The U.S. government has been issuing refunds for tariffs collected under former President Trump‘s trade policies, but the majority of this money is going to businesses rather than the consumers who initially paid the extra costs. This shift has left many individuals, like Sandra Alonso of Tampa, Fla., questioning why they aren’t receiving the refunds they believe they deserve.
Alonso’s experience highlights a broader issue in how tariff refunds are being managed. While some companies are passing refunds to their customers, others are using the money for different purposes, leaving consumers in the dark about their financial recovery options.
Shipping Companies Lead the Way in Refund Transparency
Sandra Alonso was fortunate to receive a refund for her powered wheelchair, which she imported through UPS. The company informed her via email that her refund was in progress, though it could take up to 90 days to receive. UPS, along with FedEx and DHL, has pledged to pass along refunds they receive from the government to their customers.
This commitment stems from the fact that shipping companies explicitly charged customers for tariff fees. For example, if the federal government charged FedEx $100 to import a package, FedEx would then bill the customer $100. According to Terence Lau, dean of Syracuse University’s college of law, “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. Otherwise, it would be a pretty open-and-shut lawsuit against them for unjust enrichment.”
Retailers Face Challenges in Refund Distribution
Unlike shipping companies, retailers often did not itemize tariff costs for customers. Instead, they incorporated these costs into the This practice makes it difficult for retailers to determine how much of the tariff was passed on to individual customers. As Lau explained, “It’s like the retailer stirred the tax into the batter. So once it’s cooked into the cake, you can’t just back it out ingredient by ingredient anymore because it’s not separated.”
For businesses, both large and small, shipping costs can be a complex and opaque area. Robert Shapiro, chair of the international trade group at the law firm Thompson Coburn, noted that many CEOs are unaware of the tariffs they have paid, as these costs are often rolled into the price of goods.
Retailers’ Plans for Tariff Refunds
Home Depot, for instance, received about $730 million in tariff refunds during the last quarter but did not mention any plans to refund customers. Instead, CFO Richard McPhail stated that the company would use the cash to cover new costs from pricier gasoline and diesel, “that we expect will fully offset the benefit from tariff refunds over the year.”
Some companies, like Costco and Nintendo, are facing class action lawsuits from shoppers demanding refunds. Nintendo argued in court that “plaintiffs received exactly what they paid for: Nintendo products that plaintiffs knowingly and voluntarily purchased at the advertised price.” Walmart, on the other hand, plans to use its $2.9 billion in refunds to lower prices for customers rather than providing direct refunds.
The Broader Implications of Tariff Refunds
Michael Ettlinger, a senior fellow at the Institute on Taxation and Economic Policy, criticized the current system, stating, “It’s all just a giant transfer from consumers to corporations. You can’t really design a worse tax than that.” He emphasized that the real issue lies with the government imposing illegal tariffs in the first place.
As the U.S. continues to navigate the complexities of trade policies and tariff refunds, the debate over who should benefit from these refunds remains contentious. While some companies are taking steps to ensure transparency and fairness, others are using the funds for their own purposes, leaving consumers to wonder about the true impact of these policies on their wallets.
