This coat cost $248 in illegal tariffs. Will he ever get the money back?

Tariff Overhaul: Can Businesses Recoup Millions in Unfair Fees?

Last year, Alex Grossomanides purchased a down jacket from France, only to face a hefty bill of over $400 in tariffs and processing fees—nearly equal to the coat’s original price. The unexpected charges stemmed from the garment’s true origin: a Myanmar factory, which imposed a 40% tariff rate, resulting in $248.04 in costs for Grossomanides.

The Supreme Court recently invalidated the tariff, along with dozens of others introduced by former President Donald Trump, initiating a historic refund program. However, the process may not benefit everyone, as the ruling only covers importers who paid the tariffs directly.

Customs officials are set to launch the refund system this month, following a March court order to return over $160 billion collected. This could potentially allow 330,000 importers to recover some funds, though the full reversal of costs remains challenging.

Around the Clock: The Ripple Effects on Businesses

While some businesses may see relief, many have already passed on the majority of the tariff costs to consumers through higher prices, a factor not addressed by the court rulings. Sue Johnson, a lamp-maker in California, noted that her supplier doubled the price of mica, a key material in her Art Deco-inspired designs, due to the tariffs.

“Maybe they’ll get repaid, but I have no hope they’re going to refund me,” she says.

Kacie Wright of Houghton Horns, a Texas-based musical instrument importer, highlights that even if refunds are granted, businesses might not fully recover their losses. She describes the process of securing a refund as a lengthy and costly endeavor, requiring months of communication with customs officials.

Jared Slipman, a tax law expert at Obermayer, explains that businesses, particularly smaller ones, may find the refund process too burdensome. He warns that some might opt for legal action to reclaim their losses, while consumers could bear the brunt of the financial impact.

“It may very well be the case that this is an orchestrated theft from the American consumer… and that would be very unfortunate,” Slipman says.

James Tak, a Washington resident, faced a $24 tariff from UPS after receiving video games from a Japanese friend. Though he acknowledges the complexity of refunding millions, he insists the charges were unjust. He expresses hope that his funds will be returned, stating, “It’s money I shouldn’t have to pay.”

Some shipping firms, such as FedEx, have pledged to pass on any refunds to consumers and businesses. However, many importers have limited their commitments, especially those who indirectly passed on the costs. This debate has already spurred the formation of class-action lawsuits.