$166B in tariff refunds begin: The complex process, explained

[0:00] 1, 2, 3, 4, 5, 6, you get the idea, $166 billion in refunds and interest on top of that as well. [0:09] Even for the US government, it's no small amount and it's a logistical nightmare because it'll [0:16] happen over 60 to 90 days. And here's the way it works. Only importers of record can file for the [0:25] refund. So that's the big companies like Walmart and Costco. You and me, I live in the US, so I paid [0:32] the tariff at some point. Not so. Just how much of a mess is this? Because I'm actually quite surprised, [0:40] Oliver, that they have at least put in place a bureaucracy to handle it. Now, whether it turns [0:47] out to be efficient and practical is another matter. Yeah, that's right. The court has been [0:54] holding the government's feet to the fire. It's been asking for updates regularly. And the [1:00] government has been filing declarations explaining how the process is going to work. Obviously, we [1:05] can expect some bumps in the road. But as you said, at least the machinery is in place to get this going. [1:13] Right. But then we end this with a very tricky problem. I paid the tariff, ultimately. I'm the [1:20] consumer. I mean, yes, the importer might have done and then Walmart paid it. But I paid the higher [1:25] price that Walmart charged. Do I get anything back? Not from the government. As you said, only the [1:33] importers of record can request and receive a refund from the government. There have been a few lawsuits [1:39] against Costco, for example, by consumers who paid a higher price at the checkout. But directly from [1:47] the government, consumers cannot get a refund. So if all these importers and their various [1:54] subsidiaries and large companies are getting refunds, does this become de facto a windfall [2:00] for them? Because I hardly see them turning around to me and say, those oranges you bought, Mr. Quest, [2:06] I need to owe you 15 cents back on them. I don't know how much it would be a windfall for individual [2:13] companies. I do know that our clients were subjected to the higher costs of the incoming [2:19] goods, obviously. Their business slowed down. People stopped spending as much. Prices went up [2:24] elsewhere. So I don't think any of my clients viewed the or will view the refund in the future as a [2:31] windfall. The way in which the whole tariff thing was introduced and then we've now got this money [2:38] coming back. And it's not fully resolved, is it? There are still some legal issues to be [2:44] undertaken in terms of this whole question. Yeah, there is. But the court on Friday issued [2:51] a great order. And the way it works generally is when you import something, the government will decide [2:58] and predict how much you owe on tariffs. And that's called liquidation, after which the importer [3:04] has a certain amount of time to challenge that amount. And what the court said Friday is no matter [3:09] when you imported and no matter whether your entry has been liquidated or not, if you paid an IEPA [3:16] tariff, you're entitled to a refund. Is it your feeling that the new tariff regime [3:26] is at least working? Importers may not like it, but everybody's got used to it. They now know what [3:34] the global tariff is. Everybody can adjust their business practice accordingly. Well, I do think [3:43] now that the Supreme Court has resolved the IEPA tariffs, I think that's largely true. One of the [3:47] biggest problems wasn't just the increase in prices, but it was the uncertainty because the president kept [3:53] changing things. Of course, he has found new authority, Section 122, and that's being challenged [3:59] in court. But I think for the most part, yes, that's right. I think the ground is now settled. [4:05] People at least know what's coming. It's very difficult to know how these tariffs damaged or [4:16] helped the US trading position overall. If you look at the study from the Fed, if you look at some of [4:23] the Peterson Institute studies, it all suggests that it was more damaging than otherwise. But we've also seen [4:29] the economic show that the inflation we passed through wasn't anywhere near what we had expected [4:35] or some people had forecast. No, I think that's right. And nobody knows why exactly. But there's [4:44] no question that small businesses were harmed. Someone out of business, a number of my clients [4:49] had to cut staff and make other cuts. So there's no question people were hurt. Tell us how the tariffs [4:56] affected your business before this point. Yeah. So those big tariffs came in in April, May, [5:04] and it was just so expensive to get anything that I just had to half my production rate, you know, [5:10] slow down everything my business was doing. Instead of making 30 percent more science kits like I planned [5:17] to, I made a quarter less. So it was just a huge drop in my ability to deliver products. [5:23] Jeffrey, you know, one of the questions I have had, and it's based in large part on Trump [5:28] administration officials being very circumspect about whether we'd get to this point and if we [5:33] got to this point, what the actual outcome would be if you went through the process. [5:37] Do you have an idea of the timeline here for actually receiving these refunds? When do you think [5:41] David will actually get his money back? Well, that's a good question. We're hoping sometime in the next [5:49] few months. But as you mentioned, there's $166 billion of refunds that are owed. And I think [5:57] something like 330,000 importers that are owed. So this could be a somewhat lengthy process. I think [6:06] the administration will probably do the easy