This coat cost $248 in illegal tariffs. Will he ever get the money back?
A Coat’s Hidden Cost: Can Refunds Reverse the Tariff Impact?
Last year, Alex Grossomanides purchased a down jacket from France, only to discover it had cost him over $400 in tariffs and processing fees—nearly matching the jacket’s price. The unexpected burden stemmed from the product’s origin: Myanmar, which faced a 40% tariff rate. This led to a charge of $248.04, far exceeding his initial expectations. Now, the Supreme Court has invalidated these tariffs, sparking a potential refund process that could become the largest in US history.
The Refund Process in Motion
Following the court’s ruling, customs officials are tasked with repaying over $160bn collected from importers. This could benefit roughly 330,000 businesses. However, the process may leave many, like Grossomanides, uncertain. He paid the tariffs through DHL but has yet to hear from the company about a refund. “They should be refunding people,” he says. “It’s all my money and I took the hit for it, which I don’t think is fair.”
The Court of International Trade mandated the refunds in March, setting the stage for a system to return the funds. Customs officials claim the process will be ready this month, with updates due on 14 April. Yet, fully reversing the financial impact remains challenging. Economic studies indicate that most of the tariff costs have already been absorbed by consumers through higher prices, a factor not addressed by the court’s decision.
Small Businesses Feel the Strain
Sue Johnson, a lamp maker in California, faced a stark example of the tariffs’ ripple effect. Her supplier nearly doubled the price of mica, a key material for her Art Deco-inspired designs. “Maybe they’ll get repaid, but I have no hope they’re going to refund me,” she says. Importers, like Johnson, argue that while the refunds are a step forward, they haven’t fully recovered the losses.
Kacie Wright, from a Texas-based musical instrument importer, echoes this sentiment. “Even if we do get refunds, we are still not going to be made entirely whole,” she explains. Her business spent over six months navigating customs’ online system to qualify for the process. Legal experts, such as Jared Slipman of Obermayer, warn that smaller companies may hesitate to pursue claims due to the administrative burden. “Some businesses, especially smaller ones, may look at the requirements and decide the potential ‘juice is not worth the squeeze’,” he says.
Consumers Bear the Brunt
James Tak, a Washington resident, encountered a $24 tariff charge from UPS after receiving a gift of video games from Japan. While he understands the refund process may be complex, he insists, “I just think it’s money I shouldn’t have to pay.” Many consumers, he adds, could end up losing out if businesses don’t pass on the savings. “It may very well be the case that this is an orchestrated theft from the American consumer… and that would be very unfortunate,” Slipman notes.
Though some shipping firms, like FedEx, plan to return refunds to businesses and individuals, others have made less definitive promises. The debate over who should bear the costs has already led to class-action lawsuits, highlighting the ongoing uncertainty for those affected by the tariff changes.
