Who Benefits If US Courts Overturn Donald Trump's Tariffs? It May Not Be Common Consumers...

(MENAFN- Live Mint) With two United States federal courts having struck down President Donald Trump's“biggest and boldest import taxes”, another strike from the country's Supreme Court could leave these levies defunct, according to an AP report.

The report noted that while Donald Trump boasts about the“trillions of dollars” coming into the US because of his tariffs, an“illegal” stamp on the duties could lead to demand for refunds from those affected.

Notably, there are two sets of tariffs imposed by Donald Trump - one on almost all countries on earth, which he deemed as“retaliatory” under the 1977 International Emergency Economic Powers Act (IEEPA), and one set aimed at Canada, China and Mexico.

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A special federal trade court in New York in May this year ruled that Trump was“overstepping his authority” by bypassing Congress to impose the IEEPA based tariffs. Now, last week, the US Court of Appeals for the Federal Circuit, upheld that order and sent the matter to a lower court for reconsideration.

Meanwhile, the administration has appealed to the Supreme Court on September 3, with US Solicitor General D John Sauer requesting judges to take up the matter in November.

As it now stands, if the country's Supreme Court strikes down Donald Trump 's tariffs for good, the US federal government could have to pay back many of the taxes it has collected from importers.

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As of August 24, 2024, the US Customs and Border Protection agency said it has collected over $72 billion in IEEPA tariffs.

“We're talking about hundreds of billions of dollars potentially in refunds affecting thousands and thousands of importers. Unwinding all that will be the largest administrative effort in US government history,” Luis Arandia, trade lawyer and partner at Barnes & Thornburg told AP.

Ted Murphy, co-leader, international trade practice at Sidley Austin law firm, told AP,“It's a question of what you're (importers are) going to have to do to get the refund. And the options are everything from nothing - the government may just automatically refund it; I don't think this is likely, but that's one option. There could be an administrative process, so you have to go to US Customs and apply for a refund of your IEEPA tariffs. Or you could have to file your own court case.”

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Yes. There is precedent, according to the report. In the 1990s, US courts struck down a harbor maintenance fee on exports as unconstitutional and set up a system for exporters to apply to get their money back. The only positive? The government did not have to pay back interests.

However, Donald Trump has been vocal he does not want to pay back the tariffs collected, saying the possibility“would be 1929 all over again, a GREAT DEPRESSION!”

Brent Skorup, legal fellow at the libertarian Cato Institute said if this administration loses in court, "they would turn around and start arguing why it would be impossible to give refunds to everybody. I think there will a lot of litigation about the nature of refunds and who's entitled one. And I expect the administration will raise all sorts of objections.''

Clinton Yu, partner at Barnes & Thornberg noted that even among those eligible, successfully getting a refund would mean“importers really need to have their records in order.''

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However, the consensus among experts is that the common people - who would have shelled out higher prices due to the tariff pass through - would be unlikely to gain any refunds; only companies that paid taxes directly to the government could benefit, as per the report.

How tariffs work are that the duties are paid by importers to the authority and then the cost is often passed to their customers through higher prices. But consumers would not have recourse to ask for refunds for the higher prices they had to pay.

“It's the importer of record that is legally liable for paying tariffs and duties. They would be the only one to have standing to even get that money back,” Arandia said.

(With inputs from AP)

Key Takeaways

• Federal courts are currently reviewing Trump's tariffs, with the possibility of significant refunds owed to importers.
• Consumers are unlikely to see any financial relief from tariff refunds, as they are not the ones directly liable for the duties.
• The process to claim refunds could lead to extensive litigation and administrative challenges for importers.

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