Hiltzik: Why consumers won’t see a tariff refund

Treasury Secretary Scott Bessent, who has a way of speaking out the silent parts when defending President Trump’s economic policies, spoke the truth once again on Friday. a public appearance Just hours after the Supreme Court struck down most of Trump’s tariffs.

Asked about the possibility of refunding Americans for illegal tariffs paid since Trump imposed them in April, Bessent responded with a condescending grin: “I have a feeling the American people won’t see that.”

There are a few things about this. First, those who pay the tariffs do not face any legal problems. have the right to refund. in it 6-3 decision invalidating duties on imports Under the International Emergency Economic Powers Act of 1977, or IEEPA, Chief Justice John Roberts made clear that these tariffs were unconstitutional and illegal from the start.

So there is no excuse for the government to hold on to the money it has collected – estimated to be between $135 billion and $170 billion. But Roberts did not specify whether the refunds were guaranteed or, if so, how they should be calculated and distributed.

Trump shook possibility of tariff refund – in effect, $2,000 tariff “dividend” checks in front of taxpayers for months. In effect, this would mean refunding taxpayers the money their tariffs cost them. Bessent’s comments made good on that promise.

Today, no one other than Illinois Governor JB Pritzer is seriously arguing that checks should be cut for taxpayers. A total of $8.7 billion in refund checks were requested for their voters. But it has the feel of a campaign stunt for Pritzker, who is running for a third term and is priming himself for the presidential race.

The Supreme Court decision did not specify the repayment process, leaving a gap that Bessent sought to fill. In his comments, he explained why refunds would be nothing but a dream for the average American, and those comments were chilling.

First, he said Trump has the authority to reimpose the same tariffs under different laws. In fact, Trump has already announced that he will impose a 15% tariff across the board.

He also signaled that the government was prepared to challenge importers’ refund applications, despite Roberts sending refund orders to the Court of International Trade, which would lead to litigation that “could drag on for weeks, months, years.”

In other words, Bessent implied that, far from resolving the economic confusion Trump has created through his on-again, off-again tariff policies in 2025, the court’s decision encourages Trump to inject even more uncertainty into U.S. trade relations and domestic business decisions.

That penny appeared to drop for stock market investors on Monday. Markets rose modestly in a relief rally on Friday after the Supreme Court announced its decision, but fell on Monday as Trump doubled tariffs. At the close, the Dow Jones industrial average was down 821.91 points, or almost 1.7%, while the Nasdaq and Standard & Poor’s 500 indexes were also down more than 1%.

Bessent did not mention the most important reason why American consumers are unlikely to see anything like a tariff rebate.

Tariffs imposed on imported products are in every respect a tax on domestic consumers. Economic opinion is almost unanimous on this point. As I reported in January, the Kiel Institute for the World Economy, a German think tank, concluded that 96% of the 2025 Trump tariffs were paid by American importers and their domestic customers.

“Tariffs are, literally, our own goal,” Kiel researchers wrote. “Americans are footing the bill” Their conclusion was largely echoed by the Federal Reserve Bank of New York earlier this month, which put the burden on American importers and consumers: “almost 90%.”

However, the details of tariff payments, how much they pay and for which products or parts they keep records are in the hands of importers and retailers. Consumers normally don’t know numbers. (In fact, last year, I received an invoice showing tariffs a Japanese retailer charged for a set of pens I bought as a birthday gift, but since the sum came to $12, I’m not sure asking for a government refund is worth it.)

So far, nearly 1,500 businesses have requested refunds through the International Commercial Court. Many made these claims to gain a foothold in the fight for refunds, much like music fans lining up throughout the night to buy tickets to a star’s upcoming concert.

Many of these businesses may not actually put a number to their claims. Costco is perhaps the biggest retailer file with CITHe did not say how much he thought he owed in his Nov. 28 filing, likely because he wanted to continue paying the tariffs until the Supreme Court made a final decision.

U.S. Customs and Border Protection, which actually calculates and collects the tariffs, says it will stop collecting the invalid duties when the clocks hit 12:01 a.m. Tuesday morning.

What consumers don’t know is how much of the tariffs are passed on to them. Some retailers have decided to impose some or all of the tariffs to keep consumer prices stable. Some may have stockpiled tariff-eligible products before the duties were officially imposed.

