US retailers could receive a substantial cash-flow boost after Donald Trump’s administration refund about $100bn (£74bn) of tariffs ruled unlawful by the Supreme Court.
The repayments represent 60 per cent of the $165bn (£123bn) collected through Trump’s “liberation day” tariffs, according to figures presented by customs officials to the US Court of International Trade.
The Supreme Court struck down part of the president’s tariff programme in February, forcing the government to return duties to the companies that paid them.
The refunds could provide significant relief for retailers that import products directly into the US, particularly businesses in sectors such as fashion, footwear, furniture, electricals and general merchandise, which are heavily exposed to global sourcing.
Retailers receive working-capital boost
Retailers that acted as the importer of record could see cash previously tied up in customs duties returned to their balance sheets.
The repayments could help businesses rebuild margins, reduce borrowing, invest in stock or support promotional activity after an extended period of uncertainty over import costs.
However, the impact will vary significantly between retailers.
Businesses that sourced products through wholesalers, distributors or overseas suppliers may not receive repayments directly and could instead depend on their supply-chain partners passing on the benefit.
There is also no guarantee the refunds will result in immediate price cuts for shoppers.
Many retailers absorbed at least part of the additional tariff costs to remain competitive, meaning the returned money could be used to repair margins or offset increases in wages, freight, property and other operating expenses.
Retailers that raised prices following the introduction of the duties must now decide whether to reverse those increases, fund additional discounting or retain the cash as protection against further trade disruption.
Replacement tariffs maintain pressure on prices
The refunds do not mark the end of Trump’s tariff programme.
The administration introduced a replacement round of duties last month covering more than 80 countries, including the UK, China, India, Canada, Mexico, Australia and the European Union.
The new tariffs range from 10 per cent to 12.5 per cent and replaced a global 10 per cent duty that was due to expire.
They were introduced under section 301 of the Trade Act of 1974, with the administration claiming that the affected countries had not done enough to tackle products made using forced labour.
A coalition of 25 US states has launched legal action against the replacement tariffs, arguing that the forced-labour justification is a pretext for reinstating duties overturned by the Supreme Court.
The states claim the measures imposed on 59 countries and the EU cover 99.4 per cent of US imports. They have asked the Court of International Trade to block the tariffs, declare them unlawful and order the repayment of duties already collected.
UK retailers face continued uncertainty
For British retailers operating in the US, the replacement tariffs mean landed costs and pricing strategies will remain uncertain.
Companies will need to determine whether any historical payments are eligible for refunds while simultaneously assessing their exposure to the new duties.
Retailers may also need to review supplier contracts to establish whether they or a third party acted as importer of record and is therefore entitled to claim the repayments.
Although the $100bn (£74bn) already returned provides an important balance-sheet boost for businesses, around $65bn (£48bn) of the original tariff income remains outstanding.
With a replacement tariff regime already facing a legal challenge, retailers continue to face uncertainty over sourcing costs, margins, inventory decisions and consumer prices.
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