Customs has returned about $100 billion, but the shoppers who paid higher prices have no direct claim
By Jose E. Navarro, MBA | The Navarro Report
SAN DIEGO. The government is returning struck-down tariffs on a vast scale, and I could not find a public ledger showing who is cashing the checks. U.S. Customs and Border Protection has completed roughly $100 billion in refunds of the struck-down tariffs, about 60 percent of the $166 billion it says it collected, according to a court declaration summarized by VAT Update. The money is moving. The question a controller asks is where it lands.
The Supreme Court ruled 6-3 on February 20, in Learning Resources v. Trump, that the emergency-powers law the administration relied on does not authorize tariffs. Refunds followed quickly. Bloomberg reported that Treasury paid out $49.2 billion in June alone, and that the deficit through June reached $1.37 trillion, 2 percent wider than a year earlier, the first widening of the fiscal year. Evercore analysts called the payouts a temporary increase in the deficit, since new tariffs are expected to rebuild revenue.
The refund machinery is vast. Customs built a system called CAPE to process claims, and its declaration says 17.69 million entries have been liquidated or reliquidated so far. The Court of International Trade ordered refunds to importers of record, and that order is on appeal to the Federal Circuit while Customs runs its own administrative process. In other words, the government is returning money at scale while the legal rules for who ultimately keeps it remain unsettled.
Now consider who gets paid. Only the importer of record, or its customs broker, can claim a refund from the government, according to Washington Lawyer. That party is not always the one who bore the cost. A retailer that raised shelf prices to cover tariffs and then receives the refund has been paid twice, once by its customers and once by Treasury. Shoppers generally have no claim against the government. They can only pursue the companies.
Many are trying. The Business News counts more than 100 consumer class actions in more than 30 federal districts, with defendants including Nintendo and Costco. Costco argues it has received no refund and that the claims are premature. No court has ruled on the merits. Plaintiffs will also have to prove how much of a price increase was tariff and how much was ordinary inflation, which is hard to do after the fact.
Some companies have chosen a cleaner path. FedEx publicly committed that if it receives refunds, it will issue them to the shippers and consumers who paid, as the same Washington Lawyer article notes. That is the right model. It is also voluntary, and nothing requires other importers to follow it.
Taxpayers carry a second cost that rarely makes headlines. The money was never free to hold. In March, the Cato Institute estimated that about $175 billion of the collected tariffs was accruing interest at roughly $700 million a month, according to Fortune. Refunds now include that interest, a cost no one voted on. Administrative friction adds to it. As of early August, 19,726 refunds worth about $1.6 billion had not been sent because importers had not supplied bank details, per the same VAT Update summary.
The cycle may repeat. After the ruling, the administration turned to a temporary tariff under another statute, limited to 150 days. The Committee for a Responsible Federal Budget estimated that a 10 percent version would replace about half of the lost revenue. Evercore analysts quoted by Bloomberg expect new tariffs to rebuild collections, potentially above $300 billion a year. If those rest on shaky legal ground, Americans will meet the same refund problem again.
Whatever one thinks of tariffs, the accounting should not depend on one’s politics. Three questions remain unanswered. How much of the $166 billion will reach the households and small businesses that actually bore the cost? How much will taxpayers pay in interest and administration to return it? And what stops the same sequence from happening twice?
Three modest steps would help. None of them argues for or against tariffs. They are simply arithmetic that belongs in public view. First, Customs and Treasury should publish a monthly refund ledger showing principal, interest and recipients by size category, without disclosing trade secrets, so the public can see who is being repaid. Second, Congress should consider asking large importers that receive refunds to state whether they passed tariff costs to customers and how they will treat that money. Third, any future tariff should rest on clear statutory authority, so that a court loss does not hand the public a bill measured in hundreds of billions of dollars.
In my years as a controller, an overpayment was never resolved when the check was cut. It was resolved when someone could show the money reached the party that bore the cost. Americans are owed that accounting, whichever side of the tariff debate they sit on.
Jose E. Navarro, MBA, is a financial controller and founder of The Navarro Report, a public finance and government accountability publication based in San Diego, California. He is not related to Peter Navarro.
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