Will retailers seek out customers who pay higher prices for products for which they are allowed a refund? None of them said such a possibility was on the cards, but it might not be surprising to see some businesses using the end of tariffs as a marketing tool — you know, “‘Tariff freedom month!’ We’re lowering the prices of Toyotas during the ‘etc., etc.

It is also conceivable that retailers have passed imaginary They pushed tariff costs onto their customers by imposing price increases that had nothing to do with taxes but were still to blame.

That’s what happened after Trump imposed tariffs on washing machines, almost all of which were foreign-made, in 2018. According to a 2020 survey by economists at the Federal Reserve and the University of Chicago, tariffs Mandatory washing machine prices increased by approximately 12%or about $86 each. But the researchers found that the prices of tumble dryers rose by about the same amount, even if they weren’t subject to the tariffs at all.

What happened? Researchers hypothesized that because washers and dryers are often sold in pairs, retailers may have simply spread the washer cost increase between the two products to keep their prices similar. It is also possible that retailers will charge more for dryers to increase their profits, considering that consumers will expect to pay more for rate washing machines and the same effect for dryers. In these cases, the consumer cannot be expected to provide a refund.

Another thing that cannot be predicted is the impact of Trump’s tariffs on the US consumer economy in general. Trump tariffs cost the equivalent of the average American household tax increase of about $1,000Tax Foundation calculated.

Approximately $600 of this amount was due to IEEPA tariffs, which have now been eliminated. However, according to the Foundation’s report, the new tariffs announced by Trump after the Supreme Court decision will increase the tariff on American families by between $300 and $700; this is potentially a greater overall burden than existed before the court’s decision.

The foundation calculated that all of Trump’s tariffs increased the average tariff rate to 13.8%. The Supreme Court’s decision reduced that to about 6 percent (still the highest U.S. tariff rate since 1971), but the new 15 percent tariff Trump announced would raise the applied rate back to 12.1 percent. By law, the new tariff can only remain in effect for five months unless extended by Congress. The tariff rate applied by America in 2022 was 1.5%.

Perhaps the most pressing question facing businesses is how to manage refund claims. In his dissent to Roberts’ IEEPA decision, Justice Brett Kavanaugh wrote that “the reimbursement process is likely to be a ‘mess’.”

Presumably Kavanaugh’s concern was that the International Trade Court would have to decide 1,500 claims one by one. But it doesn’t have to be this way.

In 1998, the Supreme Court declared Port Maintenance Tax on exports based on the constitutional provision. exports cannot be taxed. Responsibility for these refunds also fell to the International Commercial Court, which established a standard procedure for claims. But even under the modernized system, it took seven years, until 2005, for all these claims to be resolved. And that included a claim for just $1 billion in damages, not the more than $130 billion at stake today.

What’s inexplicable about the stench created by Trump’s tariff policies is why Trump is doing it. None of his reasons have been substantiated. The tariffs have not restored U.S. manufacturing employment, which has fallen during Trump’s current term. They have failed to eliminate America’s trade deficit with the rest of the world, which has continued since 1975 and is nowhere near an economic crisis, despite Trump’s claims.

Although the overall trade deficit fell modestly to less than $3 billion last year, or a third of 1%, most of the reduction was in services; The goods deficit increased by 25.5 billion dollars to 1.24 trillion dollars.

All that remains is Trump’s tendency to use tariffs as a tool for geopolitical bullying. Increased or threatened to increase tariffs on Brazil due to Brazil’s criminal prosecution of former President Jair Bolsonaro for leading the coup attempt; He was against Switzerland because he felt humiliated by a Swiss government leader; and against several European countries for blocking efforts to annex Greenland.

None of these actions came to fruition (Bolsonaro was convicted and is currently serving a 27-year prison sentence). America’s trading partners publicly acknowledge that the new tariffs must expire within 150 days and cannot be renewed without intervention from an official. Congress clearly uneasy about giving Trump back tariffs After the Supreme Court took them. they don’t look like that taking Trump seriously.

They might say that on tariffs, as on so many other issues, Trump is increasingly behaving like a lame duck, albeit with some iron whimsy. But as the stock market told us on Monday, even a flash of iron can be very, very costly.