OPINION:
Let’s talk about the economic circle of life. In theory, it’s a beautiful, balanced ecosystem. In reality, it works a little more like this: The government levies a massive tax, everyday Americans foot the bill, the courts strike down the tax as illegal and massive corporate retailers walk away with billions of dollars in refunds.
Welcome to the great American aftermath of President Trump’s “Liberation Day” tariffs.
Here is the punchline, right up front: According to an analysis from the Federal Reserve Bank of New York, nearly 90% of the economic burden from Mr. Trump’s sweeping tariffs fell directly on U.S. consumers and businesses.
And now that these tariffs have been officially tossed out, huge corporations heavily shopped by low- and middle-income Americans — think Walmart, Target and Dollar Tree — stand to be reimbursed billions of dollars.
How did we arrive at this bizarre wealth transfer? In February, the Supreme Court handed down a 6-3 decision ruling that the president’s global import taxes, justified by Mr. Trump under the International Emergency Economic Powers Act of 1977, were unconstitutional.
It turns out you can’t just slap open-ended tariffs on the entire globe and call it a national emergency.
Because the tariffs were struck down, the federal government is now legally obligated to refund up to $175 billion to the U.S. importers who originally paid them.
Now, if you ask the Trump administration, foreign countries paid all those tariffs. In a Wall Street Journal op-ed defending the policy, Mr. Trump claimed that “data shows that the burden, or ‘incidence,’ of the tariffs has fallen overwhelmingly on foreign producers and middlemen, including large corporations that are not from the U.S.”
He added, “In many cases, nations that are heavily dependent on exports have had no choice but to ‘eat’ the tariffs to avoid even worse losses from their excess capacity.”
The New York Fed, however, brought receipts that told an entirely different story. They found that for the first eight months, U.S. importers bore 94% of the tariff costs.
“In sum,” the researchers concluded, “U.S. firms and consumers continue to bear the bulk of the economic burden of the high tariffs.”
The White House’s reaction to this basic economic reality was nothing short of a tantrum. Economic adviser Kevin Hassett went on CNBC to declare that the authors of the Fed study should be “disciplined.”
“I mean, the paper is an embarrassment,” Mr. Hassett fumed. “It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve System.” He went on to say that the researchers produced “a conclusion which has created a lot of news that’s highly partisan based on analysis that wouldn’t be accepted in a first-semester econ class.”
Still, the tariffs were deemed illegal, and the government’s refund portal is officially open for business. Wall Street analysts at Citi estimate that Walmart is due $10.2 billion. Target is looking at $2.2 billion. Gap, Kohl’s and Macy’s are all in line for hundreds of millions of dollars.
These companies did what any rational business does when hit with import taxes: They passed the costs on to the consumer.
But now that the government is set to hand the money back to them, it will all go straight to corporate balance sheets, share repurchases and debt paydowns.
But the administration has a backup plan to get that cash back. Treasury Secretary Scott Bessent has already warned that they might just impose new tariffs to make up the difference.
“We had a setback at the Supreme Court in terms of the tariff policy, but we will be implementing or conducting Section 301 studies, so the tariffs could be back in place at the previous level by beginning of July,” Mr. Bessent said.
So, where does this leave you, the American consumer? Exactly where you always end up: holding the bag.
As Justin Wolfers, an economics professor at the University of Michigan, aptly explained, “If Costco raised the price of olive oil, I paid that higher price, and now I’m poorer. Costco, now, gets a refund. So what we did is we took money out of the government coffers and gave it to Costco. Costco is not going to write me a check; it has no reason to. And now there’s less money in the government coffers, so eventually they’re going to tax me some more.”
The refund portal is open. The corporate billions will flow. But make no mistake: Everyday shoppers funded this entire unconstitutional experiment.
And absolutely no one is writing YOU a refund check.
• Joseph Curl covered the White House and politics for a decade for The Washington Times. He can be reached at josephcurl@gmail.com and on X @josephcurl.
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