The US government is refunding $81bn in tariff payments to importers, following the Supreme Court’s February 2026 ruling that Trump did not have authority under the International Emergency Economic Powers Act to impose many of his tariffs. Not every business has been repaid: In June alone, about $49.2bn was refunded; May and June together accounted for roughly $71bn.
What has happened to this money? To trace the funds we need to start with the 2025 tariffs.
Did American prices rise because of the tariffs?
Yes, quite clearly.
Research by the Federal Reserve estimates that the tariffs imposed during 2025 raised core goods prices by about 3.1% by February 2026.
The burden was overwhelmingly borne inside America rather than by foreign exporters. New York Fed research shows that 94% of the tariff cost during the first eight months of 2025 was borne by US importers, businesses and consumers. In other words, foreign suppliers generally did not slash their prices enough to compensate. Effectively Trumps tariffs were a massive tax on businesses, which was passed onto consumers through higher prices.
This isn’t the first time. Federal Reserve research found that 90% of Trump’s 2018–19 tariffs passed throug into consumer-goods prices. One particularly clean example was washing machines: their prices rose nearly 12%, while dryers also rose by a similar amount as manufacturers widened margins across product ranges.
So the slogan that foreign countries “pay the tariffs” was the wrong way round. American customers paid nearly all of it
Did prices fall when tariffs were cancelled?
Some have, but most haven’t
Big retailers like Costco say they have already reduced prices on items including textiles, cookware and bedding as tariff rates fell, and it has promised to use refunds to provide lower prices and better value. Walmart has also announced thousands of price reductions, partly financed by expected tariff refunds.
But the overall US price level continued rising after the February judgment. Consumer prices increased 0.6% in April and 0.5% in May, leaving CPI 4.2% higher than a year earlier. By comparison UK CPI fell from 3.5% to 2.8% over the same period. Import prices also increased during April and May. Those figures were affected by energy, supply chains and other factors, so they do not prove tariff cancellation failed; but they do show that prices did not simply reverse their earlier increases.
There are several reasons why prices didn’t fall:
- Not all tariffs were cancelled. The ruling struck down the tariffs imposed using emergency-powers legislation; tariffs imposed under other laws remained, and Trump has pursued replacement tariffs.
- Refunds go to the importer, and shops, distributors and consumer that paid the higher price may get nothing.
- Prices are sticky downward. Removing a tax often slows future inflation rather than returning the price level to where it started. Petrol aside, businesses are generally quicker to discover reasons to raise prices than reasons to lower them. This isn’t new – Keynes wrote about it nearly 100 years ago.
But there is one other reasons. Businesses kept most or all of the refund. If a company raised prices and customers continued buying, it has no incentive to restore the old price.
Consumers paid higher prices, but the refund went to importers and to the companies who sold the products. Customers paid the tariff while businesses pocketed the repayment.
This was a straight forward transfer of cash from customers to businesses, facilitated by the US Government and the courts. If you want an illustration of the way that the rules of capitalism are being bent in America to create a new economic system that abandons the free market for corporate power, and where corporate power is controlled by the President and his clique then this is it.