Economists have warned that slow-walking the rebates for President Donald Trump’s now-defunct emergency tariffs could result in high costs for the government, given the interest that is accruing on revenues from the illegally collected duties.
On February 20, the Supreme Court ruled that the president was unable to impose tariffs under the International Emergency Economic Powers Act (IEEPA), which had been invoked for the majority of Trump’s global duties.
And according to a new analysis from the free-market-oriented Cato Institute, interest is compounding on the estimated $175 billion owed to importers at a rate of $20 million per day, or $700 million per month.
“If the government were to drag out refund lawsuits until the end of the president’s term, as he recently suggested, taxpayers would owe importers about $25 billion more,” their report reads.
Newsweek reached out to the White House via email for comment.
Why It Matters
The Trump administration has, in the past, acknowledged its duty to refund tariff revenues should these be struck down, but officials have said they will await guidance from a lower court on this matter while also seeking to delay the process and the eventual payments. Current and former officials have said that the task of refunding billions of dollars will likely prove a lengthy, arduous and, as Cato’s analysis highlights, costly one for the U.S. government.
What To Know
Court records show that the government had previously accepted its duty to refund, with interest, any tariffs later deemed unlawfully collected.
Following the Supreme Court decision, Treasury Secretary Scott Bessent noted that the Supreme Court provided no guidance on the question of rebates and said that the matter could play out “for weeks, months, years” in lower courts. But Bessent, as well as other members of the administration, have said that they will follow the guidance of the U.S. Court of International Trade, to which the matter was remanded, on the issue.
On Friday, government lawyers opposed a request from the plaintiffs that the refunds be issued on an expedited basis, instead requesting that the Court of International Trade pause the process for 90 days, plus the customary 32-day entry period, “to allow the political branches an opportunity to consider options.”
“The 120-plus-day delay the government just requested would cost taxpayers almost $3 billion in additional interest,” Cato’s experts wrote in their analysis.
This request was blocked by the U.S. Court of Appeals for the Federal Circuit on Monday, but the administration nevertheless anticipates the matter lasting months or even years.
During a press briefing shortly after the Supreme Court decision, Trump said the government would “end up being in court for the next five years” when asked about the issue of rebates.
What People Are Saying
William Reinsch, senior adviser for the Economics Program at the Center for Strategic and International Studies, previously told Newsweek: “Prior case law suggests that the importers who paid the tariffs are entitled to refunds with interest. The administration stipulated to a lower court last year that it would respect that. That stipulation seems to have been forgotten in the past few days, but the courts won’t forget it. There is a well-established process for obtaining refunds, and as of earlier this month, it is entirely electronic. Overpayments and underpayments are common, and [U.S. Customs and Border Protection] knows how to handle them, though they have never done it at this scale.”
What Happens Next
Hundreds of companies have already commenced litigation to secure their place in line for tariff refunds if and when these are disbursed.
In its rejection of the government’s bid to delay the process on Monday, the U.S. Court of Appeals for the Federal Circuit said the issue will proceed at the Court of International Trade.
In a polarized era, the center is dismissed as bland. At Newsweek, ours is different: The Courageous Center—it’s not “both sides,” it’s sharp, challenging and alive with ideas. We follow facts, not factions. If that sounds like the kind of journalism you want to see thrive, we need you.
When you become a Newsweek Member, you support a mission to keep the center strong and vibrant. Members enjoy: Ad-free browsing, exclusive content and editor conversations. Help keep the center courageous. Join today.
