REPORT: $22 billion rushed back — the historic puzzle of tariff refunds

A verdict that changed everything

On February 20, 2026, the United States Supreme Court issued one of the most consequential trade decisions of the modern era. In Learning Resources, Inc. et al. v. Trump, the nine justices — by a majority of six to three — ruled that the IEEPA, the International Emergency Economic Powers Act, does not grant the president the power to impose tariffs. That authority belongs to Congress, and to Congress alone. In doing so, the Court invalidated in a single stroke the "reciprocal" tariffs of the Liberation Day of April 2025, the surcharges on Chinese, Canadian, and Mexican imports tied to the fentanyl pretext — the entirety of the Trump administration's emergency tariff program. More than $130 billion collected illegally from American importers. The aftermath? A forced refund that amounts to a logistical puzzle, a budgetary abyss, and an unprecedented legal standoff.

In May 2026, the U.S. Treasury refunded nearly $22 billion in illegally collected tariffs — an amount approximately equal to the customs revenues of the same month. In plain terms, the refunds wiped out all of May's tariff receipts. For the first time in decades, the Treasury was paying back as much money as it was collecting. This is not an accounting anomaly. It is the symptom of a policy conducted in illegality, caught by the courts, whose budgetary consequences the American people will absorb for years.

Trump forced to retreat, but not without resistance

Faced with this ruling, the administration did not capitulate without a fight. Donald Trump called the Supreme Court's decision "terrible" and lambasted the importers seeking refunds, claiming they were "people who, in many cases, hate our country." In parallel, he invoked Section 122 of the Trade Act of 1974 to impose a replacement surcharge of 10% on virtually all imports, raised to 15% — the statutory ceiling — for a period of 150 days, expiring on July 24, 2026. Treasury Secretary Scott Bessent publicly declared that this combination of authorities would allow for maintaining tariff revenues virtually unchanged in 2026. What the Court had taken away with the right hand, the executive was trying to reclaim with the left.

But the refunds themselves could not be erased by decree. The U.S. Court of International Trade (CIT) ordered Customs and Border Protection (CBP) to create a mechanism allowing the 330,000 importers who had paid IEEPA taxes to recover their money. Thus was born the CAPE system — Consolidated Administration and Processing of Entries — a digital portal launched on April 20, 2026 that forms the administrative backbone of this historic refund operation.

I have to admit there is something staggering about this moment. Watching the U.S. Treasury — that institution symbolizing Western financial power — forced to urgently refund tens of billions collected on presidential order, then invalidated by its own Supreme Court, reveals an uncomfortable truth: even the most established democracies can drift, and that is precisely what their institutional guardrails are for. The Court held. That is what matters.

An astronomical figure, a bureaucracy under pressure

At the moment the Supreme Court issued its verdict, CBP had collected $166 billion in IEEPA tariffs since the program began in February 2025. One hundred and sixty-six billion. For perspective: that is more than ten times NASA's annual budget, more than the GDP of countries like Hungary or New Zealand. And all of it had to be refunded — to 330,000 importing companies, with files of varying complexity, customs entries in very different states of liquidation, and a customs IT system (ACE — Automated Commercial Environment) never designed to manage such a reversal. Judge Richard Eaton of the CIT himself noted that, "with $166 billion at stake," testimony from the customs commissioner was necessary to determine whether the government intended to refund both large and small companies alike.

The technical challenge is enormous. Each customs entry must be individually reprocessed, verified, and its liquidation canceled or modified. CBP had to develop in a matter of weeks an entirely new system — the CAPE — to absorb these millions of files in parallel. A task that seasoned auditors would normally have planned over years. Here, court deadlines imposed a launch within weeks.

CAPE Phase I: a breakneck launch

On April 20, 2026, Phase I of the CAPE went live. It covers in priority unliquidated entries and those liquidated within the 80 days preceding acceptance of the CAPE filing. The result by June 1, 2026 is impressive: more than 16 million entries processed, $89.57 billion in potential refunds accepted for processing. Of that amount, $22.80 billion, including principal and interest, had been certified and transmitted to the Treasury for disbursement. These figures, published in the Treasury statement of June 10, 2026, confirm the unprecedented scale of the operation.

