By Janet Nguyen, MARKETPLACE
President Donald Trump’s new tariff policies, which include tax rates of 10% to 50% on imports around the world, have raised about $120 billion so far this year.
Tariffs are taxes that the importer has to pay. That means tariff dollars come from U.S. companies and you, the consumer, if the company has chosen to raise prices to compensate for these higher taxes. And there’s evidence that you have. A Goldman Sachs analysis last month projected that American consumers will end up paying for 55% of Trump’s tariffs this year.
The Supreme Court recently heard arguments on whether Trump can impose sweeping tariffs under the International Emergency Economic Powers Act.
Not all tariffs are in question. The Supreme Court is considering Trump’s fentanyl tariffs, which are tariffs aimed at curbing the flow of that drug into the U.S., and the reciprocal tariffs he set on countries around the world to address trade imbalances.
The court hasn’t issued a ruling yet, but some of the conservative judges on the court and all of the liberal justices have expressed skepticism.
$90 billion will be refunded by the federal government if the Supreme Court rules that Trump doesn’t have the power to impose these tariffs. That money is supposed to go back to the importers who directly pay for those tariffs, but consumer watchdogs think there may be pathways for consumers to reclaim some of that money – we’ll just have to see the court’s specific ruling.
Meanwhile, Trump has touted the benefits of tariffs and recently wrote on Truth Social that consumers could be paid “a dividend of at least $2,000 a person,” with the exception of those who are high income. At a press conference on Wednesday, White House press secretary Karoline Leavitt said “the White House is committed”to making those payments.
But Congress would have to authorize any spending from America’s pool of tariff revenue. Here’s what you should know about the $2,000 dividends and the Supreme Court case.
Does Trump have the power to send out tariff payments?
Tariff revenue goes into the U.S. Treasury’s general fund, and only Congress has the authority to authorize spending from that pot. So lawmakers approve those tariff payments and there’d be no problem with that, said Timothy Meyer, a professor at Duke University School of Law.
If they don’t, the Trump administration doesn’t have a trade statute it can rely on to grant them the ability to redistribute tariff revenue, Meyer pointed out. But Congress did pass a bill that reduces taxes earlier this year and that law might allow Trump to send out any checks, he noted. The Trump administration could try to frame a tax cut as a tariff refund, Meyer said.
But even if the Trump administration does manage to get over any legal hurdles, not enough tariff revenue has been raised to pay for those refunds on their own.
If the income cut-off for these checks is $100,000, then 150 million adults will qualify, amounting to $300 billion in tariff dividends, according to a tweet from Erica York, the vice president of federal tax policy at the Tax Foundation. But Trump’s new tariffs have only raised about $120 billion, York wrote.
These checks could also have implications for the economy. The U.S. “has been fighting the demon of inflation since the end of the first Trump administration” and these checks could end up worsening this issue, Meyer said.
And they’re one-time payments, so they don’t address long-term affordability issues people are experiencing, Meyer noted.
What if the Supreme Court overturns Trump’s IEEPA tariffs?
Right now, it’s unclear if consumers will be able to reclaim any refunded money if Trump’s tariffs get struck down. Only the people who directly paid the tariff are supposed to get that money back. But consumer advocates are keeping an eye on the Supreme Court’s ruling to figure out what they’ll be able to do to help U.S. customers.
“The tariff is paid by law by somebody called the importer of record, and so that’s the person who literally pays the government the tariff and that’s the person who will literally be entitled to any refunds,” Meyer explained.
It’s possible that the importer of record is an agent for a company that wants those goods and has a contract with that business. In that case, the importer might be legally obligated to pass on the refund to that business. But end-use consumers don’t have contractual relationships with importers of record that would entitle them to a refund, Meyer explained.
“It’s possible, of course, that if there is a refund, that companies will lower their prices and announce that that’s a type of refund — you know, kind of a marketing thing,” Meyer said.
But depending on how the Supreme Court rules, consumers may have some pathways to reclaim tariff money, although it’s “tough to speculate” at the moment, said William Pletcher, the litigation director for Consumer Watchdog.
“You can imagine that state unfair competition laws could give consumers a potential path to claim restitution,” Pletcher said.
Class-action lawsuits could be one venue, and it’s possible that state attorney general’s offices could try to help consumers get some of that back, Pletcher added.
“We’re certainly hopeful that we get a good ruling, but we’re waiting to see,” Pletcher said.