As the Supreme Court weighs challenges to some of the tariffs recently imposed by the U.S. on imports from dozens of countries, President Trump is ramping up his campaign to keep things just the way they are.
The new tariffs — some of which were imposed after Trump declared national emergencies relating to drug trafficking and trade imbalances, leading to lawsuits that are now before the Supreme Court — have generated about $120 billion in additional revenue in fees collected from U.S. importers so far, but the president on Tuesday argued that overturning the tariffs would actually cost trillions of dollars in lost revenues.
“The ‘unwind’ in the event of a negative decision on Tariffs, would be, including investments made, to be made, and return of funds, in excess of 3 Trillion Dollars,” Trump wrote Tuesday on his social media platform. “It would not be possible to ever make up for that kind of a ‘drubbing.’ That would truly become an insurmountable National Security Event, and devastating to the future of our Country - Possibly non-sustainable!”
Although Trump did not provide any explanatory details, it appears that he was referring to an analysis by the Congressional Budget Office in August that found that the tariffs would generate about $3.3 trillion in revenues over 10 years, reducing the cumulative budget deficit by that amount. The revenues would reduce federal borrowing, saving an additional $700 billion in interest payments.
In addition, Trump seems to be referring to potential investments made by companies in production facilities in the U.S. in response to his tariffs. More broadly, Trump is repeating his basic idea behind the tariffs: that they make the country rich, and without them, the country would be poor.
Still, most of the “trillions” that Trump likes to cite as being at stake are projections into the future, sometimes enhanced with heavy doses of exaggeration. The amount that could be affected by a Supreme Court decision is the amount paid so far by importers, about $120 billion, though that number moves higher with each passing day, increasing by about $20 billion to $30 billion per month.
Messy refunds? If the Supreme Court decides that some of Trump’s tariffs are illegal, there are questions about how the federal government might go about refunding the revenues that have already been collected.
In discussions last week, Justice Amy Coney Barrett said that reimbursing U.S. firms for the tariffs they have paid would likely be “a mess.” Neal Katyal, the lawyer who represented businesses suing to overturn the tariffs, said reimbursement would be “a very complicated thing” requiring formal administrative procedures.
Some U.S. companies, though, say reimbursement could be relatively straightforward. Rick Muskat, CEO of the shoe manufacturer Deer Stags, told CNBC that official U.S. customs forms clearly document the cost of the tariffs. “On every customs entry, we detail specific line items that indicate the duty/tariff rates we are paying,” he said.
The forms even show separate entries for which tariffs are being applied. Muskat, who signed an amicus brief for the Supreme Court that calls for eliminating the new tariffs, said his forms break the import fees into three categories: the standard tariff that has been in place for years (6% in his case); a “fentanyl tariff” (20%) that Trump imposed to combat drug trafficking; and a “reciprocal” tariff (10%) that Trump imposed under his emergency declarations.
“So it should be simple for importers to apply for refunds based on this tariff itemization,” Muskat said. “The IRS has no problem issuing refunds for overpayment of taxes. This is no different.”
Paperwork, though, could slow things down, and any reimbursement process would likely require companies or already overburdened customs brokers to wade through months of historical data as they compile their refund requests.
Although importers may recoup some of the fees they paid should the Supreme Court overturn Trump’s “reciprocal” tariffs, there’s one group that paid some of the cost that probably won’t receive any refunds: American consumers. While companies may get some portion of their tariff fees back, end consumers who paid higher retail prices put in place as a result of the tariffs will likely be out of luck.