But even this roaring start masks complications. The CAPE filing validation rate reached only 69% by late May, according to industry data. In other words, three out of ten files were rejected at validation — often due to errors in electronic filings, themselves generated by the chaos of the initial tariff rollout. Companies specializing in customs brokerage report that data matching issues between original entries and records in the ACE system represent a major obstacle for many mid-sized importers.

There is something deeply ironic in the fact that the same administrative errors that complicated the collection of illegal tariffs are now complicating their refund. The chaos generated by a policy conducted in a rush is paid for twice: first on the backs of companies that absorbed the costs, then on the federal budget that must manage the refund under emergency conditions.

A historic month in the Treasury's books

May 2026 will remain in the American budgetary annals. The U.S. Treasury refunded nearly $22 billion in illegally collected tariffs — a sum approximately equal to the customs revenues of the same month. In practice, the refunds canceled all tariff receipts. This is, according to bond market analysts, a phenomenon without precedent in the modern history of American trade policy. April's figures were already significant — $2 billion refunded — but the ramping up of the CAPE system triggered an explosion in volumes in May.

The broader fiscal context is worrying. The federal deficit for the first eight months of fiscal year 2026 stood at $1.25 trillion, a reduction of 9% compared to the same period the prior year. But this apparent improvement is fragile: the Congressional Budget Office projects that the total deficit for fiscal 2026 will reach $1.85 trillion, and $1.89 trillion for 2027. The IEEPA refunds, which will stretch over several quarters — potentially through 2027 — will contribute to widening that deficit. In May, the debt interest burden already reached $133 billion, a rise of 44% compared to the same month the prior year.

The budget hole: between illusion and reality

For a year, IEEPA tariffs had constituted an unexpected fiscal windfall for the Trump administration. During fiscal 2025, tariff revenues had represented a significant share of federal income, contributing to the smallest deficit in three years. It was on that basis that the administration politically justified its aggressive trade policy — tariffs were financing deficit reduction. That rhetoric is collapsing today.

The reality is that tariff revenues over the past twelve months were based on illegal collection. The Treasury owed this money from day one. And now that it is paying it back, it is doing so with interest — a detail the administration clearly had not anticipated in its budget projections. Scott Bessent declared before Congress that the money would be returned "to the companies that were importing the goods being taxed" — a careful formulation that avoids acknowledging that it was ultimately American consumers who bore the bulk of the burden.

The Trumpian theory that foreigners pay the tariffs has always been economic fiction. The data has been clear for decades: tariffs are taxes on American importers, therefore on American companies and American consumers. Watching large corporations claim refunds by the hundreds of millions confirms, if any confirmation were needed, who was really paying.

Who is claiming what, and in what calculated silence

According to a Bloomberg analysis of the Russell 3000 Index, only about 5% of the 3,000 largest publicly traded American companies had mentioned refunds in their public communications and regulatory filings. This figure, paradoxical at first glance, is explained by a toxic political reality: claiming refunds exposes companies to public attacks from Trump — who calls them "people who hate our country" — and to class action lawsuits from consumers who argue that if the tariffs were illegal, the prices they paid were too. Angela Santos, head of the customs practice at ArentFox Schiff LLP in New York, advises her clients to avoid public statements on tariffs and refunds — "due to the risk of class actions as well as other client and supplier considerations."

Yet some numbers have leaked out. Ford Motor Co. claimed $1.3 billion in IEEPA refunds — an amount that largely explained its above-expectations quarterly results. General Motors anticipated approximately $500 million in refunds and raised its annual guidance accordingly. Stellantis recorded a one-time gain of approximately $465 million from future refunds. On the retail side, Home Depot anticipated roughly $540 million in recovery, while TJX Companies, parent of TJ Maxx, had filed a claim without specifying the amount. In total, according to Bloomberg's calculations, S&P 500 companies that disclosed figures represented approximately $7.3 billion in duties paid or expected in refunds.

