In February 2026, the U.S. Supreme Court ruled that the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) to impose its massive country-specific tariffs was unlawful. This means that for almost a year, the Trump administration unlawfully imposed tariffs under the act and collected them from U.S. importers. Although importers of record paid those duties, much of the economic costs were passed through supply chains to American manufacturers and small businesses in the form of higher prices—and eventually, those higher prices were passed on to American consumers.
Yet while American consumers bore the brunt of the Trump administration’s unlawful IEEPA tariffs, they are largely left holding the bag while large corporations receive the refunds the court system has ordered paid back to importers.
While American consumers bore the brunt of the Trump administration’s unlawful IEEPA tariffs, they are largely left holding the bag while large corporations receive the refunds the court system has ordered paid back to importers.
A new Center for American Progress analysis estimates that approximately $35 billion of the $115 billion in customs-duty refunds recorded from May 2026 through August 2026 may be attributable to the nation’s roughly 234,000 identified small-business importers—equivalent to about $149,000 per importer. Yet this pales in comparison to the extra $426,000 in tariffs paid per small-business importer as a result of the Trump administration’s trade policies. This is because only the Trump administration’s IEEPA tariffs are being refunded. Small-business importers—and the rest of the economy—are still subject to a complex web of ever-changing tariffs imposed by the White House using other legal authorities, with several stacking on top of one another. The U.S. applied tariff rate is estimated to rise to 11.8 percent in 2026; in 2022, it was only 1.5 percent.
The Trump administration’s tariffs imposed steep costs on businesses nationwide
Tariff revenue surged following the Trump administration’s “Liberation Day” tariff announcement in April 2025. Although the administration argued that foreign countries would bear the cost of its tariffs, research using import data through November 2025 found that “nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers” rather than foreign exporters.
The impact on small businesses—a backbone of the U.S. economy—was especially significant. Small businesses in the goods and retail sectors were particularly vulnerable to tariff-related cost increases because many relied on imported inputs and had fewer resources to absorb sudden cost increases or reorganize their supply chains. These pressures increased operating expenses and reduced profit margins. Although many firms absorbed part of the added costs, others had little choice but to pass some of the burden on to consumers through higher prices. According to New York Federal Reserve research, approximately 26 percent of the 2025 tariff increase was passed through to consumers in the form of higher prices.
CAP analysis of tariff revenue data from the U.S. Department of the Treasury’s Daily Treasury Statements and U.S. Census Bureau importer data finds that the nation’s roughly 234,000 identified small-business importers paid an average of $426,000 more in tariffs from March 2025 through August 2026 than in the preceding 18 months—equivalent to about $24,000 more per month. (see Methodological appendix)
These costs were not confined to the nation’s largest commercial centers. Small-business importers in all 50 states and Washington, D.C., faced higher tariff burdens, although the increases varied depending on each state’s industry mix, reliance on imported goods, and number of identified importers. (see Methodological appendix) In 21 states, the estimated average additional tariff cost exceeded $200,000 per small-business importer, while Texas, New Jersey, and Kentucky recorded an average of more than $300,000. (see Figure 1)
Tariff refunds will not make consumers or small businesses whole
Following the Supreme Court’s February 2026 ruling, U.S. Customs and Border Protection began processing refunds, with interest, for eligible duties collected under the now-invalidated IEEPA tariffs. In total, $166 billion is slated to be returned to U.S. importers.
Data from the Treasury Department’s Monthly Treasury Statements show that the federal government paid out about $115 billion in tariff refunds from May 2026 through August 2026, the bulk of which consisted of refunds for eligible duties collected under the invalidated IEEPA tariffs. CAP analysis estimates that approximately $35 billion of these refunds may be attributable to the nation’s roughly 234,000 identified small-business importers—equivalent to an estimated average of about $149,000 per importer.
On a state-by-state basis, the estimated average refund ranged from approximately $14,000 per identified small-business importer in Hawaii to $124,000 in Texas, while the estimated averages in New Jersey and Kentucky also exceeded $100,000. (see Figure 1) The Methodological appendix includes further details and information about data limitations.
Yet those refunds will do little to compensate the consumers, workers, and small businesses for the economic harm they incurred. The headline refund total also overstates its likely economic impact. One analysis estimates that only 34 percent of tariff refunds will flow to the most financially constrained small and medium-sized firms, while a larger share will reach those firms that are least constrained. As a result, it is likely that many companies that receive refunds will use them to rebuild savings or pay down debt rather than to support new hiring, investment, or lower prices.
