Few households were banking on a tariff rebate cheque from the White House, but it’s looking even less likely now following last week’s Supreme Court decision. The court ruled President Trump could not use the International Emergency Economic Powers Act (IEEPA) to levy duties on trading partners. Indeed, with economists suggesting some $175 billion is now locked up in litigation for refunds, the Treasury secretary admitted the funds are unlikely to ever see the light of day for consumers.
The Supreme Court’s decision on Friday ruled the Oval Office’s use of IEEPA to introduce its sweeping global tariffs was unlawful, prompting a weekend of updates from the Oval Office as it scrambled to find a new legal footing to continue collecting its import duties. IEEPA tariffs were initially imposed on China in February 2025, and a month later, were imposed on Canada and Mexico. April’s “Liberation Day” tariffs also came under the IEEPA authority.
And while the White House has a number of options for continuing to generate its tariff revenue, the funds initially generated under the IEEPA tariffs are now in dispute. Optimists have suggested the refunds could act as an economic stimulus for the economy, as U.S. importers would be the entities receiving the cash influx.
Indeed, consumers might even hope for lower prices if corporations pass on the influx of cash. But Treasury Secretary Scott Bessent has already suggested consumers will be waiting a while—if not forever—for the cash to trickle its way back into their pockets.
Speaking at the Economic Club of Dallas in the aftermath of the ruling, the Treasury secretary said the Supreme Court had not ruled on how the funds generated under IEEPA should be handled, so that decision will be pushed back to international trade courts.
He continued: “My sense is that could be dragged out for weeks, months, years, so … we’ll see what happens there.” Bessent continued that using alternative methods like Section 232 (national security justification) or Section 301 (unfair trade practices) means tariff revenue generation won’t drop or slow. But on the IEEPA revenues, he added: “I got a feeling the American people won’t see it.”
Other members of the Trump team are of the same opinion: In an interview on Fox News Sunday, U.S. Trade Representative Jamieson Greer was asked if the White House will fight efforts to seek compensation or pay out refunds. “So it’s a matter for the courts,” Greer added. “They created the situation, and we’ll follow whatever they say to do.”
Precisely how much the American people are missing out on is still up for debate, as the IEEPA funds will need to be separated from customs duties and levies already in place under previous and new trading agreements. The latest analysis from the Penn Wharton Budget Model at the University of Pennsylvania projects up to $175 billion in potential refunds, reflecting cumulative IEEPA collections of roughly $164.7 billion by January 2026, with collections running at about $500 million per day.
UBS’s chief economist Paul Donovan told clients this morning that any hopes of businesses passing the rebates back through to consumers may be naive: “Tariff rebates will increase the U.S. fiscal deficit, and act as a fiscal stimulus. Any rebates will be paid to U.S. importers (as they are the ones who made payments to the U.S. Treasury). With new tariffs coming in, it seems unlikely anyone will rush to lower prices to their customers.”
Lower effective rates
What businesses may be able to look forward to is a lower effective tariff rate.
In the immediate aftermath of the ruling, the Trump team confirmed it would be enforcing a 15% tariff rate under Section 122 of the 1974 Trade Act, which allows for levies to be enforced for 150 days—allowing the White House to get its ducks in a row to enforce the duties in the longer term.
However, the uncertainty generally points toward the fact that in the long run, the effective tariff rate is likely to trend downwards. The Yale Budget Lab wrote this weekend that without IEEPA tariffs, consumers will face an overall average effective tariff rate of 9.1%, which remains the highest since 1946 excluding 2025. However, if IEEPA tariffs had stayed in effect, the effective rate would have been 16.9%.
“The [Deutsche Bank] house view [is] that we continue to expect the effective tariff rate to fall in 2026,” added Deutsche Jim Reid to clients this morning. “Indeed, since October the average customs duty collected has already declined by around two percentage points, to roughly 11%, largely due to carve outs and exemptions. Some of this easing has been attributed to the administration’s weak showing in local elections in early November, highlighting the domestic political constraints on another aggressive tariff escalation.”