Apple, Nike, Amazon: the giants in the crosshairs

Apple Inc. confirmed it was pursuing refunds by following "established procedures." Its CEO, Tim Cook, stated the company planned to "reinvest any amounts received into American innovation and advanced manufacturing" — a skillfully patriotic formulation to defuse Trump's criticism. Other companies were not as cautious: Nike Inc. and Lululemon Athletica face class action lawsuits from customers claiming they deserve a share of the refunds, having paid prices inflated by taxes deemed illegal. A class action filed on May 15, 2026 accuses Amazon.com of having profited from "hundreds of millions of dollars in illegal tariff costs" while voluntarily forgoing refund claims to "curry favor with Trump."

Even Costco, already engaged in litigation against the administration, declared in a court filing of May 18, 2026 that it had not yet received any refund. At the other end of the scale, Hasbro Inc. found itself in a Kafkaesque situation: its $50 million in IEEPA claims were disqualified from CAPE Phase I as they were tied to reconciliation entries — those complex files that would only be processed starting June 29, 2026 under Phase II. Hasbro's CFO, Gina Goetter, stated soberly: "We're still waiting to understand when the government is going to address this part of the refund process."

There is something in this situation that perfectly illustrates the cost of tariff chaos: companies finding themselves monetizing their tax receivables on a secondary market — at 90 cents on the dollar — because they cannot afford to wait for federal bureaucracy to process their files. That is not creative finance. That is survival.

A portal for 330,000 companies, designed in weeks

The Consolidated Administration and Processing of Entries — the CAPE system — is one of the most ambitious and rushed administrative responses in the history of American customs. Ordered by the court, urgently developed by CBP, launched on April 20, 2026, it was meant to allow 330,000 importing companies to file their refund claims centrally. Phase I covers unliquidated entries and those liquidated within the 80 days preceding the acceptance of the filing. By June 5, 2026, CBP reported that 181,155 CAPE declarations had been submitted, of which 125,576 had passed validation — a success rate of approximately 69%. The 10.6 million entries already re-liquidated without IEEPA duties represent an encouraging signal of processing capacity.

Phase II, expected on June 29, 2026, will tackle approximately 2.8 million reconciliation entries, representing approximately $28.7 billion in IEEPA duties paid. This is where some of the most complex files are concentrated — importers whose initial customs declarations were tied to deferred reconciliation mechanisms, a common technique for large multinationals managing royalties, transfer prices, or post-import rebates. Phase III, finally, will concern entries liquidated more than 80 days ago — but only for importers who have filed individual lawsuits before the CIT, under the government's current position.

ACE's technical limits: when the system reveals its shortcomings

The American customs IT system ACE — the Automated Commercial Environment — was designed to process imports going forward, not to reverse them. It was not anticipated that CBP would need to mass-cancel entry liquidations, recalculate duties on millions of historical transactions, and coordinate refunds with the Treasury in near real time. International trade experts report cases where discrepancies between data filed in ACE and original invoices generate systematic validation errors — forcing importers to rework their files with their customs brokers, adding weeks of delay.

CBP has stated it is developing ACE updates to handle tariff reclassification technical instructions, but timelines remain uncertain. For mid-sized companies — those with small customs teams that depend entirely on brokers — the complexity of CAPE submissions represents a disproportionate administrative burden. Multiple industry testimonials report a growing reliance on specialized firms charging significant fees to prepare and submit CAPE declarations — fees that eat into the amounts to be recovered.

This is the painful paradox of this affair: the companies that suffered most from the illegal tariffs — small and medium-sized importers with no legal department and no dedicated customs team — are also those who struggle most to navigate the refund system. Large groups with compliance teams will receive their checks first. The small ones will wait, if they even manage to file correctly.

An appeal that puts everything in question

On June 2, 2026, the Department of Justice formally appealed the CIT order before the Court of Appeals for the Federal Circuit. This decision plunged thousands of importers into uncertainty. The order in question, issued by Judge Richard Eaton in April 2026, required CBP to refund all importers who had paid the $166 billion in IEEPA duties — including those who had not filed individual lawsuits. The DOJ contests that the CIT has the authority to issue such a universal injunction, arguing that refunds for "finally liquidated" entries — those processed and finalized more than 80 days ago — require court orders specific to each importer.

