My firm does not handle importers or deal with tariff issues but I am curious about how recent legal news will affect small businesses and consumers.
- Issue summary: Five small businesses won their lawsuit against the federal government that the Trump tariffs are illegal. The fact that they won their case is not surprising, but the strength of the ruling by three Republican judges is the subject of comments by legal analysts. Based on this, we can reasonably expect that the federal government will lose its appeals of the case and that the tariffs paid by U.S. importing businesses will remain illegal.
- Impact: The more interesting next issue is the likely impact of the change in U.S. trade policy. Worldwide stock future prices are up sharply in the hours since the court ruling. Small business owners are expressing relief in social media. One discussed relief after he had taken out a personal loan just to pay the tariffs and keep his business open.
- Forecast: A reasonable assumption, apparently shared by the majority of initial tax and economic commenters, is that tariffs paid will be recovered by small businesses, importing will immediately rebound, but consumer prices paid will not quickly drop to pre-tariff levels. Consumers will not benefit from the new court ruling from higher prices already paid for purchases.
- Conclusion: The government’s effort to resist the refund of tariffs are unlikely to be successful. However, the refund of tariffs paid could take more than six months, according to lawyers for importers who processed these claims in the past.