An Australian clothing company, Nashie, recently received a six-figure refund from the US government, including 6% interest, for tariffs it had paid on US imports. It’s just one of thousands of businesses reclaiming tariffs imposed on what President Donald Trump called “Liberation Day”.
Of the roughly US$166 billion due to be refunded, more than US$85 billion has already been returned to businesses.
But while a US Supreme Court ruling in February reversed the tariffs, much of the economic and political damage, and perhaps some of the Trump administration’s gains, will be hard to undo.
Tariffs not designed to last
Trump’s April 2025 tariffs relied on the International Emergency Economic Powers Act (IEEPA), a 1977 law that lets presidents respond to extraordinary foreign threats – yet never mentions the word “tariff”.
On February 20 2026, the US Supreme Court ruled in a 6-3 decision that IEEPA did not authorise tariffs – under the Constitution, only Congress has the power to impose taxes and duties.
The decision placed an important limit on the president’s power to impose tariffs. But it did not end Trump’s tariff policy, which was, from the beginning, designed to buy time to rewrite US trade relations with the rest of the world.
Trump responded with a temporary 10% global tariff, which expires on July 24 after the statutory 150-day limit.
Trump has also pursued more targeted tariffs under laws dealing with unfair trade practices, national security and anti-slavery claims.
These require investigations into foreign trade practices and lengthy procedures, which slow the process and also create a record that can be scrutinised in court.
The US Trade Representative’s findings on alleged forced labour have prepared the ground for a 12.5% tariff on exports from 54 countries, including Australia, China, New Zealand and the United Kingdom, starting on July 24 2026.
So while the Supreme Court closed one legal door, the Trump administration was already preparing to walk through another. And it has bought itself yet more time.
The fiscal cost for the US
The refunds paid out contributed to a US$120 billion federal deficit this June, in sharp contrast to the US$27 billion surplus in June 2025.
That said, the US$166 billion being paid out is not a fine. Much of it is money the government collected without legal authority and must now return. This is real money, but it’s less than 2% of the projected 2026 federal government spending.
Without any fanfare to match “Liberation Day”, the political cost may be smaller still.
The refunds involve a technical process and are dispersed among many importers, making them far less visible than the original tariff announcements.
And concessions that trading partners, including the UK and the European Union, made under the threat of higher tariffs don’t automatically vanish when a tariff is struck down.
What’s in a refund?
For businesses, repaying money they should never have paid doesn’t recreate the position they were in before the tariffs.
Importers had capital tied up for months as financing costs mounted, orders were cancelled and inventory sat stranded. Many had to renegotiate contracts.
They paid customs brokers and lawyers, and delayed other investments while waiting to learn which tariff would apply. Some stopped shipping to the US altogether, unsure what customs duties they would incur.
Smaller firms were especially exposed. They generally have smaller cash reserves, fewer alternative suppliers, and less capacity to absorb an unexpected increase in duty.
One analysis estimated small business importers in the US each paid US$306,000 extra in tariffs on average.
The Federal Reserve Bank of Atlanta estimates that “financially constrained” businesses will receive 34% of all refunds, or about US$56 billion. These firms are most likely to use the money to invest, hire staff or reduce prices.
Better-financed businesses are more likely to save it, repay debt or distribute it to shareholders. PepsiCo said it would use the refunds to offset some commodity inflation.
But few are likely to pass the refunds back to consumers due to the complexity and cost involved. Nintendo is being sued by its own customers, who argue the tariff refunds should be paid to consumers to offset the higher prices they paid.
Access is also uneven. A business with a US bank account and customs broker can get its refund relatively smoothly. Australian businesses shipping via Australia Post face further delays: those shipments weren’t entered through the system US Customs and Border Protection uses for refunds, and no refund pathway exists yet.
Nor does the refund necessarily reach whoever ultimately paid. Rather, it goes to the importer, even where the cost was passed on to a retailer or consumer through higher prices.
The deeper cost is uncertainty
The most important consequence of Trump’s tariff policy is persistent uncertainty.
Trump can impose an immediate commercial disruption, then use that disruption as leverage in negotiations with other governments. The latest example is Monday’s 50% tariff on a range of Canadian goods, which the US says responds to Canadian retaliation and discrimination against US cars, dairy and alcohol.
Persistent uncertainty also encourages global commerce to fragment into competing blocs whose market access is more predictable.
As our Weaponised Trade project shows, the deeper danger is other governments adopting the same playbook: temporary, legally questionable trade restrictions becoming the norm rather than the exception.
Litigation to roll back these measures takes months or even years.
And if a court does eventually invalidate a measure, the US can invoke another law and restart the process. Courts operate retrospectively. Markets, on the other hand, react to them immediately.
The Supreme Court ruling did not return lost customers, reverse commercial decisions or restore confidence in predictable trade rules.
Tariffs can be refunded. Uncertainty cannot.