The stakes are considerable: by some estimates, approximately $11.4 billion in finally liquidated entries could be temporarily frozen pending the outcome of this appeal. In the most pessimistic scenario, importers who have not filed individual claims could lose their right to a refund if the two-year statute of limitations — running from the entry date — expires before they can reach the court. Since the first IEEPA entries date from early 2025, that window will begin to close in early 2027. The countdown has started.

The race against the clock for 330,000 importers

Nearly 4,000 importers have already filed individual claims before the CIT. But that number represents only a fraction of the 330,000 eligible. For the approximately 326,000 remaining, the wait-and-see strategy — hoping that administrative refund via CAPE will suffice — carries growing risks. Jackson Walker LLP, in a note published on June 22, 2026, warned explicitly: waiting to see how the appeal plays out could mean losing the right to a refund entirely. For entries finally liquidated well before the Supreme Court's decision, the specific statute of limitations is a sword of Damocles that few companies seem to properly appreciate.

The Court of Appeals for the Federal Circuit had, at the same time, ruled on June 19, 2026 that the Section 122 tariffs imposed as replacements for IEEPA tariffs could continue to be collected during the appeal — finding that the government had demonstrated sufficient likelihood of success on the merits. This decision further complicates the equation: importers are now paying new 10–15% duties under Section 122, while awaiting refunds of former IEEPA duties, in a legal context where their right to those refunds is itself challenged on appeal.

This double movement — refunding illegal tariffs with one hand, collecting replacement tariffs with the other — reveals the deeply cynical nature of the administration's tariff strategy. The policy was never truly economic. It was political. And now that the courts have said no, the executive is trying to preserve the bulk of its arsenal while playing for time on the refunds.

A calculation the administration would rather avoid

The question of the true budgetary cost of the IEEPA program is complex — and politically awkward. On one hand, IEEPA tariffs had generated billions in revenue for a year, contributing to deficit reduction. On the other, those revenues were illegal from day one — they could not legitimately appear in long-term budget projections. The CBO had included tariff revenues in its deficit projections for 2025, contributing to the display of the "smallest deficit in three years." Today, those same revenues are going out in refunds, with interest on top.

The total refund program potentially amounts to $166 billion in principal, plus applicable legal interest. If the entirety of this amount is refunded — which remains uncertain given the DOJ's appeal — the net impact on the federal budget would be considerable. The debt interest burden, already up 44% in May 2026, makes the context even more difficult. The projected deficit of $1.85 trillion for fiscal 2026 did not fully account for the scale of the refunds. The actual fiscal trajectory could be significantly worse.

Section 122: a 10% patch over a $166 billion hole

The Section 122 replacement surcharge — legally capped at 15% and limited to a duration of 150 days — cannot compensate for the budgetary shock of the IEEPA refunds. Section 122 revenues for the period running through July 24, 2026 will at best represent a few tens of billions. Against $166 billion to refund, that is a drop in the bucket. And unlike the IEEPA tariffs, Section 122 is technically constrained — the Court of Appeals did validate provisional collection, but the Court of International Trade had ruled it unauthorized by statute in May 2026, in the cases State of Oregon v. Trump and Burlap and Barrel v. Trump. This additional legal front generates cumulative legal uncertainty that handicaps federal medium-term budget planning.

At the Treasury, debt management teams must navigate an unprecedented dashboard: tariff revenues practically nil in May (wiped out by refunds), a sharply rising interest burden, corporate tax receipts down 67% in May compared to the prior year, and individual subscriptions up only 16%. The trajectory is worrying for anyone looking at the numbers objectively.

I have no pretension to predict America's fiscal future — economists far more qualified than I am regularly get it wrong. But I can say this: when the world's most powerful country finances its trade policy on the basis of illegal tax revenues, then has to repay the whole thing with interest, something has fundamentally broken in the chain of political accountability.

