Donald Trump’s tariff regime has been scoffed at by business leaders and world economists (Larry Summers, for instance, called it both “crazy” and “dumb”), but the White House hasn’t backed down from its highly unconventional program. The tariffs, which are taxing American businesses on their imports, are reportedly generating billions of dollars in revenue for the federal government on a month-to-month basis. Many businesses aren’t happy about it, however, and now several lawsuits are threatening to force the administration to pay back most of the money raised by Trump’s tariff program.
Two court cases have sought to challenge the bizarre legal argument that the White House has made to justify its tariff program, Politico writes. That argument invokes the 1977 International Emergency Economic Powers Act, which was originally created to deal with circumstances of “unusual and extraordinary threat” to the nation, outlets have reported. Trump has previously cited the fentanyl crisis and the national deficit as ample national emergencies that justify his administration taking extraordinary measures. The law in question grants certain powers that wouldn’t otherwise be accessible to the president, although courts have quibbled over whether what Trump is doing qualifies under the law.
The cases challenging Trump’s policy were brought by a group of U.S. importers, as well as 12 Democratic states that have deemed the administration’s actions illegal, Politico writes. If the government’s tariffs are deemed illegitimate, the impacted importers believe they are entitled to refunds, an obligation the government has acknowledged, the outlet says. If those refunds were to go through, they would likely be processed by Customs and Border Protection, it adds. In short, were the case to go the wrong way for Trump, it could mean that the government would have to pay back much of the money it has generated via tariffs. This would effectively nix the entire revenue-raising scheme, which seems to have been partially devised to help pay for the major tax cuts that were passed in Trump’s One Big Beautiful Bill. Returning the funds to the wronged businesses would also prove a “logistical nightmare,” Politico notes.
So far, the outcome isn’t looking good for the White House, either. Politico writes:
In May, a federal court ruled Trump’s tariffs exceeded the president’s authority granted under the 1977 emergency law. That was followed by a narrower ruling from the D.C. District Court in a separate case shielding two small businesses from the same tariffs.
Both decisions were later stayed, however, keeping the tariffs in place as the litigation works its way through the federal court system. Most experts believe it will eventually reach the Supreme Court.
“Two separate courts have already ruled strongly against them, so the idea that this is a sure thing doesn’t hold up,” a person close to the White House told the outlet. “The odds of this going against them are way higher than 50-50.” Gizmodo reached out to the Trump administration for comment.
Not a lot of data has been compiled yet about the broad impact of Trump’s tariffs on U.S. businesses, but it’d be easy to assume that the impact hasn’t been good. Online chatter from small business owners has shown growing alarm at the new fiscal realities being imposed on entrepreneurs by the heightened import duties and, in recent months, companies have mulled appending “tariff surcharges” to customer receipts, so as to alert buyers to the fact that rising prices are the result of the government’s new program, not pointless price gouging. Some companies have even mused that they may be forced to shut down due to rising costs, and legislative attempts have been made to exempt small businesses from the government’s revenue-making scheme.
If the government were forced to pay back all of the money it has sucked out of American businesses, it would obviously be a hilarious defeat for the administration. The tariff regime, dubious as it seems to many, has been touted by the White House as one of the president’s chief achievements. Trump has always characterized himself as the ultimate deal-maker, and the administration characterized the tariffs as further evidence of that. It’s worth noting, however, that a deal isn’t really worth a whole lot if it ends up being illegal.
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