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Key Takeaways
- The Supreme Court ruled 6-3 that President Donald Trump lacked authority under IEEPA to impose many tariffs, potentially putting more than $160 billion in collections in question.
- The decision leaves unresolved whether businesses will receive refunds, with economists warning the repayment process could be complex and uneven, especially for small firms.
- While the ruling could lower long-term costs for consumers, Trump signaled he may reimpose tariffs using a different legal authority.
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Billions of dollars in refunds may be returned to businesses after the Supreme Court struck down a portion of President Donald Trump’s tariffs.
In a 6-3 ruling, the U.S. Supreme Court found that the International Emergency Economic Powers Act (IEEPA) did not give Trump the power to issue many of the tariffs he had imposed last year. Tariffs based on IEEPA authority represent about three-fourths of the revenue collected from Trump’s tariff policies, The Tax Foundation calculated.
Why This Matters to You
Tariffs act like a tax on imports, often raising costs for businesses and consumers. Friday’s ruling could moderate price increases, but it also creates uncertainty for trade policy, federal revenue, and future market expectations.
“The justices left the door open for refunds. However, that will likely be litigated,” wrote KPMG Chief Economist Diane Swonk. “The logistics of refunds are expected to be a nightmare and require an enormous amount of documentation.”
Court Quiet on Refunds that Could Exceed $175 Billion
While the Supreme Court ruled that Trump didn’t have the authority to collect the tariffs, it didn’t say whether the government had to give refunds.
“The Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers,” Supreme Court Justice Brett Kavanaugh wrote in a dissent. “But that process is likely to be a ‘mess,’ as was acknowledged at oral argument.”
U.S. customs officials have estimated that through Dec. 14, the government collected $133.5 billion in tariffs under the IEEPA. Collections continued through this year, making that total even higher.
The Tax Foundation estimates tariff collections exceed $160 billion, while economists at the Penn-Wharton Budget Model told Reuters that collections could more than $175 billion. Who gets these refunds could depend on businesses’ ability to claw back the funds.
“Small firms are not likely to fare as well as large firms due to the paperwork, time and potential for additional legal challenges by the administration on refunds,” Swonk wrote.
Not All Tariff Collections May End Up Being Refunded
But it’s not certain that all of the revenue collected from the IEEPA tariffs would be refunded, wrote Nationwide Chief Economist Kathy Bostjancic, who estimated that total refunds could amount to around $70 billion.
“The messy part will be for the lower courts to decide how the refunds for importers will be calculated and distributed,” Bostjancic wrote.
The court ruling could save consumers in the long run. Collections from Trump’s tariff were estimated to cost U.S. households around $1,300 a year in 2026, The Tax Foundation reported.
However, on Friday afternoon, Trump said he would sign an executive order to impose tariffs under a different law.