Trump and the chilling effect

One of the most striking dimensions of this crisis is the silence of companies. According to Bloomberg, among the 3,000 largest publicly traded American companies, barely 5% had mentioned refunds in their recent communications. This discretion is not innocent. It reflects a rational assessment of political risk in the context of Trump 2.0 America. Claiming a refund — even legitimately — exposes a company to being singled out for presidential condemnation, to having its government contracts threatened, or to finding itself in the crosshairs of regulatory investigations. This is what American jurists call a chilling effect on the exercise of rights guaranteed by the courts.

The Supreme Court had ruled. Judge Eaton had ordered the refunds. And yet CEOs of multinationals were carefully weighing their words before mentioning refunds in their quarterly earnings calls. Tim Cook of Apple had to wrap his refund claim in a speech about American investment. TJX's CFO confirmed filing a claim without disclosing figures. This self-censorship, in a rule-of-law state, is a troubling symptom. It reveals how much informal political pressure from the executive can impede even rights recognized by the judicial system.

Consumer class actions: a new front

While companies avoid discussing their refunds, a new wave of litigation is emerging from below. Class actions have been filed against Nike, Lululemon, and Amazon by consumers who believe they deserve a share of this money. The reasoning is simple: if the tariffs were illegal, the prices consumers paid — which included passed-on tariff costs — were also, in some measure, unlawful. Lawyers specializing in class actions have sensed an opportunity and are multiplying filings.

The lawsuit against Amazon, filed on May 15, 2026, is particularly interesting legally: it accuses the e-commerce giant not only of passing on illegal tariff costs to consumers, but also of voluntarily forgoing refund claims it was entitled to — in order to preserve its political relationship with the Trump administration. If that theory were to succeed in court, it would open a completely new front: corporate liability toward consumers for tax decisions taken in a degraded political context.

This proliferation of class actions against companies like Nike or Amazon fascinates me as much as it worries me. On one hand, there is something just in the idea that consumers who paid prices inflated by illegal taxes deserve compensation. On the other, this avalanche of litigation will swallow additional billions in legal fees, slow real refunds, and primarily enrich law firms. Corrective justice has its virtues. Extractive justice has its perversions.

Monetizing uncertainty

Faced with uncertainties over refund timelines, a secondary market for IEEPA receivables has spontaneously formed. Companies specializing in alternative finance are offering to purchase importers' refund rights at a discount — allowing those importers to convert their future receivables into immediate liquidity. According to market data as of June 15, 2026, buyout rates for many IEEPA receivables reached approximately 90% of expected value, and could be even higher for receivables exceeding $5 million. By comparison, ERC (Employee Retention Credit) receivables had been monetized at approximately 85% of their value.

Companies like Asset Enhancement Solutions, based in New York, had already facilitated more than $25 million in IEEPA receivable monetizations. A typical case, in the automotive industry, involved a supplier that had absorbed $6 million in IEEPA duties in 2025–2026 — unable to pass these costs on to its automaker clients. The company monetized $4 million in receivables in two tranches to obtain immediate liquidity. According to promoters of these solutions, the transaction can be completed in ten days.

The legal uncertainty accelerator

The IEEPA secondary market is not just a niche financial product. It reflects a systemic reality: legal uncertainty carries a negative economic value. When companies agree to sell at 90 cents a dollar that a court has recognized as their right to receive in full, they are paying an uncertainty premium. That premium represents the risk that the DOJ's appeal succeeds, that administrative timelines extend beyond their cash flow horizon, or that the statute of limitations closes before they can exercise their rights.

For Funko Inc., the maker of vinyl figures, the situation reached the grotesque: with approximately $20 million in IEEPA receivables, the company was publicly considering selling its refund rights rather than waiting. Its CFO, Yves LePendeven, declared: "There is also a market for monetizing tariff receivables, and we are currently exploring all our options." When a commercial company considers it preferable to sell at a discount a receivable recognized by the Supreme Court rather than wait for the federal government to settle it, that is an alarm signal about the functioning of the American economic rule of law.

