How upcoming tariff refunds may affect U.S. businesses and consumers

[0:00] Among the many uncertainties clouding the U.S. economic picture are tariffs, both the prospect [0:05] of new ones and upcoming refunds from recent tariffs deemed illegal. And there are a number [0:10] of questions for businesses and consumers alike. Our Stephanie Sy has more. [0:16] In February, the Supreme Court struck down the sweeping tariffs imposed by President Trump [0:21] under the International Emergency Economic Powers Act. Now, businesses are scrambling [0:27] to get their money back. Last week, U.S. Customs and Border Protection started accepting refund [0:33] claims for $166 billion in tariffs collected over the past year, including from companies such as [0:41] Basic Fun, which sells toys familiar to many of us, Tonka Trucks, Care Bears, and Light Bright. [0:48] The CEO, Jay Foreman, joins me now. Jay, great to have you back on the NewsHour. So how much money [0:54] are you owed? And tell us what the process has been like to claim the refund. [0:59] Sure. Well, if all goes well, we've got $7.4 million coming back to us, which we'll use to [1:05] reinvest in our business and our employees. So far, I have to say the process has been smooth. The [1:12] CBP set up the portal. The portal operated pretty well. A couple of glitches here and there last Monday [1:20] when we were able to start loading everything in, but we've got all our invoices and claims loaded [1:25] and all we're doing is waiting for the magic day when they push the button and actually [1:31] the money starts to flow back in the form of refunds. That's, you know, at this point, [1:37] that's what we're waiting for. Everything else is locked and loaded. [1:41] Do you have any idea when that button is going to get pushed and how does it come out? Is it just [1:46] all in one lump sum? We believe that somewhere in the next 45 to 60 days, maybe 90 days at most, [1:55] but we haven't been told. There's no posting on the portal that tells you when to expect those [2:02] refunds to come in. And we're really not sure whether they're going to come in. It's all going [2:07] to come in in one shot or it's going to, you know, sort of dribble in invoice by invoice. So we've got [2:13] 560 individual import invoices logged into the computer. We're hoping that it's going to come [2:23] back in, you know, one lump sum, but we really have no idea right now. We're just, you know, [2:28] sort of sitting and waiting. Well, I know that your business basically sells toys to the major [2:34] retailers who then sell to customers, right? Some of those retailers, as you know, passed on [2:39] surcharges to customers, you said that you're planning to invest these millions back into the [2:45] business. Will customers ever reap any benefit from the tariff refunds? I think in some ways they [2:51] will. You know, major retailers that were in the position that they had to pass along refunds if they [2:57] decide to take the refund or they had to pass on tariffs. If they decide to take the refund, they've got [3:04] a lot of opportunities to sort of provide deals and get money back to consumers, you know, in a lot of [3:11] different ways, whether that's discounting products or giving folks credits. The challenge more is with [3:18] smaller, medium-sized companies that weren't able to pass those costs along. For us, it just came right [3:24] off the bottom line. So our plan is really to reinvest this in our business, to pay down some debt, [3:30] invest in some new equipment, invest in our employees. So I think the most important thing is [3:38] when this money is returned, it will be invested back into the economy. In some ways, through pricing [3:45] to consumers, and they'll see it. In other ways, it'll go back to companies that can return it to [3:49] shareholders or reinvest it in their business. It's not quite like shooting a missile off that explodes [3:55] and not only do you never see that money again, but you have to replace that missile. When that money [4:01] comes back into the economy and into the folks that pay the tariffs, it's going to be reinvested [4:08] into this country. And you'll see an economic boom to the tune of $160 billion or more coming back into [4:16] the market here. Were there any losses or business impacts that the refund can't make up for? [4:23] Yeah, I'll give you a perfect example. We purchased the assets of a great company called [4:28] Arcade OneUp. It's a company that makes sort of Pac-Man and video game machines that you can put in [4:34] your home game room. And they got hit super hard, not only by the tariffs, but even before the tariffs [4:40] by the supply chain crisis and the cost of freight and transportation and the gyrations in the market [4:47] around COVID. And in the end, it was the tariffs that really put the nail in the coffin for them. [4:53] And they weren't able to make it. And so we were able to purchase the assets of the company, [4:57] keep a number of the employees employed and bring that product line back to the market. And there are [5:02] dozens, if not hundreds of companies in the same situation. People, small businesses, I like to call [5:09] them the sort of shark tank generation where people that have created basements in their homes and in [5:14] their garages that are using their own money and their savings to create businesses that don't have [5:19] leverage to pass those costs along. Those folks really suffered. And that money needs to come back [5:25] to them. And I'm sure they will be reinvesting all that money back into their lives, into their [5:30] businesses, and a lot of them just to repay debt that they might have taken on in order to finance [5:37] their businesses and support the payment of these tariffs. [5:41] Jay, are you confident that there won't be any more tariffs in the future? I mean, [5:46] do you have to plan your business for the eventuality that they could come back? [5:51] Since COVID and the supply chain crisis and this whole tariff situation, we're always planning for [5:58] a worst case scenario. Right now, tariffs are 10%, which are workable. There are cases going through [6:05] the courts right now to try to strike those 10% tariffs down. The administration is talking about [6:10] imposing a different regimented tariffs, 301 tariffs. So we have to assume that this administration is [6:17] still looking in some form to place tariffs, whether they stay on industries like the toy business or [6:24] the government focuses on really strategic industries. That's left to be determined. But [6:30] we have to continue to sort of have a chaos mentality that whether it's the administration doing [6:38] things that are upsetting the market or the world doing things that are upsetting the market, [6:42] that's the business environment many of us are in right now. And we just have to hunker down and [6:48] hope for the best and prepare for the worst. That is Jay Foreman, CEO of the toy company Basic [6:55] Fund, joining us. Thank you, Jay. Thank you.