The fate of nearly $175 billion collected under the International Emergency Economic Powers Act remains uncertain after the US Supreme Court ruled that President Donald Trump could not use the law to impose sweeping global tariffs.
While some had speculated that refunds from the disputed tariffs could offer a stimulus boost, Treasury Secretary Scott Bessent has indicated that American consumers should not expect a windfall anytime soon — if at all.
Supreme Court Strikes Down IEEPA Tariffs
The Supreme Court ruled that the Oval Office's use of IEEPA to introduce broad-based tariffs was unlawful. The tariffs were initially imposed on China in February 2025 and later extended to Canada and Mexico. April's so-called “Liberation Day” tariffs were also introduced under IEEPA authority.
With the ruling invalidating that legal basis, the administration is now seeking alternative mechanisms to continue collecting duties, including Section 232 (national security) and Section 301 (unfair trade practices). However, the revenue already collected under IEEPA is now tied up in litigation.
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'We'll See'
Speaking at the Economic Club of Dallas, Treasury Secretary Scott Bessent acknowledged the uncertainty surrounding the disputed funds.
"My sense is that could be dragged out for weeks, months, years, so … we'll see what happens there," Bessent said, referring to how international trade courts will decide the handling of the collections.
On the prospect of refunds reaching consumers, he added bluntly: “I got a feeling the American people won't see it.”
US Trade Representative Jamieson Greer echoed a similar view in an interview on Fox News Sunday. When asked whether the White House would fight refund efforts, Greer said: “So it's a matter for the courts. They created the situation, and we'll follow whatever they say to do.”
Up To $175 Billion At Stake
According to the Penn Wharton Budget Model at the University of Pennsylvania, potential refunds could reach as high as $175 billion. The estimate reflects cumulative IEEPA collections of roughly $164.7 billion by January 2026, with revenues running at about $500 million per day before the ruling.
However, separating IEEPA-specific revenues from other customs duties and levies remains complex, and the final refund figure could vary.
Stimulus Hopes Fade
Some economists had argued that if refunds were paid to US importers — who directly remitted the tariffs — the cash injection could act as a fiscal stimulus. In theory, companies might pass some of that relief on to consumers through lower prices. But UBS chief economist Paul Donovan dismissed such optimism.
"Tariff rebates will increase the US fiscal deficit, and act as a fiscal stimulus. Any rebates will be paid to US importers (as they are the ones who made payments to the US Treasury). With new tariffs coming in, it seems unlikely anyone will rush to lower prices to their customers,” Donovan said in a client note.
Lower Effective Tariff Rate Ahead?
In the immediate aftermath of the ruling, the administration confirmed it would enforce a 15% tariff rate under Section 122 of the 1974 Trade Act, which permits temporary levies for 150 days. However, analysts suggest that over the longer term, the effective tariff rate could trend lower.
The Yale Budget Lab estimates that without IEEPA tariffs, consumers will face an overall average effective tariff rate of 9.1% — still the highest since 1946, excluding 2025. Had the IEEPA tariffs remained in force, the effective rate would have been 16.9%.
Deutsche Bank strategist Jim Reid noted in a client update: “We continue to expect the effective tariff rate to fall in 2026.” He added that 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.
Reid also pointed to domestic political constraints, noting that some easing followed the administration's weaker performance in local elections in early November.
What It Means For Consumers
For now, the $175 billion in disputed tariff revenue appears headed for a prolonged legal battle. While alternative tariff routes may sustain revenue collection, the funds raised under IEEPA remain in limbo. And as Bessent put it, Americans hoping for a rebate check may be disappointed: “I got a feeling the American people won't see it.”
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