A secondary market for U.S. Treasury receivables — guaranteed by the Supreme Court — trading at 90 cents on the dollar. That is simultaneously a testament to American financial ingenuity and an admission of institutional powerlessness. The fact that companies prefer to sell their right to justice rather than wait for it to be delivered says something profound about the state of trust in government institutions.

Between loyalty to Trump and the constraints of reality

Treasury Secretary Scott Bessent finds himself in an uncomfortable position, even by his standards. Close to financial circles, pragmatic by training, he must manage the budgetary consequences of a tariff policy he would probably have defined differently had he had the choice. His statement that the new Section 122 authorities will allow for keeping tariff revenues "virtually unchanged" sounds more like an attempt at public optimism than a rigorous budget projection. Section 122 expires on July 24, 2026. Its renewal is not assured. And in the meantime, $166 billion must be refunded.

Before Congress, Bessent has been forced to answer increasingly precise questions about the refund mechanism. His response — that the money would go back "to the companies that were importing the goods" — was perceived by some Democratic lawmakers as sidestepping the consumer question. If companies receive billions in refunds, to what extent will those savings be passed on to consumer prices? Stephen Juneau, economist at Bank of America, estimated that importers would likely use the refunds to offset rising energy and transportation costs, and that consumers might benefit from a slowdown in price increases rather than a direct decrease — a moderate disinflationary force ahead of the midterm elections.

An overwhelmed Treasury: an administrative machine under strain

At CBP, operational teams are working under extraordinary pressure. The CAPE must be deployed in multiple phases, each requiring ACE system updates, testing, validation periods, and coordination with private sector customs brokers. Phase I was launched six weeks after the CIT's March order — a technical achievement, but achieved at the cost of a 31% validation error rate. Phase II, expected on June 29, 2026, involves even more complex reconciliation files. Phase III, if realized, will concern finally liquidated entries whose historical data is the most difficult to process.

The CBP commissioner had to appear before Judge Eaton to explain the pace and scope of refunds. Eaton reportedly asked the government to reconsider its appeal given the logistical scale of individually processing 330,000 files. Without a universal order, each importer would need to obtain its own judgment — a judicial bottleneck of unprecedented scale for an already overburdened system.

Scott Bessent is, in this matter, the man who inherits a fire he did not start. His financial pragmatism probably pushes him to want to handle the refunds in an orderly fashion. But the Trumpian political logic — resist, contest, appeal, delay — overrides the manager's calculations. That is the dilemma of every talented technocrat in an ideologically driven administration: their professional excellence is captive to political direction.

330,000 importers, but not all equal

Behind the billion-dollar figures of Ford, GM, and Apple, there are tens of thousands of small importing businesses that paid IEEPA tariffs without having the legal or logistical resources to navigate the CAPE system. Many of them have no internal customs department. They work with independent customs brokers, often themselves overwhelmed by the influx of CAPE files. The amounts at stake for them — a few tens or hundreds of thousands of dollars — are often too small to justify the fees of a specialized firm, but too significant to abandon.

Companies like Weyco Group Inc., a mid-sized shoe manufacturer, filed their claim as soon as the CAPE portal opened on April 20, 2026. But Weyco declared that IEEPA tariffs had led to margin compression and had forced the company to raise consumer prices. Those prices, now baked into consumer purchasing habits, will not automatically fall once the refund is received. Price elasticity is always easier on the way up than the correction on the way down — a reality economists know well.

DUNS, IOR numbers, and customs technocracy

The CAPE procedure requires applicants to verify that their IOR number (Importer of Record) in the ACE system exactly matches their ACH banking information for disbursement. Companies that have restructured, merged, changed their legal name, or simply updated their banking information over recent years find themselves facing administrative discrepancies that block their refunds. Customs experts recommend using licensed brokers to verify all matches before submission — an additional step that extends timelines.

The challenge of reconciliation is particularly acute for companies that used Type 09 entries — a mechanism allowing year-end consolidation of price adjustments, royalties, or rebates. These reconciliation files could not be processed in CAPE Phase I, and only enter Phase II's scope under restrictive conditions. For these importers, the $28.7 billion at stake in Phase II represents additional months of waiting — with the legal risks of the DOJ's appeal hanging over them.

