The Supreme Court has declared Trump's tariffs in the US unlawful. But while we were rubbing our hands with schadenfreude, the full scope of the decision is slowly coming to light. The amateurish US government is stepping into every possible trap with legendary precision, all while celebrating its own incompetence.
During a dinner with friends, a banker pointed out a detail that I hadn't considered, despite my background as a trained foreign trade merchant.
Trump requested a stay on the processing of tariff refunds. The court denied it. The result: European and Canadian companies are receiving their tariff payments back – including interest – after they have already passed those additional costs on to the final prices paid by US consumers.
It’s true, we Europeans can essentially just rub our hands together. Corporations importing into the US will be fully compensated, while the US consumers, who actually bore the costs, will walk away empty-handed.
The US Court of Appeals for the Federal Circuit rejected the Trump administration's motion to delay the tariff refund proceedings. The Trump administration's Department of Justice had requested a 90-day withholding period, but the court declined. The case was immediately sent back to the US Court of International Trade so that the refunds could be processed.
This isn't just about Trump losing in court. It's about who wins and who loses when an illegal economic policy is reversed. European and Canadian companies that paid Trump's tariffs are getting their money back. American consumers, who paid higher prices because of these tariffs and thus bore the burden of inflation, receive nothing.
The Supreme Court declared the global tariffs imposed under the emergency law IEEPA to be unlawful. The government had collected more than 130 billion dollars from these tariffs by mid-December 2025. Total refunds could eventually reach up to 175 billion dollars. This money wasn't pulled out of a hat. Companies exporting to the US, including many European firms, paid the tariffs upon importing the goods. Naturally, these companies passed a portion of these additional costs on to consumers in the form of higher prices. The American end-consumer carried this inflation.
More than 2,000 lawsuits for refunds have already been filed in US federal courts. The plaintiffs include companies like FedEx, Costco, and Revlon, as well as numerous European and Canadian firms that paid tariffs on goods exported to the US. These companies will receive their paid tariffs back with interest. Lawyers for small businesses pointed out that administration representatives had repeatedly stated that tariffs would be refunded with interest if they were overturned.
Do European companies have to refund the reimbursed amounts to US customers? Of course not. There is no mechanism for that. The inflation has already happened, the consumers have paid, and the dollars have flowed out.
An example to clarify: A European company pays 10 million dollars in tariffs and passes these costs on to American consumers through price increases. The Supreme Court in the US declares the tariffs illegal. The company receives the 10 million plus interest back. The consumers who paid the higher prices walk away with nothing.
The Trump administration now has a funding problem of about 175 billion dollars. And how does a bungling Trump solve a funding problem? It’s obvious: through new tariffs. After the Supreme Court overturned his country-specific tariffs, Trump imposed a new import duty of 10 percent using a different legal basis and threatened to increase it to 15 percent.👍
American consumers are therefore burdened twice: first by the inflation from the initial tariffs, then by higher prices due to new tariffs introduced to finance the repayments. European and Canadian firms receive an unexpected windfall: they paid tariffs, passed the costs on to US consumers, and are now getting the payments plus interest back. Capital that was temporarily tied up by the tariffs returns with a bonus. American consumers, on the other hand, have suffered a permanent loss of purchasing power.
What will happen? I believe European and Canadian companies will receive significant refunds over the next 12 to 18 months, while American consumers will likely experience new inflation through newly imposed tariffs. The gap between corporate recovery and consumer loss is likely to widen.
We in Europe should learn from this: US trade policy is unreliable, legally unstable, and costly. It is better to build trade relations with partners who do not require years of legal battles to reverse illegal measures. This is what policy failure looks like when decisions are overturned: those who bore the costs are not compensated; the companies that passed the costs through are compensated; the government that caused the problem imposes new costs to finance the refunds, and the economic credibility of US trade policy suffers further damage.
Sources:
Die Zeit.de
US court rejects delay of tariff refunds
Tagesschau.de
Judges declare Trump's tariffs unlawful
Trump intends to further increase global tariffs
