U.S. Businesses Receive Tariff Refunds, But Consumers Struggle to Recoup Costs
While the government refunds illegal tariffs to importers, many shoppers remain in limbo as retailers struggle to separate baked-in costs.
Quick Look
- The U.S. government is refunding billions in illegal tariffs to businesses.
- While shipping companies like UPS are obligated to pass these savings to customers, many retailers cannot isolate tariff costs from product prices, leaving most consumers without a refund.
AI-generated summary
Why It Matters
The Supreme Court ruled in February that certain tariffs imposed by the Trump administration were illegal, triggering a refund process for businesses that paid them.
When we're talking tariff refunds, we're talking more than $160 billion. And Sarah Alonzo wants her cut.
Money that she paid for a wheelchair she uses to get around Tampa, Florida, after her old one finally fell apart. The new one is both powered and lightweight.
But it's made in China. When she bought the new chair last year, tariffs on Chinese goods were a sky-high 145%. Alonzo paid an extra $3,500.
The thing is, though, the federal government can't give her that money back. That's because she did not pay the tariff directly to the government. Like most people, she paid a business - in her case, UPS - which imported the chair. Now the government is refunding UPS, and UPS told her in an email her refund is in the works.
Now, shipping companies have to give the money back because they explicitly charged customers tariff fees. That's according to the dean of Syracuse University's College of Law, Terence Lau. He says if FedEx got charged 100 bucks to import your package, they then billed you 100 bucks.
UPS, DHL and FedEx all say they are returning tariff dollars to customers. But do not expect the same from retailers. Many of them did not spell out how much customers were paying for tariffs and instead baked that cost directly into higher prices. So it's hard, maybe even impossible, for the companies to know how much extra each shopper paid because of tariffs.
Michael Ettlinger is a senior fellow at the Institute on Taxation and Economic Policy. He says customers and businesses share the cost of tariffs. But for the most part, businesses are the ones keeping the refund.
Some retailers like Walmart say they'll use tariff refunds to lower prices, and companies like Costco and Nintendo are facing class-action lawsuits from shoppers demanding refunds. Ettlinger says, well, some businesses are benefiting.
Sandra Alonzo heard from UPS about a month ago about her refund being processed but hasn't received anything yet.
UPS says it takes up to three months to get the refunds it receives from the government to customers. Of course, Alonzo's paid higher prices at plenty of retailers because of tariffs. So for her, this is one refund on the way and many more unlikely to come.
What to Watch
AI outlook — possibilities, not facts
UPS will continue processing refunds over a three-month period.
Very likely · Within months
Open Questions
- How many consumers will successfully receive refunds from retailers?
- Will class-action lawsuits against retailers succeed?
