The U.S. government could face up to $168 billion in refunds to businesses if the Supreme Court rules that the Trump administration improperly used federal emergency powers to impose tariffs on dozens of countries, according to a recent analysis.
As of December 5, the government has collected $259 billion in tariff revenue. But a high court decision finding that the administration overstepped its authority under the International Emergency Economic Powers Act (IEEPA) could require refunds to importers, said Kent Smetters, a professor at the University of Pennsylvania’s Wharton School.
During a November hearing, justices appeared divided over whether Trump had the legal authority to implement broad tariffs under IEEPA, noting that the law does not specifically mention tariffs and no president has previously relied on it for country-specific levies. Legal experts say similar tariffs could be imposed under other laws, such as Section 232 of the Trade Expansion Act of 1962, for national security purposes or Section 301 of the Trade Act of 1974 addressing unfair trade practices.
Smetters argued that striking down the tariffs could boost U.S. economic growth. He explained that tariffs are inefficient revenue tools, increase costs for companies relying on imported parts, and reduce overall productivity. While refunds would slightly increase the federal debt, removing the tariffs would make U.S. businesses more attractive for investment.
The Trump administration maintains that tariffs are crucial for stimulating manufacturing, creating jobs, reducing the trade deficit, and generating federal revenue. A White House spokesman described the Supreme Court’s decision as having “enormous economic and national security consequences” and called for a “speedy and proper resolution.”
As of mid-November, the overall U.S. tariff rate was 16.8%, the highest since 1935, compared with 2.4% in January before Trump returned to office. Small businesses, however, say a potential refund would not undo the economic harm already caused by higher import costs. Business owners report disruptions in staffing, cash flow, and operations, arguing that reimbursement would come too late to reverse the damage.
Consumers have also borne the cost of tariffs, paying an average of $1,197.50 per household between February and November, totaling nearly $160 billion. Critics say the levies have driven up prices for American families rather than lowering costs as promised, calling the tariffs a burden on households during a time when bipartisan efforts are needed to reduce expenses.