I often think about the modest-scale entrepreneurs who imported goods from China or Southeast Asia, paid their tariffs reluctantly, passed the costs on to their customers, and now must decipher an administrative system designed for large organizations. They have a right to their refund. But the bureaucracy distributing it was designed for big companies. That is the silent injustice of this crisis.

A decision that goes beyond trade law

The Learning Resources v. Trump decision is not merely a matter of American customs law. It resonates in Western capitals, international trade centers, and the chancelleries of U.S. trading partners. When the United States Supreme Court declares that its president exceeded his constitutional powers by imposing unilateral tariffs on the entire world, it sends a powerful signal: the American constitutional system functions. Checks and balances are not merely theoretical. This validation of the judicial system as a guardrail against executive absolutism is important news for all of America's allies — and bad news for its adversaries, who had hoped to see American institutions fray.

The decision was welcomed by the governments of the European Union, Canada, and Japan, who had suffered directly from IEEPA tariffs. For Brussels, the partial invalidation of Trump's tariff policy opens a more equitable commercial negotiating space, even if Section 122 maintains residual tariff pressure. WTO Director-General Ngozi Okonjo-Iweala had repeatedly stated that IEEPA tariffs violated the fundamental rules of international trade. The U.S. Supreme Court, in a sense, vindicated her — even if through a domestic constitutional path rather than international trade law.

Trump as a necessary evil: what the decision reveals about the American executive

It would be simplistic to conclude that the IEEPA debacle signals the death of Trump's muscular trade policy. Section 122 tariffs continue to be collected. Section 232 duties on steel and aluminum remain in place. Section 301 tariffs on Chinese products were upheld by the Supreme Court on June 15, 2026. The president still has significant legal tools to pursue a protectionist trade policy — simply, he can no longer do so by emergency decree under the IEEPA. This constraint, imposed by the courts, is healthy. It forces the executive to work with Congress — as the Constitution intended.

That is the paradox of Trump as a necessary evil in Western politics: he put on the table legitimate questions about trade imbalances, about Western supply chain dependence on China, about the need to reshore certain industrial capacities. These questions deserved to be asked. But the method — emergency tariffs imposed by decree, without solid legal footing, without coordination with allies, with open contempt for WTO rules — created more disorder than it solved problems. The puzzle of $22 billion in refunds is the price to pay for that approach.

I refuse to fall into the easy caricature. Trump was right to put China under commercial pressure — even Obama and Biden had done so, in their own way. The problem was not the objective, it was the instrument. Governing by permanent emergency, bypassing Congress, ignoring legal constraints — that is governance that works until the day it does not. That day arrived with the Supreme Court in February. The Western world will emerge stronger if its institutions hold. And for now, they are holding.

A loaded and uncertain calendar

The coming months lay out a particularly packed legal and administrative calendar. On June 29, 2026, CAPE Phase II is expected, covering 2.8 million reconciliation entries for $28.7 billion. On July 24, 2026, Section 122 duties expire — unless extended by presidential or congressional action. The Court of Appeals for the Federal Circuit must rule on the DOJ's appeal of the universal refund order, a process that will take several months. In late 2026 or early 2027, finally liquidated entries could begin to be refunded — if the appeal is rejected and CAPE Phase III is deployed as planned.

The two-year statute of limitations for the first IEEPA entries (early 2025) will begin to close in early 2027. The 330,000 importers — or at least those who have not yet filed individual claims — will need to make a decision before that date: either file at the CIT, or bet on the universal order being upheld on appeal. That is a risky bet, and trade lawyers almost unanimously recommend filing rather than waiting.

The shockwave through global supply chains

Beyond the budget figures and legal files, the IEEPA crisis will leave deep marks on global supply chains. Companies that had accelerated production relocations — to Mexico, Vietnam, India, or even the United States — in response to IEEPA tariffs must recalibrate their decisions. Those relocations carried real costs, sometimes greater than the tariffs themselves. They will not automatically be reversed, even if the IEEPA tariffs disappear. Persistent uncertainty — Section 122, appeals, new legislative attempts — will continue to fuel investor caution.