ones first and then get into the more complex ones. So [6:13] I think the best thing to do at this point, if you're an importer, is go on to the system and submit [6:21] your claim. You know, David, to that point, and again, like uncertainty, I feel like has been your [6:27] life since April of last year on some level. It certainly hasn't ended now as we wait to kind of [6:35] see how this all plays out to go through. Although, you know, obviously, because of the Supreme Court, [6:40] you will be getting the refund. Are there impacts to your business that can't be undone, even when [6:46] that money comes in? Yes, totally. What I've thought about is that every dollar that I paid in the tariff [6:55] taxes, I've lost another dollar in my business just from all the disruptions from, you know, having to [7:03] cut my production. And that other dollar is a dollar I can't get back eventually from the government. It's a [7:10] dollar that just doesn't exist in the first place because I just, you know, had my workshop here in [7:16] Virginia running really slow because I didn't, I wasn't able to get my parts. Jeffrey, the president's [7:24] answer to the Supreme Court's ruling was a 10% global tariff on all countries. A panel of trade and court [7:30] judges have challenged the legality of this new tax. Do we have any idea where that stands today? Is this all [7:35] going to kind of come back? Yeah. So what you're, I think, talking about is the Section 122 tariffs that [7:43] the president instituted hours after the Supreme Court invalidated his IEPA tariffs and were involved [7:50] with with that case, too. Oral argument was on April 10th. So we expect to have a decision from the [7:58] Court of International Trade sometime in the next week or so. And just to be clear, despite what the [8:04] president announced, it's still 10%, right? Like I have not seen the actual EO come through or [8:11] paperwork raising it to 15, which is what the president announced he was changing it to like [8:15] 24 hours later. That's right. It's still at 10%. He hasn't changed anything to 15. So as of right now, [8:24] it's 10%. But I suppose that could change at any time. That is a very good point. Uncertainty. Again, [8:30] coin of the realm. David Levi, Jeffrey Schwab, really appreciate you guys. Thanks so much. [8:33] Starting today, business owners can start applying for tariff refunds. American importers are owed more [16:53] than $160 billion plus interest. The U.S. government launched an online portal today two months after [17:00] the Supreme Court struck down President Trump's most sweeping tariffs. CNN's David Goldman is with [17:05] us now on this story. All right, David, how much is at stake and how does this process work? You just go [17:11] put in the amount you want and they just give it right to you, don't they? [17:14] Oh, if only it were that simple. Yeah, no, it's about $166 billion that are owed to importers. But [17:23] that's the key word. It's importers, not consumers. We'll get to that in a second. But you know, [17:28] if you brought in something that got a tariff and it was an illegal tariff, right, the ones that the [17:34] Supreme Court struck down, not the other tariffs that are still legal, then you might be due a refund [17:40] and it could take 60 to 90 days to get that money back. Why? Because some of those tariffs were legal and [17:49] so they got to sort out, the government does, what was paid illegally, what was paid legally. Could take a long [17:56] time. So yeah, we are due a lot of money, but it's to companies, right? Bunch of companies sued. FedEx, [18:04] Costco, a bunch of companies that said that they wanted their tariff money back. It's going to go [18:10] back to them, right? Or maybe not even them, maybe the company that imported the goods and then sold [18:16] to a Costco or a Kawasaki or a Bumblebee or so on and so forth. If you're the consumer and you paid [18:23] all that extra money, that's not necessarily going to be something that you get back. Some companies [18:28] like FedEx said that they're going to try to do that, but good luck. It's going to be a long, [18:32] complicated process. That does sound long and complicated. So I don't get like extra samples [18:37] if I go to Costco or anything? I don't, like, do I get anything? Do we consumers get anything? [18:44] You do. You do. They always give you the extra samples, but for the rest of us, no, [18:49] not necessarily, right? So the problem is, is that those costs didn't 100% filter down to consumers. [18:58] Okay. So what are we talking about? When we were talking about higher prices because of tariffs, [19:04] a lot of that was eaten by the businesses themselves. And that's why inflation, which [19:09] was predicted to skyrocket, never really did. And so if you're a business, you say, well, [19:16] wait a minute, we've been paying a lot of this tariff cost. We didn't raise our prices necessarily. [19:21] So why are we going to give a consumer back that money? Well, some consumers actually did end up [19:28] paying a little bit more. On average, the tax foundation says about $1,000 per family in added [19:34] tax expense because of the tariffs last year. That's not nothing. It's just complicated to get [19:40] that back. And other than extra free samples at Costco, which I love, I don't think that we're [19:45] going to be getting a lot of treats lately. Sorry. I like my sample idea though. I'm just [19:50] going to put that out there. It's a great idea. Right. Next time I go, I'm going to let them know [19:55] that they owe us. Yeah. Put that in the suggestion box. David Goldman, thank you so much for taking [20:00] us through that. We do appreciate it.