Will Trump Have to Refund the Tariffs?

His tariffs have settled in against 90 countries, the latest inflation report shows only a modest uptick, he insists, but a looming appellate court case nonetheless has President Trump throwing fits.

In May, a three-judge panel at the U.S. Court of International Trade (USCIT) in New York unanimously ruled that Trump went beyond his authority by implementing his vast menu of imposts. Tariffs are the prerogative of Congress is their point, and this special court is the expert on trade law. (The three judges were appointed by Reagan, Obama, and Trump.)

Qingdao, China.

As he has done repeatedly, such as justifying sending U.S. troops into Los Angeles, Trump declared an emergency under the International Emergency Economic Powers Act of 1977 (IEEPA) to gave himself the right to set tariffs in place of Congress. But the trade court said tariffs are dissociated from halting the emergency of fentanyl entering the country. The court wrote,

"A tax deals with a budget deficit by raising revenue. A dam deals with flooding by holding back a river. But there is no such association between the act of imposing a tariff and the ‘unusual and extraordinary threat[s]’ that the Trafficking Orders purport to combat."

What if the appeals court also decides that the tariffs are illegal? Wouldn’t the Trump administration be required to refund all the tariffs collected to date?

The federal appeals court set dates in early June to hear from attorneys on both sides, but Trump’s lawyers have just sent a letter to the court which shows that a desperate loonyness has taken hold:

”If the United States were forced to pay back the trillions of dollars committed to us, America could go from strength to failure the moment such an incorrect decision took effect…the President believes that a forced dissolution of the agreements could lead to a 1929-style result. In such a scenario, people would be forced from their homes, millions of jobs would be eliminated, hard-working Americans would lose their savings, and even Social Security and Medicare could be threatened.”

First, tariffs collected so far come to $130 billion. The “trillions of dollars committed to us” presumably counts foreign pledges to invest in the United States, such as Japan’s commitment to invest $500 million in return for a tariff lowered to 15%. The lawyers absurdly paint the U.S. going “from strength to failure” for having to pay back money never received, money that is not a tariff subject to refund even if it were paid in.

And second, how would the refunding of $130 billion (out of a $6 trillion budget for fiscal 2026) bring about a "1929-style" collapse forcing people from their homes, costing them their savings, and so on? Wouldn't our savings benefit from the refunds restoring pre-tariff prices at the local big box stores? This garment-rending is coming from an administration that had no qualms about passing the “Big Beautiful” budget bill that promises sinking the U.S. $3.5 trillion further into debt.

On Monday the President announced another 90-day truce with China. Had the previous pause expired, the U.S.was slated to ratchet up taxes on Chinese imports from an already high 30%, and Beijing would likely have responded in kind.

"We’ve been dealing very nicely with China as you probably have heard. They have tremendous tariffs that they’re paying to the United States of America.”

There it is again, the unending lie. He's still trying to bamboozle even his own followers that foreign countries pay the tariffs rather than U.S. importers. He said it again in a Truth Social tweet:

"Trillions of dollars are being taken in on Tariffs, which has been incredible for our Country, its Stock Market, its General Wealth, and just about everything else. It has been proven, even at this late stage, Tariffs have not caused inflation or any other problem for America, other than massive amounts of CASH pouring into our Treasury coffers. Also, it’s been shown that, for the most part, Consumers aren’t even paying these Tariffs, it is mostly Companies and Governments, many of them Foreign, picking up the tabs."

No, they don't. The entirety of tariffs are paid within the U.S. at ports of entry, charged to importers by U.S. customs agents, and turned over to the federal government. "Companies" may refer to U.S. corporations for the moment trying to hold down prices to prevent angering customers, but that cannot be sustained. Companies such as Walmart operate on thin margins and cannot "eat" 15% tariffs without incurring huge losses.

Trump celebrates "massive amounts of CASH pouring into our Treasury coffers" but haven't Americans caught on by now that they are, or soon will be, paying these massive amounts to the government in the form of higher prices?

The trade court consolidated two cases in rendering its decision, one filed by New York-based wine importer V.O.S. Selections and four smaller businesses, the second by twelve states. The White House immediately appealed and a federal appeals court granted an emergency motion to reinstate the tariffs so it could hear the President’s appeal. Arguments before the appeals court, sitting en banc, i.e. all its jurists, not just a three-judge panel, at end-July "didn’t go well for the government", says The Wall Street Journal. That may explain why Trump's lawyers thought their special pleading letter was needed.

Trump has now decreed eight phony emergencies. This publication foresaw this in January of 2019 in our article, Declaring an Emergency Gives the President Unchecked Power, which predicted Trump "will resort repeatedly to this detour around the Constitution to get his way."

If the appeals court rules against the government, the case will of course move to the Supreme Court. Mr. Trump is already at work hoping to steer the outcome:

"The ruling by the U.S. Court of International Trade is so wrong, and so political! Hopefully, the Supreme Court will reverse this horrible, Country threatening decision, QUICKLY and DECISIVELY. Backroom ‘hustlers’ must not be allowed to destroy our Nation! The horrific decision stated that I would have to get the approval of Congress for these Tariffs. In other words, hundreds of politicians would sit around D.C. for weeks, and even months, trying to come to a conclusion as to what to charge other Countries that are treating us unfairly. If allowed to stand, this would completely destroy Presidential Power—The Presidency would never be the same!”

Destroying presidential power aside, his argument is not without reason if you think some tariffs are in order to partially offset the nation's trade deficits with low-wage countries that have taken millions of our jobs.

If the appellate court rules against the government and mandates refunds of tariffs, it would be an unmanageable bureaucratic rat's nest to try to figure out how much is owed to whom. Trump again, with strange notions of "wealth creation" and augury of financial collapse:

“If a Radical Left Court ruled against us at this late date, in an attempt to bring down or disturb the largest amount of money, wealth creation and influence the U.S.A. has ever seen, it would be impossible to ever recover, or pay back, these massive sums of money and honor. It would be 1929 all over again, a GREAT DEPRESSION!”

The Journal reacted with, "Wow. Ending a tax increase means depression. Who knew?"

In an interview, Treasury Secretary Scott Bessent observed that:

"The amount of money that’s coming in here, I think the more deals we’ve done, the more money coming in, it gets harder and harder for SCOTUS to rule against this.”

And that's what will happen. It will be so onerous to have to give the money back that the Supreme Court will just have to set the Constitution aside once again and rule that Trump’s illegal tariffs are legal.