According to Bank of America analysts, IEEPA refunds could play a role as a moderate disinflationary force ahead of the November 2026 midterm elections. Importers that receive their checks could absorb some of the recent cost increases without fully passing them on to consumers. That is a possible scenario, but one that depends on the speed of the refunds and their actual magnitude. For now, the legal uncertainty related to the DOJ's appeal keeps all projections in the conditional.

The true cost of this illegal tariff policy is not $22 billion, nor even $166 billion. It is trust — of foreign investors in the stability of the American regulatory framework, of allies in the predictability of Washington's trade policy, of American entrepreneurs in their ability to plan at medium term. That capital of trust, once dented, rebuilds slowly. Even when the refund checks arrive, the scar will remain.

A painful institutional lesson

The IEEPA affair is becoming one of the most complete case studies on the dangers of government by emergency decree. When an administration decides to bypass Congress to build an entire tariff architecture on the basis of an emergency statute, it takes a considerable systemic risk. Not only can the legitimacy of the policy be challenged — and it was — but in the event of judicial invalidation, the administrative and budgetary consequences are of a scope difficult to anticipate. One hundred and sixty-six billion dollars to refund, a customs bureaucracy placed under extreme pressure, 330,000 companies in uncertainty, a commercial judiciary overwhelmed with lawsuits — that is the balance sheet of a decision made in a few weeks on Truth Social.

American institutions held. The Supreme Court said no by six to three. The CIT ordered the refunds. The CAPE portal was opened. The checks began to arrive — $22 billion in May alone. This is not easy and does not unfold without turbulence, but the system works. That is the fundamental difference between Western democracies and their adversaries: here, even the powerful are constrained by law. That difference is worth defending.

What this says about Trump — and what comes next

Donald Trump is not politically finished. He adapts, reconfigures, invokes Section 122, seeks other angles of attack. Muscular trade policy remains popular with his electorate. And he is not without arguments: trade imbalances with China are real, the excessive dependence of Western supply chains is a documented strategic problem. But the method — permanent emergency, institutional bypass, contempt for constitutional guardrails — produces exactly the type of budgetary and legal chaos we observe today. $22 billion refunded in a month. Tens of billions more to come. A budget hole difficult to plug. And a seriously dented international tariff credibility.

For the West, the signal to retain is this: its institutions hold. Its Supreme Court ruled. Its Treasury is refunding. Its companies are claiming their rights — even timidly, even keeping a low profile. It is imperfect, laborious, costly. But it is democracy. And facing Beijing, Moscow, and Tehran, which know none of these institutional checks, this laborious slowness is ultimately a strength.

By Maxime Marquette, columnist

Editorial stance

I am not a journalist but a columnist and analyst. My expertise lies in observing and analysing the geopolitical, economic and strategic dynamics that shape our world. My work is to take political strategies apart, to understand global economic movements, to put the decisions of international actors in context and to offer analytical perspectives on the changes that are redefining our societies.

I do not claim the cold objectivity of traditional journalism, which stops at reporting facts. I claim analytical clarity, rigorous interpretation and a deep understanding of the complex issues that concern us all. My role is to give meaning to the facts, to place them in their historical and strategic context, and to offer a critical reading of events.

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When an article cites statistical, economic or geopolitical data, it comes from the institutions that produce it (intergovernmental organisations, central banks, national statistics offices), and the exact institution is named under Sources.

Nature of the analysis

The analyses, interpretations and perspectives in the analytical sections of this article are a critical, contextual synthesis based on the information available, the trends observed and the expert comments cited in the sources consulted.

My role is to interpret these facts, to set them in the context of today's geopolitical and economic dynamics, and to give them a coherent meaning within the larger story of the changes shaping our time. These analyses reflect expertise built through continuous observation of international affairs and an understanding of the strategic mechanisms that drive global actors.

This article describes a documented state of affairs on its publication date, not a prediction: later developments may shift its outlook. No update is promised in advance; when an article is corrected or completed, the change is dated in the text.