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| The tariffs on Alex Grossomanides's French down jacket totalled almost as much as the purchase itself(Image: Alex Grossomanides) |
Last year, Alex Grossomanides thought he had gotten a good deal on a down jacket from France. However, when he received a bill for more than $400 (£298) in processing and tariff fees, which is almost as much as the coat cost, he realized he had overspent. It was far higher than he had anticipated in part because the parka was, unbeknownst to him, made in Myanmar, then facing a tariff rate of 40%, which stuck him with $248.04 in charges.
The Supreme Court has since declared that duty, and dozens of others that US President Donald Trump unveiled last year, invalid, setting in motion a refund process that is poised to be the biggest repayment programme in US history.
But even before refunds have started, many of those hit with tariff costs, like Alex, are expecting to be left out.
This is due to the fact that the ruling only applies to importers who directly paid the tariffs. This raises questions about how to deal with the complaints of importers who paid the duties in more indirect ways, like higher prices, fees, and other charges. Grossomanides, who paid the tariff through the shipping company DHL, says he hopes to get his money back, but he hasn't heard from the company and doesn't count on it. "They should be refunding people," the 37-year-old personal trainer from Massachusetts says. "I took the hit for it, which I don't think is fair because it's all my money." In March, the US Court of International Trade ordered customs officials to return the more than $160 billion (£121 billion) that the government had collected. This put about 330,000 importers in a position where they could possibly get some of their money back.
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Fears that the government would fight the decision have not materialised.
Customs officials working on the issue have said the refund system should be ready to launch this month. They are due to update the Court of International Trade on their progress on 14 April.
'I have no hope' of a refund
However, going back in time completely will be nearly impossible. Economic studies suggest that importers have already passed on the majority of the tariff costs in the form of higher prices - an issue that is not tackled in the court rulings.
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| Sue Johnson, owner of Sue Johnson Lamps in Berkeley, California(Image: Ryan Louie) |
According to lampmaker Sue Johnson, tariffs have had a significant impact on her small California business. As a result, her supplier has roughly doubled the price of mica, which she uses in her designs that are influenced by Art Deco. But she doesn't think the Supreme Court's decision will help. She states, "Maybe they'll get repaid, but I have no hope they'll refund me."
The issue is said to be complicated by importers. Though many raised prices, they often did not increase them by enough to fully offset the tariff expense.
The tariffs also often triggered other kinds of costs, forcing businesses to take on debt to pay for the duties and leading to harder-to-quantify hits like lost sales.
"Even if we do get refunds, we are still not going to be made entirely whole," Kacie Wright of
Houghton Horns, a small Texas-based business that imports musical instruments, said during a forum hosted by We Pay the Tariffs, a small business advocacy group.
She said it was expensive just to make sure her business was ready to get a refund. It took customs officials more than six months to properly register her business in the agency's online system. Lawyer
Jared Slipman, chair of Obermayer's tax department, who has been advising businesses on the process, asserts that customs has placed the burden on businesses to gather information in order to make claims. He says some businesses, especially smaller ones, may look at the requirements and decide that the potential "juice is not worth the squeeze". He anticipates that others will eventually have to go to court to get what they think they are owed. Consumers, he adds, "get the worst of it".
According to Slipman, "It may very well be the case that this is an orchestrated theft from the American consumer... and that would be very unfortunate." James Tak, who received video games as a gift from a friend in Japan, was hit with a $24 tariff charge from UPS last year. He says he understands that managing refunds for millions of people like him will likely be messy. He still wants his money back. "I just think it's money I shouldn't have to pay," says the 41-year-old, who lives in Washington.
FedEx and other shipping companies, for example, have stated that they will issue refunds to consumers and businesses. But many importers have limited their promises, especially companies that passed on the tariff costs in less clear-cut ways.
The debate has led to class-action lawsuits against a number of businesses, such as
Costco, the Ray-Bans manufacturer EssilorLuxottica, and
Fabletics, the Kate Hudson-founded clothing brand that once listed tariff costs on its receipts.
In those lawsuits, the companies are said to be in a precarious position of "unjust enrichment," receiving money back from the government despite having already passed on the costs. Consumer concerns are frequently the focus of government watchdogs like the
Federal Trade Commission. According to Adrian Bacon, head of litigation at the Law Offices of Todd Friedman, which brought the case against Fabletics and is investigating other businesses, private pressure is likely the only way to get businesses to respond in this scenario, which involves government policies. That has not stopped Trump officials from weighing in on the fight.
Last month, US Trade Representative Jamieson Greer urged businesses that receive a refund "windfall" to give bonuses to employees. Treasury Secretary Scott Bessent said in February that it was unlikely that consumers would benefit. He stated, "I have a feeling the American people won't see it."
Source: BBC
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