The Trump administration faces a “big question” about how to compensate Americans after the U.S. Supreme Court ruled its tariff policy illegal last month, said Stephen Moore, who served as an economic adviser to President Donald Trump during his first term. Newsweek.
He said resolving the tariff refund issue will be “messy” and it is not clear exactly how it will be resolved. While some have distributed checks of up to $2,000 for Americans, Moore did not say exactly what the amount should be, but said he is “almost certain” consumers will be compensated.
Trump previously said the US was bringing in “trillions of dollars” and that “a dividend of at least $2,000 per person (not including high-income earners!) will be paid to everyone.”
Why it matters
A court majority rejected Trump’s sweeping tariff policy last month, limiting his ability to impose tariffs without congressional approval. The president attempted to impose major tariffs on dozens of countries upon his return to office, but that policy raised legal questions about whether he had the authority to impose them under the International Emergency Economic Powers Act (IEEPA), a 1977 law that gives commanders in chief special powers in emergency situations.
The administration is now faced with the question of what to do with the revenue it has collected from the rates. In his dissent, Supreme Court Justice Brett Kavanaugh wrote that the decision “says nothing today about whether, and if so how, the government should return the billions of dollars it collected from importers,” a process he said would likely be a “mess.”
What you need to know
Moore, a conservative economist who founded the Committee to Unleash Prosperity, said Monday that settling tariff refunds will be a “very complicated issue.” The checks should go to the companies that paid the rates, he added.
“Those are thousands and thousands of companies that have written over $150 billion in checks to the government that have now been declared illegal. So those are going to have to be cut,” Moore said.
Many studies suggest the average family paid somewhere around $2,000 in import duties, he said.
“That’s a big question in dealing with this problem. So it’s not clear how all of this is going to be resolved, but I’m almost certain that consumers are going to have to get some refund because you can’t make all voters feel like all the money went to big corporations and not to them when they paid some of the taxes,” Moore explained.
It is “required by law” that companies that have paid the rate receive compensation. Although many passed these costs on to consumers, they were the ones writing the checks. Moore said the government could adopt a policy requiring companies to refund consumers who paid part of the tax, even if they did not pay it directly.
“I think American families are going to demand that kind of compensation,” he said.
Moore says economic perception remains a “mystery.”
The economy remains a key issue for the Trump administration, especially as the midterm elections approach. Democrats hope to use the affordability issue to win seats in the House of Representatives and the Senate. Polls show Trump’s popularity declining and Democrats gaining an edge in the race for control of Congress.
Many figures paint a picture of an improving economy: falling house prices, falling inflation and a well-performing stock market. But poll after poll continues to show that consumer sentiment remains low and approval of Trump’s handling of the economy remains low.
Moore said this is “the real mystery.”
High inflation during the Biden administration is one factor keeping consumers from being more optimistic about the state of the economy, he said.
“I think these are the lingering effects of the high prices that people are still paying as a result of the runaway spending that has led to inflation,” Moore said. “People expected prices to fall. I think that was an unrealistic expectation. We don’t really want prices to fall. Deflation can actually be worse for an economy than inflation because it crushes businesses.”
He explained that he believes voters will become more positive about the economy in the coming months. He added that Trump can “prevent losses” by talking about policies that include less regulation and lower taxes.
“People are already starting to feel the impact of the big, beautiful tax bill. Less money is being withheld from their paychecks, which started in January, and in some cases that could mean as much as $1,500 less in taxes paid this year, which is a significant boost to their personal incomes, but also to the American economy,” he said.
What people say
Supreme Court Justice Brett Kavanaugh wrote in his dissent: “In the meantime, however, the interim impact of the Court’s ruling could be significant. The United States could be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed the costs on to consumers or others.”
President Donald Trump criticized the ruling last week: “The Supreme Court (will use lowercase for a while due to a complete lack of respect!) of the United States has accidentally and unknowingly given me, as President of the United States, far more authority and power than I had before their ridiculous, stupid, and highly internationally divisive ruling.”
William Reinsch, a senior economist at the Center for Strategic and International Studies (CSIS), said Newsweek previously: “Nobody will get refunds anytime soon, but ultimately importers who claim refunds should get them, but the burden will be on the importer to take the initiative.”
What happens next
A federal appeals court remanded the case Monday VOS Selections vs. Trump back to the US Court of International Trade. The legal battle over fare refunds continues.
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