The chaos of duties: collected, rejected and refunded with interest. And the cycle continues

Of the approximately $166 billion in tariffs collected under the IEEPA emergency powers and subsequently struck down by the Supreme Court, the Trump Administration has already refunded around $100 billion to importers. A report filed on Tuesday by US Customs and Border Protection (CBP, the US customs agency) indicated the total amount of refunds accepted: $128.7 billion, including interest.

To record, manage and process such a large volume of refunds, the CBP had to build a dedicated system, called CAPE, which has been operational since 20 April. In short, the duty refund process got underway immediately, more quickly than anticipated by Treasury Secretary Scott Bessent, who had suggested that it could take years of appeals. Under the procedure outlined by the CBP, companies that had paid the duties – or their freight forwarders – were able to upload a list of their import transaction numbers to Cape, up to 9,999 customs declarations at a time. The system then removes the tariff line item annulled by the Court from each transaction, recalculates the duty due, and processes the refunds within 60–90 days. As at 31 July, according to the agency’s report, 252,496 declarations had been received, covering over 25 million transactions.

The refund is payable to the importer of record – that is, the party who paid the duty at the border – regardless of who bore the cost, including consumers. According to an NBER paper published this Monday by Mary Amiti and Sebastian Heise (New York Fed) and David Weinstein (Columbia), around 26 per cent of the duties imposed in 2025 were passed on to consumer prices, with over a third of this being channelled through indirect transmission channels that take up to a year to feed through to goods’ price lists (increased competition, price adjustments to maintain margins, more expensive components, not to mention price revisions which often take place at the start of the year).

But as early as 29 May, Richard Eaton, a judge at the US Court of International Trade, noted that the money was mainly flowing back to the giants. Apple’s refunds are estimated at $2.2 billion (the effect has already been accounted for in the quarter ending in June, with 11 cents of earnings per share attributed to the refund); Ford $1.3 billion; General Motors half a billion; Nike around one billion. But there is a snag: smaller companies. Firstly, those without the legal resources risk receiving nothing. Secondly, part of the refunds relating to cases that are now final is still being contested in court. As a rule, a company has 180 days to challenge a duty paid, after which the case becomes ‘final and conclusive’ by law and cannot be reopened, even if the duty was unlawful. And regarding these ‘sealed’ cases, which amount to around 11.4 billion dollars, the government has argued that customs cannot automatically refund them to importers who have not taken legal action without a specific court order.

In the meantime, the delay increases the total cost of refunds due to interest – and once again, this is borne by the federal budget, and therefore by the taxpayers and consumers who paid part of those duties. US customs law treats overpaid duties as a debt, and the Treasury must pay interest on those sums (conservative estimates suggest around 4.5 per cent), which accrues from the date of payment until the refund is made. When the entire sum was still outstanding, the Cato Institute estimated an additional cost of around 700 million for each additional month of delay.

But President Trump is pressing ahead, seeking every legal avenue to make permanent the level of tariffs that the Supreme Court ruling has overturned, thereby risking a cycle of collection, rejection and refund with interest. In February, having branded the judges ‘unfair’, Trump imposed a 10 per cent blanket tariff for 150 days under Section 122, a 1974 provision that had never been used before and which was in turn struck down in May. When it expired at the end of July, he replaced it with a blanket tariff of 10–12.5 per cent, justified by a hastily conducted investigation into forced labour and already challenged by a group of states. According to the Tax Foundation, US tariff policy has changed more than 50 times in a year and a half. And as Scott Lincicome, vice-president of the Cato Institute, wrote in Bloomberg: “The president is relishing the chaos because he isn’t the one footing the bill. Everyone else is paying for it, and the bill is growing by the day.”