Summary of Key Points
The Trump administration has been forced to refund a staggering $16.6 billion in illegal tariffs (of which $8.1 billion has already been returned) due to a ruling by the U.S. Supreme Court that the previously imposed "reciprocal tariffs" were unconstitutional. This has significantly contributed to the expansion of the U.S. fiscal deficit. Meanwhile, the Trump administration has not abandoned the use of tariffs and is re-imposing them under Section 301 of the Trade Act of 1974, with Brazil being the first target of these new measures, leading to increased trade tensions. Some companies, such as Apple and Amazon, have chosen to refrain from applying for tax refunds due to political risks.
1. Billions in Tariffs Refunded, but the Fiscal Deficit Cannot Be Afforded
The tax refund initiative by the Trump administration is considered one of the largest in history, with a total estimated refund of $16.6 billion (about 1.13 trillion RMB), affecting 330,000 importers and over 53 million shipments. To date, $8.1 billion has been refunded, with the bulk of this amount distributed in June alone—$49.1 billion, which is more than the tariff revenue collected that month ($23.6 billion), resulting in a fiscal loss of $25.6 billion for that month. The impact on finances is evident: the deficit for the first nine months of the fiscal year has totaled $1.367 trillion (a 2% increase from the same period last year), and the Congressional Budget Office has raised its forecast for the fiscal year 2026 deficit to $1.9 trillion (5.8% of GDP). The main beneficiaries of the refunds are large corporations, such as Walmart ($10 billion), Target ($2 billion), Nike ($1 billion), and General Motors ($几百 million), while smaller companies, which may not have had the funds to cover the tariffs in advance, benefit less.
2. Why Did the Supreme Court Rule Tariffs Unconstitutional? "Reciprocal Tariffs" Were Not Followed Properly
The "reciprocal tariffs" implemented by the Trump administration essentially bypassed Congress and allowed the president to impose taxes without authorization. The U.S. Constitution stipulates that the power to levy taxes lies with Congress, and the president cannot impose taxes at will. The Supreme Court ruled that the additional tariffs imposed in 2024 by the Trump administration were unconstitutional and required the refund of the funds to the affected companies. In simple terms, the president must obtain Congressional approval before imposing taxes; since Trump did not follow this process, the taxes had to be refunded.
3. Refunding Tariffs but Still Wanting to Impose New Ones? Changing the "Clothing" to Continue the Strategy
The Trump administration has not given up on tariffs; it is just using a different legal approach:
- Temporary Tariffs About to Expire: The 10% temporary tariffs imposed under Section 122 of the Trade Act of 1974 will expire on July 24, and Congress is unlikely to extend them (given public dissatisfaction with high prices and the approaching midterms).
- Section 301 Returns: This section of the trade act allows the government to investigate the trading practices of other countries and impose tariffs if deemed unfair, with the possibility of renewal for four years. The U.S. has already initiated Section 301 investigations against 60 economies, including China, the EU, and Japan. Brazil was the first target, with additional tariffs (25%) imposed on certain Brazilian products starting July 22, with exemptions for goods needed by the U.S., such as coffee and beef.
This move essentially means that the old, unconstitutional tariffs are refunded, only to be replaced by new ones under a different pretext.
4. Why Don't Apple and Amazon Apply for Refunds? Fear of Retaliation from Trump
Not all companies are eager to receive these unexpected refunds. Apple and Amazon have not applied for refunds because Trump has publicly stated that he will "remember" those companies that do not apply and even praised them for being "smart." Companies are wary of potential retaliatory actions by the administration, such as higher tariffs or antitrust investigations. Given Trump's reputation for being straightforward in his dealings, they do not want to offend the current president and risk affecting their future business.
5. New Tariffs Imposed, Brazil Responds: Will Trade Tensions Escalate?
The U.S. decision to impose tariffs on Brazil has been described as the first move in a new round of tariff actions. Brazil has reacted strongly, with President Lula calling it an "unreasonable unilateral measure" and planning counteractions, including imposing tariffs on U.S. products, as well as filing a complaint with the WTO. This is just the beginning; the U.S. is still investigating 60 more economies and may impose tariffs on even more countries. If other nations retaliate, global trade tensions will escalate, affecting exports and potentially driving up prices of goods (for example, if Brazilian coffee and orange juice become more expensive for American consumers), with the general public bearing the consequences.
In summary, the Trump administration's tariff policy has created a cycle of refunding old tariffs while imposing new ones, facing pressures on fiscal deficits and risks of increased trade tensions. Both businesses and consumers could become victims of these measures.