Trump hints that illegal tariffs will not be refunded; U.S. Treasury Secretary says this year's tariff revenue will "remain basically unchanged"

After the U.S. Supreme Court ruled last year that most of the tariffs implemented were illegal, President Trump hinted he would not refund the related taxes. U.S. Treasury Secretary Janet Yellen expects that government tariff revenue in 2026 will remain nearly unchanged. These statements imply that even with the risk of over $170 billion in tariffs being refunded, the Trump administration is determined to maintain the tariff barriers and has not retreated due to significant court defeats.

According to CCTV News, during a temporary White House press conference on Friday the 20th, Trump stated he would sign an executive order imposing a 10% import tariff on global goods to replace the large-scale tariffs previously levied under the U.S. International Emergency Economic Powers Act (IEEPA), which the Supreme Court found to be unlawful.

CCTV mentioned that when asked by reporters whether the approximately $175 billion in tariffs previously collected would be refunded, Trump responded that the Supreme Court’s ruling was flawed and did not mention “retaining this money” or “not retaining this money”—he guessed that “over the next two or even five years, this will all go to court.”

Also on Friday, at the Dallas Economic Club, Yellen stated that the Trump administration would invoke alternative legal authorities granted by Congress, including Section 122 and Section 301 of the Trade Act of 1974, and Section 232 of the Trade Expansion Act of 1962, to replace the tariffs based on IEEPA that the Supreme Court overturned.

Yellen emphasized, “No one should expect tariff revenue to decrease.” She said that Treasury’s estimates show that tariffs under Sections 122, 232, and 301 could keep 2026 tariff revenue “roughly unchanged.” She reiterated this point in a Q&A session after her speech, demonstrating the government’s confidence in building a new tariff system.

Later, in media interviews, Yellen again stressed that even with this Supreme Court ruling, there is “no change” in terms of national security and fiscal revenue. She criticized the Supreme Court’s decision, saying Americans will face economic setbacks as a result. She stated:

“In terms of development direction, national security, how we achieve goals through these agreements, and fiscal revenue, nothing has changed. What has changed is that the Supreme Court has deprived the President of negotiation leverage.”

Previously, CCTV mentioned that according to economists at the Wharton School of the University of Pennsylvania’s predictive model, tariffs levied under IEEPA exceeded $175 billion as of Friday. After such tariffs are deemed illegal, the government may need to refund $175 billion.

Yellen indicated that U.S. federal tariff revenue is closer to $1.3 trillion, rather than the $1.75 trillion suggested by the model of the research institutions. If refunds are issued, it could resemble “corporate welfare.” The new tariffs will be somewhat more complex than those based on IEEPA.

“We will revert to previous tariff levels. It’s just that the approach will be a bit less direct and more complicated.”

According to CCTV News, the U.S. Supreme Court ruled this Friday that the Trump administration’s large-scale tariffs under IEEPA lacked clear legal authorization. The majority of justices believed that IEEPA did not grant the President the power to impose tariffs without Congress’s approval.

The defeat for the Trump administration will trigger an unprecedented battle over refunds. Data from U.S. Customs and Border Protection shows that by the end of last year, the federal government had collected about $170 billion in tariffs under IEEPA, involving over 300,000 importers. Many companies, including Costco, Lululemon, and Alcoa, along with more than 1,500 firms, have filed lawsuits seeking to recover the paid tariffs.

The billion-dollar refund battle begins

The Supreme Court’s ruling on Friday did not specify the eligibility criteria or procedures for refunds, leaving this issue to be handled by the U.S. International Trade Commission.

Justice Brett Kavanaugh, who dissented, wrote in his dissent that “the Court today says nothing about whether and how the government should refund the billions of dollars collected from importers,” warning that the refund process “could be a mess.”

According to Bloomberg economic research analysis, as of December 14 last year, the textile, toy, and food & beverage industries were the largest payers of IEEPA tariffs, with machinery, electronics, and auto parts importers also significantly affected. Since refunds will be issued to the record holders who paid the tariffs, large companies that import directly are more likely to receive refunds, while small businesses that purchase through wholesalers are at a disadvantage.

The National Retail Federation called for a “seamless” refund process. David French, the organization’s Vice President of Government Relations, said that tariff relief would boost the economy and enable companies to invest and operate more freely. Yellen questioned this, suggesting refunds could become “corporate windfalls,” and asked whether companies like Costco suing the government would “return the money to customers.”

According to Treasury Department data, the U.S. Treasury currently holds about $774 billion in cash, enough to cover refund demands. Yellen previously said that the refund process could take weeks to months, “maybe even over a year.”

Market impact remains uncertain

Legal and consulting experts expect that the government might complicate refunds by requiring companies to prove costs were not passed on or by demanding extensive documentation. Customs brokers and lawyers advise companies to prepare import records at minimum to respond to potential refund claims. U.S. Customs and Border Protection announced that starting February 6, refunds will no longer be issued via paper checks but through electronic payments.

For the retail sector, the impact of the ruling is uncertain. Emarketer chief analyst Zak Stambor noted, “While the ruling provides some short-term relief, it does not eliminate the broader trade policy uncertainty facing retailers and brands,” and expects a “moderate tailwind” for retail sales starting this year, though this benefit will gradually fade before 2028.

Telsey Advisory Group analyst Joe Feldman said that the ruling raises more questions than certainty. Recovering paid funds will take time, and prices of goods generally won’t fall due to tariff cancellations—except for staples like milk and eggs. He believes, “The actual situation won’t change much.”

Lalo, a baby product manufacturer, co-founder Michael Wieder said the company will take all necessary steps to recover over $2 million in tariffs. He admitted, “We don’t expect refunds overnight, but we want to be at the front of the line.” When asked how refunds would be handled if received, he replied, “We’ll see then.”

Ibis Cycles CEO Hans Heim expects to eventually receive refunds, though timing is uncertain. He noted that over the past year, companies have spent significant time restructuring supply chains, analyzing tariff changes, and cutting costs. “People will be happy on the surface to get refunds, but they’d rather have this never happen in the first place.”

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