Tariff refunds put businesses on the spot
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The Trump administration moved faster than anyone expected to build a system to repay businesses billions of dollars in tariffs. Now, the president is warning companies not to use it.
Why it matters: Businesses face an especially tricky quandary: On the one hand, consumers and some lawmakers are calling on them to pass down refunds to their customers. On the other, there's now political pressure not to seek refunds at all.
Stunning stat: The sum of the expected payout — $165 billion, excluding interest — is an unprecedented amount for the government to distribute back to U.S. importers.
What they're saying: "It's brilliant if they don't do that," President Trump told CNBC this week, referring to importers who do not seek a refund.
- Responding to a question about large companies second-guessing whether to go through the refund process, Trump added: "If they don't do that, they got to know me very well. ... If they don't do that, I'll remember them."
- The White House did not respond to a request for comment on Friday.
Zoom out: Discouraging businesses to seek a refund stands in sharp contrast to the lightning-fast speed with which the administration built the refund system.
- Customs and Border Protection stood up the first phase of the platform in just 45 days — despite earlier warnings from the administration's lawyers that such an effort would take much longer.
Between the lines: CEOs have to weigh whether to seek a refund and risk Trump-sized blowback.
- "You don't want to hold a press conference when you do it, but I think as a company you have to file," says Terence Lau, a former trade attorney at Ford Motor who is now the dean of the Syracuse University College of Law.
- "If you are owed billions of dollars from the federal government and you don't get it back, you're going to have a derivative shareholder lawsuit on your hands so fast it'll make your head spin."
- Among businesses seeking a refund, Costco Wholesale has been one of the few to announce what it planned to do with it, saying last month that it would "return this value to our members through lower prices and better values."
CEOs have the refund question on their minds: "Our strategy is to protect the fact that we do not want anything to expire," Snap-On CFO Aldo John Pagliari said on Thursday in response to a question about whether the manufacturer will seek a refund.
- "If you do not file ... you run the risk that things go past what they call the liquidation date, and then you can never challenge it — even if one wanted to," he added.
By the numbers: A CBP spokesperson did not respond to a question about how many importers had so far applied for refunds.
- One sign of the demand: About a week before the portal opened, roughly 57,000 importers had taken the initial step to be eligible for refunds, with more completing that process daily, CBP said in a court filing.
- Still, it's a mere fraction of the roughly 300,000 importers that CBP estimates paid the tariff duties.
What to watch: The White House has not said whether it will appeal the ruling, from the nation's top trade court, that the government issue refunds. It has until early June to do so.
- The Supreme Court earlier this year struck down the bulk of Trump's tariffs enacted under the International Emergency Economic Powers Act, but it kicked the question about refunds back down to the lower courts.
