Last year, Sandra Alonso needed a new powered wheelchair to get around Tampa, Florida. She ordered the same model she had before — it folds easily and she can lift it without help.
“It’s just the perfect chair for me,” she said.
Unfortunately for Alonso, the chair is made in China. When she bought it last year, tariffs on Chinese goods were 145%. She paid an extra $3,500.
“There’s no reason I had to pay double for this chair,” Alonso said. “The federal government should give me my money back.”
But the federal government can’t give her that money back. Instead, it is returning the cash to the importers that directly paid those tariff fees — typically American businesses.
The $160 Billion Question
In February, the Supreme Court ruled that many of President Trump’s tariffs were illegal, forcing the federal government to refund more than $160 billion it had collected. Those companies passed on some of the extra cost to customers, usually in the form of higher prices. But few are stepping up to share the refunds.
“It’s all just a giant transfer from consumers to corporations,” said Michael Ettlinger, a senior fellow at the Institute on Taxation and Economic Policy. “You can’t really design a worse tax than that.”
Shipping Companies Are the Exception
Alonso is actually lucky — she imported her chair through UPS, which told her in an email that her refund is in the works. The company said it can take up to 90 days to get the cash to customers.
UPS, FedEx, and DHL have all pledged to pass along refunds they get from the government to customers. Part of the reason is that shippers explicitly charged customers tariff fees — if the federal government charged FedEx $100 to import your package, FedEx then billed you $100.
“Now that FedEx and UPS have received a refund of that $100 from the federal government, they are absolutely obligated to return it to the person they collected it from,” said Terence Lau, dean of Syracuse University’s college of law. “Otherwise it would be a pretty open-and-shut lawsuit against them for unjust enrichment.”
Retailers Are a Different Story
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.
It is hard, maybe even impossible, for companies to know how much extra each shopper paid because of tariffs. These import taxes were rarely tracked with individual products sold and were often spread out across the supply chain.
“It’s like the retailer stirred the tax into the batter,” Lau said. “So once it’s cooked into the cake you can’t just back it out ingredient by ingredient anymore because it’s not separated.”
Where the Money Is Going
- Home Depot received about $730 million in tariff refunds during the last quarter but did not mention any plans to refund customers. CFO Richard McPhail told investors the company would use that cash to cover new costs from pricier gasoline and diesel.
- Walmart executives said they had received most of the $2.9 billion in refunds they were eligible for and plans to use those dollars to lower prices for customers, rather than provide direct refunds.
- Costco and Nintendo are facing class action lawsuits from shoppers demanding refunds. Nintendo asked the court to dismiss the lawsuit, arguing that “plaintiffs received exactly what they paid for.”
The Bottom Line
The federal government is refunding more than $160 billion in illegal tariffs to businesses, but consumers are not seeing the money. Shipping companies like UPS and FedEx are passing refunds along. Retailers are keeping the cash or using it to cover other costs. Some companies are facing lawsuits from customers who want their money back.
