Tariff refunds should prompt reassessment of trade policy

After the United States Supreme Court ruled in February that the US government's sweeping tariffs imposed under the International Emergency Economic Powers Act were illegal, the US Customs and Border Protection has been forced to process refunds. As of late July, the CBP had transferred roughly $100 billion — about 60 percent of the $166 billion it had collected — in tariff refunds to the Treasury for disbursement to importers.

A policy sold as a way to extract wealth from abroad instead pushed US Customs duty revenue into negative territory in May and June (down $0.04 billion and $25.6 billion respectively) as the refunds offset collection of the remaining tariffs. That pushed the federal deficit to $1.4 trillion in the first nine months of the fiscal year (October-June).

Under US federal law, the CBP must refund tariffs collected unlawfully with interest. The Cato Institute estimates that the delay in refunding companies for emergency tariffs invalidated by the Supreme Court is costing US importers a total of $700 million per month.