, UC San Diego School of Global Policy and Strategy

YES: The tariffs were ruled unlawful by the Supreme Court so the government should return the money it had no authority to collect. But the court decided legality, not the refund process. If companies must sue to recover their stolen funds, the system will favor large corporations with legal teams and deep pockets. Small businesses, squeezed by the tariffs, may be forced to absorb the loss.

Kelly Cunningham, San Diego Institute for Economic Research

YES: Not likely to receive any refunds just yet as President Trump seeks other means to impose tariffs. The effects and uncertainties of these actions illustrate the negative disruptions of tariffs. Tariffs are taxes burdening the movement of goods while imposing inefficiencies into the marketplace. Costs of both businesses and consumers increase by disproportionate order with the uncertain effects resulting. In the end, consumers will pay even higher costs directly or indirectly with fewer options available.

Alan Gin, University of San Diego

NO: While companies may have had to pay more for products due to the tariffs, many of them probably passed that added cost onto consumers in the form of higher prices. Giving those firms rebates would mean they sold the product at a higher price but didn’t actually have higher costs, which only increases their profits. A better approach would be to give the rebate to consumers, who were impacted by an estimated $1,300 to $1,700 per household.

Norm Miller, University of San Diego

YES: Illegally charged tariffs should not become a windfall to the government to use arbitrarily. There are digital records of tariffs paid. They should be returned within a reasonable time period, i.e. six months. This can be done automatically without needless applications, but I fear stonewalling as Trump had other plans for these funds. Legal tariffs will remain on cars, steel and lumber, and Trump will try again to impose new tariffs. Note the total collected on illegal tariffs equals about seven days of federal government spending.

David Ely, San Diego State University

YES: The Supreme Court’s determination that the tariffs were illegal confirms that the federal government lacked the authority to collect the funds from importers. The absence of guidance from the Supreme Court on handling refunds or the immediate imposition of tariffs under a different authority does not diminish the rights of importers to recoup their payments. The economy would be best served if the federal government announced a clear plan to issue refunds expeditiously.

Ray Major, economist

YES: Because it’s the law. However, this is going to be a mess. Without clear guidance from the Supreme Court regarding how refunds are to be handled, the process will surely be litigated for years. Small businesses will suffer the most, and importers will have to spend money filing individual lawsuits to get their money back. And at the end of the day, consumers will see little or most likely no return of the tariffs they paid.

Executives

Bob Rauch, R.A. Rauch & Associates

NO: Refunds require explicit statutory authorization, and companies that preserved claims through timely protests or lawsuits might qualify. But the Supreme Court’s silence on refund mechanics means this could only be resolved through litigation, agency rulemaking or congressional action. Refunds would go to corporate entities, but would not be passed back to the consumers who actually paid them. There is no way to track consumers to pay back for their store purchases. No retroactive refunds.

Jamie Moraga, Franklin Revere

YES: This isn’t straightforward. It’s wrong that the court ducked the refund question, leaving businesses in limbo. Refunding up to $175 billion widens the deficit and will be slow, messy, and skewed toward larger importers. If a business can document that it truly absorbed those tariffs rather than passing them to consumers, it should get partial relief by crediting prior payments against future tariffs to avoid back-and-forth payments that worsen the deficit and disrupt the economy.

Austin Neudecker, Weave Growth

YES: If the Supreme Court determines the tariffs illegal and the tariffs are not immediately codified into law by Congress, the government must return the illegal fees. Businesses priced goods, signed contracts and paid duties, which impacted how they operated, sourced and planned. If the government keeps the $133 billion collected without proper authority, it undermines confidence in fair trade policy from companies and trading partners. Legality and credibility outweigh maintaining a narrative.

Phil Blair, Manpower

YES: Tariffs have been declared illegal fees and should be returned to the people who were unfairly charged. Because they were paid electronically, it should be easy to return the money.

Gary London, London Moeder Advisors

NO: With $38 trillion in debt, it’s tempting to say that the government should keep the money, if not for the likelihood that the Trump administration will squander the debt in some other way. Importers did take some of the hit, many playing “wait and see” on whether the court would reverse. But ultimately, consumers pay the tariffs, so I say give it back to us. Ironically, that would be good midterm election politics for Republicans.

Chris Van Gorder, Scripps Health

NO: I never liked the presidential tariffs because Congress was not involved, but it’s not in the country’s best interest to allow litigation to go forward for refunds. Clearly, illegal tariffs should stop immediately, but the cost of litigation for refunds will tie up the courts for years with class-action attorneys being the big winners. Who are the victims? Importers? Companies like hospitals that paid higher costs? Individuals? It’s time to move on.

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