Trump’s New Global Tariffs Loom as $71B Refund Wave Hits Companies

The U.S. government has refunded $71 billion in tariffs to companies after the Supreme Court ruled Trump’s levies illegal in February. But relief may be short-lived. Trump is preparing new global tariffs of 10% to 12.5% set to expire July 24, while threatening 25% duties on Brazil starting July 22. Companies are already using refund money to offset inflation from the Iran war, not to lower consumer prices.

How the refund wave unfolded

In June alone, the U.S. government paid out $49.2 billion in tariff refunds, bringing the total to $71 billion, or more than 60% of the $166 billion available. The Supreme Court’s 6-3 ruling in February decided that the International Emergency Economic Powers Act (IEEPA) does not grant Trump power to impose tariffs of indefinite scope. Most refunds occurred in May and June, according to Treasury data. In June, the government collected only $23.6 billion in gross customs duties while paying $49.2 billion in refunds, creating a negative customs flow of $25.6 billion for the month.

Companies use refunds to fight new inflation, not cut prices

PepsiCo CFO Steve Schmitt said the company will use tariff refunds to offset commodity inflation and the impact of the Iran war on gas prices and consumer behavior. McCormick & Company’s CFO Marcos Gabriel noted the company’s $31 million in refunds will counterbalance higher costs, not fund price cuts. Gabriel said the Middle East conflict is driving inflation the company had not contemplated, forcing it to use most of the refund to offset these higher costs. Consumers are not expected to receive much payback.

Trump’s new tariff wave begins July 22

The administration is preparing new duties citing lax enforcement of anti-forced labour laws and excess industrial capacity. The new tariff rates are expected to be between 10% and 12.5%, affecting the UK, Japan, India, Taiwan, and China. Brazil will face a 25% tariff on some products starting July 22, making it the second most heavily tariffed country after China. The current temporary 10% global tariff expires July 24, but the White House is preparing new duties to replace it.

Brazil retaliates as political tensions rise

Brazil’s President Luiz Inácio Lula da Silva called the 25% tariffs a regrettable milestone and vowed retaliation. His office said the tariffs result from pressure by the family of far-right former president Jair Bolsonaro and are timed to influence Brazil’s October elections. The Office of the U.S. Trade Representative cited Brazil’s unreasonable acts and practices that harmed U.S. commerce. Lula, seeking re-election, faces a challenger from Bolsonaro’s family and views the tariffs as political interference.

Final Thoughts

Companies are using tariff refunds to absorb new inflation, not lower prices for consumers. With fresh global tariffs starting July 22 and new duties looming July 24, the trade war cycle appears set to repeat, pressuring corporate margins and consumer spending across North America.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.