For many small businesses, the refunds process may be nothing more than a mirage of potential economic benefit. Even if an eligible small-business importer receives a full refund, it is unlikely they could effectively distribute the money to specific consumers who bought their products at elevated prices. In some cases, higher expenses were the result of suppliers (who themselves faced higher costs) charging more for parts and materials. In other instances, companies paid higher shipping costs to ensure their imports arrived before a tariff deadline hit. To avoid raising prices, companies also dipped into their available cash, took out loans, paused hiring, or decreased other expenses, such as marketing or advertising.
Navigating the refund process itself can be costly and complex for small businesses. Refunds are not automatic: Importers of record—the party responsible for ensuring that imported goods comply with customs and other legal requirements—or their authorized customs brokers must identify eligible entries and submit a Consolidated Administration and Processing of Entries (CAPE) declaration listing those entry numbers through the Automated Commercial Environment (ACE) Portal. Depending on an entry’s liquidation status and CAPE eligibility, an importer may also need to file a timely administrative protest to preserve its refund claim.
Small-business importers may have fewer legal and administrative resources than larger firms and may need help from customs brokers or attorneys to navigate the tariff-refund process. For some businesses with relatively small claims, the time and professional costs involved could reduce—or even outweigh—the value of pursuing a refund.
Although the practice remains uncommon, a Federal Reserve Bank of Atlanta survey in August 2026 found that 1.2 percent of firms receiving or applying to receive tariff refunds selected “Selling refund rights to third party” when asked how they had obtained or planned to obtain a refund. Some companies traded potential refunds for immediate cash, to manage debt or plan their capital needs, or to avoid uncertainty about whether and when refunds would arrive. Other firms have explored borrowing against their refund claims, allowing them to obtain liquidity without selling the claims at a discount.
Large corporations are benefiting while small businesses face lasting harm
The plight of small businesses—and everyday consumers—stands in stark contrast to the windfall currently being enjoyed by corporate America. In recent weeks, several corporations have highlighted tariff refunds as part of their quarterly earnings reports and investor calls. Target, for example, noted on August 19 that it had received almost $1 billion as a refund for the tariffs that the Trump administration unlawfully imposed last year. Ross Stores, Polaris, and Carter’s have likewise reported that tariff refunds materially increased their quarterly profits, margins, or earnings per share. Their disclosures focused on the refunds’ benefits to their shareholders and bottom lines rather than to their customers.
And of course, refunds will mean nothing to the small businesses that have already permanently closed their doors. Small-business bankruptcy filings increased by 50 percent year over year in the first half of 2026 amid the increased costs and uncertainty associated with the Trump administration’s trade policies. According to the Democratic minority staff of Congress’ Joint Economic Committee, businesses with fewer than 10 employees lost 292,000 jobs in 2025—nearly 4.5 times as many as in 2020, during the COVID-19 pandemic. More than half of the job losses since April 2025 have occurred in tariff-exposed industries, which are susceptible to the negative impacts of the Trump administration’s tariffs.
Will consumers get the IEEPA-related refunds?
If a small-business importer is unlikely to benefit from a refund of the invalidated IEEPA tariffs it paid, it is even less likely that refunds will reach everyday consumers. Often, importers are not the final consumer of an imported good. There is thus a mismatch between the entities legally entitled to a refund and those that ultimately bore the tariff’s economic cost. An importer of record may pass a portion of a tariff’s cost on to its customers, who in turn pass on higher prices through complex supply chains involving distributors, retailers, and, ultimately, consumers.
Imagine, for example, a small business on Main Street that sells fashion apparel. The business imports its products from multiple countries, many of which would have been subject to the IEEPA tariffs, but the business itself may not be the importer of record. Instead, it may purchase its merchandise from a wholesaler, distributor, or other intermediary whose prices reflect some portion of the tariff costs. Because of higher costs of inputs, the small business likely would have raised the prices of imported merchandise.
But suppose that same business also makes and sells bespoke apparel. The business would have faced higher costs for textiles, sewing equipment, and other materials used to produce its apparel—most of which would have been purchased from a local supplier rather than through a freight forwarder. The shop would have passed some of the local supplier’s higher costs on to consumers as well.
Other costs would have been harder for the Main Street shop to transfer. For example, added costs from tariffs likely would have meant that the business was able to spend less on advertising or had to reduce the hours of some of its employees or even cut back on hiring, perhaps resulting in less inventory, fewer customers, and a reduced revenue stream.
