Low- and Middle-Income American families, and small businesses, accounting for well over half of our country’s population, paid out a disproportionate share of their incomes to the government due to IEEPA Tariffs recently struck down by the Supreme Court. Total payments amounted to roughly $175 billion. Now these families and small businesses face the prospect of receiving no rebates. Thus, the system is regressive for them on both the front and back ends — the burden of the original high tariffs and now the denial of rebates to compensate them.
As the result of the so-called “Liberation Day” tariffs announced April 2, 2025, retail prices rose by between 6 and 7 percentage points, costing the average American household between $400 and $600 — and many considerably more. For low-income families especially, this was a painful gouge into their incomes.
One might imagine that in the interest of fairness, rebates would automatically go to these families and small businesses. That is not the case. The way our system works, rebates go ONLY to importers who DIRECTLY paid the tariffs to the Customs and Border Protection agency (CBP) in the first place. The CBP estimates that 330,000 American importers actually paid the tariffs.
In contrast, 300 million-plus Americans assumed most of the burden virtually every time they went to the grocery store, bought a car, or purchased a pair of shoes, a dress, or a home appliance. Small businesses lost as well because most of the costs of the tariffs paid by larger importers or wholesalers were passed on to them. Most consumers and small businesses have NO clear recourse to getting any of their money back.
America’s importers that accounted for most of the tariff revenue were generally large retailers, big wholesalers, shippers, and companies that import components and raw materials to be incorporated in their manufactured goods. This group, accordingly, will receive the lion’s share of rebates from the U.S. Government through a relatively smooth, computerized process for which they are pre-registered.
Those American consumers who bought imported products after “Liberation Day” in stores, through websites, or in auto showrooms — who probably didn’t feel very “liberated” then — will feel even less so now. They will have NO access to the rebates. If they benefit at all, it would only be because some importing companies that DID receive rebates chose to pass the funds on to them. But this is not easy.
Doing so on a case-by-case, buyer-by-buyer, product-by-product basis would be highly complicated if not impossible for most companies. Restoring even a semblance of an equitable outcome would require a large company to use a broader approach — e.g., discounting consumer prices for a period of time, issuing gift credit cards to customers, or providing equivalent amounts to small retailers who sell their products in order to enable them to recoup their losses or pass the benefits on to their own customers.
U.S. Customs and Border Protection officials say they are now working on new arrangements, but these may take a long time. Likewise, small businesses may consider engaging in lawsuits to recover their tariff costs, but these could be expensive and time-consuming. Many will go bankrupt waiting.
To be clear, this rebate conundrum, at its roots, is not the fault of large companies or importers, or of this administration. It is a byproduct of an older rebate system and a multi-layered distribution system.
But the perception — and reality — of unfairness is highly palpable. It needs to be addressed by a wide range of companies and government officials. CNN has done an especially good job interviewing small business owners who have been painfully harmed and forced to lay off employees. This overall unfairness and pain must be confronted. To make matters worse, unreturned money will be kept by the Treasury.
In the 2008–09 financial crisis, the government provided enormous support to large financial institutions but virtually none to small businesses, leaving a bitter taste in the mouths of many such businesses and their employees, and millions of everyday, hard-working Americans. As was the case then, an inequitable solution now will further widen social and economic divisions and foment bitterness in this country.
Coming in tandem with currently skyrocketing oil prices and new sets of tariffs imposed by the president to replace the earlier ones, this situation is an especially bitter pill for low-income and even average families whose budgets are already stressed.
This situation fans the flames of social stress in this country. Businesses and the government must devise measures to address it. Whatever the government claims to be planning should be speeded up. In addition, several large companies that have constructively addressed this inequity already could share their techniques with others that have not. Both steps would make a bad situation better. Failure to do so would further pull apart our already highly divided society. All will suffer.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
The post Millions of Americans paid billions in tariffs later ruled illegal — and they won’t see a dime back appeared first on Fortune.
