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The triple toll of Trump’s terrible tariffs
Ultimately, American workers and consumers suffer three different ways.
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Following the Supreme Court’s February ruling that Donald Trump’s tariff policy violated Congress’s tax authority, the administration must now refund the $159 billion it collected from its unconstitutional tariffs.
But unfortunately for American workers and consumers, winding down this fiscal fiasco results in a lose-lose-lose situation:
First, most Americans will never be reimbursed for what were effectively temporary sales taxes they paid for various imports, nor will they receive the public benefit of having those sums spent on government programs or projects.
Second, because it is logistically easier to reimburse the American companies that directly paid the tariffs, some corporations may enjoy windfall refund profits — presuming, that is, those companies did not go bankrupt.
Finally, the surviving businesses and the employees who still work for them — hundreds of thousands of workers were laid off because of the tariffs — will for the foreseeable future continue to suffer because foreign countries, companies, and citizens quite rationally retaliated against Trump’s policies.
Let’s work through the three-fold ruin wrought by Trump’s catastrophic policy.
#1: Lost taxes paid
Despite Trump’s woefully ignorant belief that tariffs transfer monies from foreign treasuries into our own, that’s not how they work.
Yes, tariff receipts temporarily ended up in Washington. But those taxes were paid indirectly, via increased retail prices, by every American who bought imported goods or products made from imported components. Yale Budget Lab estimated the price tag per American at $2,400 per year, which is almost how long tariffs were in effect until the Supreme Court’s February 20 decision. Because it’s nearly impossible for individual citizens to compute how much they paid in tariffs, no less apply for reimbursements, most will get nothing.
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Some plucky consumers are seeking class-action relief. Nike customers already filed a suit against the sportswear manufacturer demanding reimbursement for the so-called “embedded costs” passed through to them in higher prices; customers at Costco and Ray Ban sunglasses filed similar suits. In a second category of “line-item cost” lawsuits filed against FedEx and United Parcel Service, litigants seek to recover sums these couriers required recipients to pay upon delivery for import tariffs their purchased mailed from abroad incurred in transit.
No matter who wins these cases, litigation creates economic inefficiencies, particularly the litigants’ legal expenses. And these suits only account for a fraction of the $159 billion in collected tariffs.
Last November, Trump promised qualified citizens they would receive $2,000 tariff “dividend” checks paid for by the “trillions and trillions” of dollars he claimed his tariffs already raised.
