Supreme Court Trump tariffs ruling could put U.S. on hook for $175 billion in refunds, estimate says

The U.S. government could owe more than $175 billion in refunds to importers after the Supreme Court ruled Friday in a 6-3 decision that tariffs unilaterally imposed by President Donald Trump are illegal, a new estimate says.

The potential refunds to a broad range of companies would be for tariffs already collected by the government since Trump slapped on the duties without authorization from Congress.

The $175 billion refund estimate from the Penn-Wharton Budget Model was produced at the request of the Reuters news wire service. The model is a non-partisan fiscal research group at the University of Pennsylvania.

Multiple importers already have pending lawsuits seeking refunds of their tariffs, citing lower-court rulings that found Trump’s tariffs are not legal.

The Supreme Court ruling on Friday did not say that the federal government could keep the money it has already collected from those tariffs but didn’t explicitly address refunds.

The president had invoked the International Emergency Economic Powers Act to impose the tariffs. He was the first president to ever use IEEPA for that purpose.

Supreme Court Justice Brett Kavanaugh, one of three conservative members of the high court to dissent from Friday’s ruling, warned about the potential logistical difficulty of having to refund tariffs already collected.

“In the meantime, however, the interim effects of the Court’s decision could be substantial,” Kavanaugh wrote in his dissent.

“The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others,” he wrote.

“As was acknowledged at oral argument, the refund process is likely to be a ‘mess,’ ” Kavanaugh wrote.

“In addition, according to the Government, the IEEPA tariffs have helped facilitate trade deals worth trillions of dollars — including with foreign nations from China to the United Kingdom to Japan, and more,” he wrote.

“The Court’s decision could generate uncertainty regarding those trade arrangements.” 

Brian LeBlanc, senior economist at PNC Financial Services Group, in a LinkedIn post on Friday said “we estimate” that the IEEPA-related tariffs that have been ruled illegal constitute “roughly 60% of the tariffs issued to date.”

“That’s a big deal. Until President Trump replaces those tariffs with alternative authorities, the tariff rate just dropped from around 9.5% to around 5%,” LeBlanc wrote. “Refunds are going to be tricky, and we expect the Trump administration to replace most (but not all) of this lost tariff revenue.”

The U.S. Customs and Border Protection in December said the amount of tariffs collected that would be at risk of having to be refunded was $133.5 billion.

That tally would have risen since then because of the ongoing collection of duties.