After a United States Supreme Court decision struck down 1968 Wharton graduate and President Donald Trump’s tariffs on international trading partners, the Penn Wharton Budget Model estimated that the federal government may have to refund importers up to $175 billion.
The Feb. 20 decision found that the 1977 International Emergency Economic Powers Act does not authorize a president to impose unilateral tariffs indefinitely. While the ruling does not explicitly require immediate repayments from U.S. Customs and Border Protection, importers can submit refund claims for customs duties on goods liquidated over the past 180 days.
PWBM applied microeconomist Lysle Boller told The Daily Pennsylvanian that refunds on tariffs imposed since January 2025 are likely the “most immediate impact” of the ruling.
“For a lot of the importers that paid those tariffs to the administration, there will probably be some mechanism for them to claim a refund for that money,” Boller said. “Ultimately there going to be lost revenue for the government, and money that will be going back into the pockets of the companies that are importing these goods.”
The PWBM report said that large tariffs “may induce consumers to reduce demand for that good or switch to alternatives,” which would lead to a lower tariff revenue than if they assumed there would be no change in consumer behavior.
The analysis estimated that IEEPA duties accounted for roughly half of total customs duties collected since January 2025. The tariffs were initially levied on China, Canada, and Mexico in February and March 2025, before extending to nearly all U.S. trading partners.
CBP collected approximately $133.5 billion in tariffs under IEEPA authority as of Dec. 14, 2025, which generated an estimated $500 million per day in federal revenue. The model’s estimated $175 billion of refunds is equal to an average of $1,300 per U.S. household.
Looking ahead, Boller said that individuals seem to be “skeptical” of whether or not the value of these tariffs will be refunded back to consumers.
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Shortly after the court’s decision was released, Trump announced that new global tariffs of 10% would begin on Feb. 24. On Saturday, he increased this number to 15% — in a temporary measure against the court’s decision applied under Section 122 of the 1974 Trade Act. These global tariffs could legally remain in effect for up to 150 days under this law.
PWBM Faculty Director and professor of business economics and public policy Kent Smetters told the DP that the global tariff “returns the effective tax rate back to where it was pre-Supreme Court decision.”
“If those tariffs had been struck down and not been replaced, the effective tariff rate going forward would be much lower, which means imports would be relatively cheaper for us consumers,” Boller added.
Following Trump’s Saturday announcement, U.S. stocks dropped on the morning of Feb. 23.
“They were expecting their tariffs to be overturned, and then they were basically returned back to this very similar overall affected tax rate,” Smetters said. “There’s differences by country, but nonetheless, the overall effect is roughly the same.”
