Tariff Refunds Deliver Windfall for Major Companies

It's All Talk on a Friday morning. I'm Kevin Deeds coming to you from the Golden Tower of the Fisher Building. The number is 1-800-8-9-57-1800-8-5-90 W-JR. Give us a call. Give us a text. Be a part of the show. For months, one of the biggest arguments over President Trump's tariffs was simple. Who ultimately pays the bill? Businesses warned tariffs would raise their costs, potentially increase prices for consumers, and disrupt supply chains. But now there's another enormous wrinkle. Billions of dollars in tariff refunds are flowing back to some of America's biggest corporations after the Supreme Court declared certain tariffs unlawful. More than 40 companies in the S&P 500 have reported roughly $9.6 billion in refunds. That's a lot of money. Apple reported refund is nearly $2.2 billion. Nike's is $986 million. FedEx about $800 million. General Motors is about $500 million. In Customs and Border Protection has accepted a staggering $128.7 billion in refund claims for processing. So who gets all this money, who ultimately paid these tariffs in the first place? And if a company passed its tariff costs along to us by raising prices and now gets the tariff money back, do we ever see a dime of that refund? Join us now as Merrick Masters, Business Professor, Labor and Expert at Wayne State University. Good morning. How are you? I'm doing very well. Thank you for having me this morning. I appreciate you being here. This seems like a big mess to me. Well, it is an administrative mess, and it's probably nightmarish for various agencies, including customs and the U.S. Department of Treasury to process it. But it is moving relatively expeditiously, and I think it's important to put it in perspective. Over the Trump administration, companies have paid about $366 billion in tariffs. What they are refunding now is $166 billion under one statute, the International Emergency Economic Powers Act, that was declared unlawfully used by the president to impose what he called so-called reciprocal tariffs on certain countries. And those tariffs have been refunded or in the process of being refunded. $100 billion has been dispersed. I believe the major auto companies in the U.S. combined have paid about $35 billion in tariffs, and they're due to get, you know, somewhere in the neighborhood of $2.5 billion in the refunds. That's a lot of money going back and forth. Do you think it would have been possible or prudent to find out the legal standing before issuing those tariffs?

That were questionable? In an ideal world, the answer to that is yes. But remember, Trump was very anxious upon taking office to reset the economic order through trade adjustments. And this he did by executive order because he knew he could never get it through Congress. And that forced the president to hack. He believed he had the emergency powers to do so. The court had a different interpretation. I think the policy dispute legally and otherwise under that is something that can be debated with people with good intentions. But nonetheless, as it stands now, there are a lot of the tariffs that Trump has put in place that are still in effect. It's important to remember that the tariffs on auto, the tariffs on steel and aluminum. the tariffs on forced labor that have been imposed and the tariffs that are pending on Canada, 50% tariffs that are being negotiated until at least August the 19th. Those things are still pending. Where does the government get the money to pay these refunds? Did they just put it all in the bank, so to speak, when they collected it, or did they bring it in and start spending it? It goes to the U.S. Treasury, and as I said, over the past year and a half, they've collected about $360 billion in customs and related fees, which include tariffs, and as a result of that, they had that money to distribute. So whether it goes into a separate pool or not, I don't know. I think it gets it all blend into what you might say is the general fund and paid out according to that. Even they have to pay out, even though they might have already spent the money, they might have to pay it out nonetheless. And that's why you have the, among other reasons, that's why you have the deficit. Now, this adds to the federal deficit, which has adverse economic effects. So it's a complicating situation in a number of different directions. Ultimately, your question, what the customers can expect in terms of relief, I really doubt that they'll get much in terms of relief. It's hard to say exactly how much of the tariff that was paid by the companies. They actually make the payment and get the rebate was ultimately being paid by the customer in the form of higher prices. So when you talk about companies like Apple or Nike, FedEx, Amazon, these companies that are getting, you know, hundreds of millions of dollars or in some cases even billions of dollars, are they seeing this is sort of an unexpected windfall or were they, you know, when they run their companies or is this just a reimbursement they were planning on getting back? I don't think they planned on getting it back. They might have hoped they would get some of it back, but the reality of it is that they're paying, many of these companies are paying a lot more in tariffs.

that are still in place and they're getting back. So this is a little bit of a relief that they get that they can use however they desire. But my guess is that they're going to use most of it for capital investments or financing regular operating costs. Well, it would be nice if they used it to lower prices, but there's nothing requiring them to do that. Well, you know, once prices go up, Over the longer term, you may see some, you know, it may force them to feel less pressure to raise prices going forward. So you don't know what might happen in that regard, looking into the future. But once prices go up, they are very hard to come down. It's very rare, you know, you saw it in the past month or two in which the consumer price index actually went down. That's a rarity. That's deflation. And usually in ordinary times, if you have deflation, you have a depression. When we get through this refund process, who wins and loses? Do corporations win or lose, the consumers win or lose, taxpayers, the government? Well, I think that ultimately depends on how the overall impact of the tariffs has been on resetting the economic table, and that is open to question. Manufacturing jobs in the past year have gone down slightly in the United States. Auto manufacturing jobs in the United States have gone down slightly. So you haven't seen the rebirth in manufacturing in terms of jobs. despite all the talk about investments that are promised and are being made to expand the manufacturing footprint in the United States. Yeah, we hear the president talk about all this massive commitment to bringing manufacturing back to the United States and how it's going to just supercharge the economy with all these jobs. And is there any, I mean, is there any evidence that what he's saying is true or are we just in the promise stage? Well, there is some evidence of increased economic activity on that front and the expansion and construction of plant facilities, and those things bode well for the future. But it takes a long time to make these new investments. You can make a promise to commit to spending certain funds, but there's a lag between that promise and when the funds actually start to show up in terms of jobs in the factories that are up and running. Merrick Masters, business professor, labor expert at Wayne State University. Thank you for your expertise in the conversation. Really appreciate it. Thank you for having me today. Have a good day. Yeah, have a wonderful weekend. Yeah, how'd you like to work at the Treasury and you come into work and they say, hey, we need to get $128.7 billion in refunds out and get to work. Wild, wild situation. Wow. All right, we're going to take a quick break. When we come back, we're going to have the headlines and we are going to talk some Tiger baseball. They are doing unbelievably another win last night. They played the White Sox this weekend, Friday, Saturday, Sunday, at home. If they win all three games, the Tigers will be in first.

place in their division. Unbelievable. It's all talk. I'm Kevin Deetz.