American shoppers end up bearing the brunt of the $175 billion tariff refund ‘chaos,’ according to Trump’s ex-commerce secretary

Tariff Refunds Remain Out of Reach for U.S. Importers

Any hopes among American importers for a return of tariff payments this year have been dashed. Treasury Secretary Scott Bessent asserts that the $175 billion collected through a now-invalidated tariff program will never be returned to U.S. consumers.

Wilbur Ross, former Commerce Secretary under President Trump, shares Bessent’s skepticism. Ross predicts that legal battles over tariff refunds will drag on for years, likely ending up once again before the Supreme Court, which previously declined to rule on refund issues.

Recently, the Supreme Court determined that President Trump could not use the International Emergency Economic Powers Act (IEEPA) to impose tariffs on trade partners, ordering that revenue disputes be handled in international trade courts. Since then, importers have initiated numerous lawsuits seeking reimbursement for tariffs paid last year.

Consumers Bear the Brunt

Ross, who served in Trump’s cabinet from 2017 to 2021, warns that consumers will ultimately suffer. Although importers initially paid the tariffs, much of that cost was passed down through wholesalers and retailers. According to the Yale Budget Lab, consumers absorbed between 40% and 76% of tariff costs for essential goods, and between 47% and 106% for durable items.

Even if the passthrough effect is ignored, Ross notes that determining which businesses deserve refunds—and the amounts owed—would be extremely complex. “Each product and its associated tariff follow a unique calculation. Sorting this out would require a case-by-case approach, involving tens or even hundreds of thousands of variations,” he explains.

“In the end, you might grant a windfall to some companies, but the average consumer would see little benefit,” Ross adds.

Should a court attempt to reimburse consumers directly, the process would become even more convoluted. “One person might have paid a hefty tariff on an imported car, while another family only bought a couple pairs of sneakers from Vietnam. How would you fairly distribute refunds at the consumer level? Mapping out every detail of the supply chain and family differences would likely overwhelm even the most advanced AI systems,” Ross observes.

Legal Uncertainty and Lingering Challenges

This dilemma, according to Ross, is what Bessent meant when he told the Economic Club of Dallas after the Supreme Court decision: “I suspect Americans won’t see those funds.”

Some suggest businesses might eventually pass refunds to consumers, but Ross believes the legal disputes will persist for years, likely returning to the Supreme Court. “With so many lawsuits filed in various courts, each with its own legal basis, the situation has become a tangled web of litigation,” he says.

A Legal Loophole Emerges

Following the Supreme Court ruling, the Trump administration announced it would enforce a 15% tariff under Section 122 of the 1974 Trade Act, which permits tariffs for up to 150 days. This move gives the White House time to establish a more permanent legal foundation, such as Section 232 (national security) or Section 301 (unfair trade practices), both of which Ross considers viable alternatives.

Ross, who has chaired or directed over 100 companies in more than 20 countries, points out that the court’s “unusual” decision left a loophole open: the possibility of an outright ban on certain products. Since the court deemed tariffs under IEEPA as illegal taxation but did not address the legality of a total ban, the option remains theoretically available.

“One unpredictable outcome is that the Supreme Court ruling didn’t eliminate Trump’s power to ban imports,” Ross explains. “He could, in theory, prohibit the import of specific products from certain countries—or from all countries. The court simply didn’t address this possibility.”

However, a ban would be far less attractive than tariffs. While it could reduce reliance on foreign economies, it wouldn’t generate the revenue needed to help balance the federal budget.

Still, Ross notes that the loophole gives Trump leverage if trading partners attempt to exploit the situation. “Most countries seem to be waiting to see what happens. If any begin to backtrack on concessions made to Trump, he could retaliate with bans,” Ross suggests.

“It’s odd that, although the legal foundation for the tariffs was struck down, many practical effects remain,” he concludes.