Refunds cannot reverse the economic damage caused by the tariffs
What is more, the return of money collected from American importers in the form of the Trump administration’s unlawful IEEPA tariffs is not costless to American taxpayers. On the contrary, the U.S. government must issue refunds with interest compounded daily. In total, estimates from the Cato Institute suggest that as of May 2026, $4.5 billion in interest had accrued on the initial IEEPA revenue.
Treasury data show that customs-duty refunds exceeded gross collections in May, June, and July 2026—including by more than 2-to-1 in June—temporarily turning customs duties from a source of federal revenue into a net outflow. In August 2026, gross collections once again exceeded refunds, producing $12.8 billion in positive net customs-duty receipts. As tariff refunds exceed the amount of tariff revenue collected, they elevate the already historic national debt levels, putting strain on interest rates for households.
Conclusion
For roughly a year, beginning in March 2025 and concluding in February 2026 when the Supreme Court ruled that IEEPA did not afford the president the legal authority to impose tariffs, the Trump administration unlawfully collected $166 billion in duties on American imports. Those tariffs were borne by American businesses, manufacturers, and consumers in the form of higher prices. And while some of that money has been refunded to importers of record, much of it is unlikely to reach the typical American household whose budget was stretched—in some cases, to the breaking point—by the higher prices associated with the Trump administration’s tariffs.
Refunds are also unlikely to produce broad or immediate price reductions. Many large companies are already valuing their refunds in dollars per share, suggesting they will focus the benefit of their refund on shareholders instead of everyday households. The Trump administration’s regressive tariff and refund process is yet another example of how the administration’s economic policies have hurt American families and businesses.
The authors would like to thank Emily Gee, Cristina Tello-Trillo, and Jazmine Amoako for their valuable contributions and review, as well as the Data Visualization and Editorial team for preparing figures and supporting the review process.
Methodological appendix
The authors used tariff revenue data from the U.S. Treasury Department’s “Daily Treasury Statement: Deposits and Withdrawals of Operating Cash.” Tariff revenue collected from March 2025 through August 2026 was compared with collections during the preceding 18 months, from September 2023 through February 2025. The analysis begins in March 2025 to capture tariffs that took effect before the Trump’s administration’s April 2025 “Liberation Day” announcement, including IEEPA tariffs on imports from Canada and Mexico and expanded steel and aluminum tariffs, and ends in August 2026, the latest month available at the time of the analysis. The preceding 18 months provide an equal-length baseline. The difference between the two periods was $330.4 billion and was used as the estimated increase in tariff revenue during the period when the Trump administration’s tariffs were in effect. Daily tariff revenue figures were aggregated by summing the reported values within each calendar month to construct monthly totals. Daily Treasury Statements categorized these receipts as “DHS–Customs and Certain Excise Taxes” through November 7, 2025. Beginning November 10, 2025, the receipts were categorized as “DHS–Customs Duties, Taxes, and Fees.”
The authors also used customs-duty refund data from the Treasury Department’s “Monthly Treasury Statement: Receipts of the U.S. Government.” Customs-duty refunds recorded from May, when IEEPA refunds began, through August 2026, the latest available month, totaled approximately $115 billion. Because the Treasury category covers customs-duty refunds generally and does not separately identify IEEPA refunds, the analysis uses this amount as a proxy for IEEPA-related refunds.
To allocate the estimated increase in tariff revenue and customs-duty refunds, the authors used the U.S. Census Bureau’s “A Profile of U.S. Importing and Exporting Companies, 2023-2024,” the latest Census Bureau report on identified U.S. importing companies and their known import value. “Known value” refers to imports that can be matched to identified companies. The authors define “small-business importers” as the Census Bureau’s small- and medium-sized enterprises (SME) category, which primarily comprises importing firms with fewer than 500 employees but also includes nonemployers and certain firms without reported employment data.
Each state’s known import value for small-business importers was calculated as a share of total U.S. known import value for all identified importers. These shares were applied separately to the $330.4 billion increase in tariff revenue and the approximately $115 billion in refunds. Each state allocation was then divided by the Census-reported number of small-business importers in that state to calculate a simple average per importer.
National importer counts represent unique identified companies. As the Census Bureau notes in Table 6d, “Detail may not sum to total because companies may import to more than one state.” State counts therefore cannot be summed to obtain a unique national count, and averaging the state-level estimates does not reproduce the national average.
These estimates provide a first-pass approximation based on 2024 import patterns. Because tariff rates vary by product and country of origin, allocating refunds based on import value may overstate or understate refunds for states with an import mix that differs from the national average. Refund estimates also do not account for eligibility at the individual-entry level and represent modeled allocations. Per-importer estimates are simple averages and should not be interpreted as amounts paid or received by a typical importer.