Comment by xnx
2 days ago
Am I understanding this right?
1) US customer pays huge import tax on imported goods in the form of higher prices.
2) Seller sends the collected tax to the US government
3) US government will refund all/most of that tax back to the seller after this ruling
4) Seller gets to keep the returned tax money as pure profit (no refund to customer)
This will be so in some cases, but there are extra steps in others.
e.g. In a different path, 1 and 2 are the same, but things then diverge.
3) To recoup some of those tariff costs, the company sells the rights to any potential future tariff refunds. They recoup a portion of what they paid immediately but hand away the right to a full refund to another party, such as Cantor Fitzgerald. The seller might use this to reduce prices for their customers, but probably won't. They'll set prices according to what the market will support.
4) US government will refund all/most of that tax back to companies, like Cantor Fitzgerald, that bought the rights to tariff refunds.
5) Seller doesn't get any extra money back, so there's no money to refund to consumers.
IMPORTANT NOTE: Cantor Fitzgerald, while just one of the companies doing this, was formerly headed by Howard Lutnick and is currently owned and operated by his sons.
How is this not reverse Byzantine tax farming?
Where you going with this?
Afaik, Byzantine (or reverse) and other private tax collection setups aren't illegal.
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Some additional context to your note: Howard Lutnick is Trump's Secretary of the Treasury. And also was Epstein's literal next-door neighbor.
Lutnick is Secretary of Commerce. This is a smaller role than Scott Bessent, who is the Secretary of the Treasury.
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Amazing. Did he get the role because of his skillset, of because of his skill at keeping his mouth shut?
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And bought a house from Epstein for $10
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To the extent this is true, the entire thing could literally be a grift (I'm not saying Trump is smart enough to come up with this, just that people around him are, and he's grifty enough to go along with it):
Trump has been obsessed with tariffs for decades. I fully believe he thought this was a great idea. Lutnick, on the other hand, quite obviously forsaw this eventuality (as did anyone who understands how power actually flows in the United States) and encouraged it while preparing to profit massively himself. It's an obvious play, good on him for getting away with it. It's clear at this point that this administration has utterly collapsed the idea of the rule of law, though. 15 years ago this would have been a scandal that would have led to firings and possibly impeachment
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Umm this doesnt seem to be true: https://www.semafor.com/article/02/20/2026/cantor-fitzgerald...
Or is there another source for this claim?
The importer pays the tax and passes it on as higher prices to the consumer. So the importers are the one that had the tax collected from them and would be getting the refund.
The importer CAN be the seller, but other times the importer is a middleman in the supply chain.
To the CPAs among us: will the refunded import taxes be treated as extra profit for all the importers who paid them?
I could see an argument that they don't have a legal obligation to pass the refunds on to their customers, any more than my local grocery store owes me 5 cents for the gallon of milk I bought last year if the store discovers that their wholesaler had been mistakenly overcharging them.
The idea of getting a refund for mischaracterized tariffs is actually fairly common (it's called a duty drawback and there's a cottage industry around this). It's generally used when an importer incorrectly categorized their import under an HS code that has a higher duty than the correctly categorized HS code.
The difference this time is the scale is orders of magnitude larger. Will be interesting to see how they (importers and CBP) work through this.
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I got charged a $600 tariff from UPS to ship a $30 25-pound sandbag into the US from Canada.
UPS didn't even deliver the product.
I'm suing them in small claims.
We'll see what happens.
I imagine that even after the ruling, our ass backwards legal system will somehow say this makes sense, even though the tariff rate was never near high enough for that bill to make any sense.
Further, they're going to get refunded the $10 it MIGHT have cost them.
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That's a great question. I would also love to know that answer. I agree with you that they're not going to share the refund if the importer was the middleman in the supply chain, and same thing if the importer was also the seller.
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I think the tax is basically on the profit made when you add up costs and expenses. Say:
Before: Importer pays China $10 for widget, pays $2 duty, sells to shop for $12 - profit zero, tax on that zero.
Now: Paid $10 for widget. Paid $2 duty, sold for $12, $2 refunded - profit $2, pays tax on the $2.
At least that's the normal way of doing accounting. There can be odd exceptions and complications in local laws.
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Related question, unanswerable except maybe as a rough estimate: how much will it cost, in accountant/bookkeeper time, to do all the administrivia required to process all these refunds?
It depends on the terms of the transaction. Most business-to-business transactions would have the importer responsible for duties, but many, maybe the majority of business-to-consumer transactions have taxes & duties covered by the exporter and included in the final price which would typically reflect the additional taxes & duties in the prices. In those case, the exporter would be the one refunded.
at the end of the day, it's average joe who bought his things more expensive, and he won't get back his money.
That's what matters, don't care if it's the seller or a middleman that gets this money.
That's really a shame for american citizens, i'd be furious if i was american.
Many are beyond furious
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So they basically figured out how to bribe all these companies?
Such a kleptocracy.
i read that Costco could actually refund everyone, as they can know exactly who bought what.
If they do, that's another matter, but they definitely can.
> The importer pays the tax and passes it on as higher prices to the consumer.
So it matters how we’re interpreting “paying”. One way to look at it is that if the cost was passed on to the consumer, the consumer paid it. The importer simply handed over the money.
and if so, do you really believe any importers who paid the tariff will further refund back to the consumer ? It's eventually a net win for the importer.
Or maybe this is used to justify a new emergency federal law that all purchases must be reported on your tax return, just in case the government ever needs to refund any illegally collected import taxes.
I think I'm kidding, but I'm not really sure anymore.
Indiana has sometimes required that for decades, though I think they finally adjusted the law a little after online purchases became popular.
Indiana charges sales tax like a lot of states, but only on things sold in the state or from a company located in the state. If you ordered something from California or overseas, no sales tax was charged. The law required you to track these purchases and report it on your tax return so you can pay the required sales tax.
That said, enforcement wasn't good and I don't know a single person that actually did so. A common tax fraud for the average person, I guess.
And honestly, I think any emergency federal law would be similar: It wouldn't be for refunds for the masses, but for surveillance and extortion.
Yeah, most states that have sales taxes have "use taxes" to cover this case and the case of a wholesale item (no tax) being used in house. It gets enforced primarily in retrospect and on big ticket items that the state does see, like a vehicle purchase.
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A federal law has to be approved by Congress, that isn’t happening. An executive order maybe?
That would be no more legal than what the Supreme Court just struck down.
It is more complicated than that.
Seller sold forward contracts to recoup tariffs at a lower price and passed on the benefits to the consumers already. E.g. For every $1 seller paid as tariffs, seller sold a contract to someone for $0.25 saying if government ever refunds the buyer of the contract can keep it. The $0.25 already passed to consumers as benefits.
> Seller gets to keep the returned tax money as pure profit (no refund to customer)
Not to the specific customer but this benefits will now get passed to future customers as prices will be lowered than usual (lower than pre-tariff prices) due to competition.
Note that consumers who paid more were not necessarily paying the tariffs. Stores like Costco, Walmart increased prices across the board and socialized the impact of tariffs. Even if there was some mechanism to return tariff money to consumer, there is no way you could return it to someone who paid higher due to this socialized nature of price increase.
Guess who took the other side of those forward contracts: https://www.wired.com/story/cantor-fitzgerald-trump-tariff-r...
There have been no decisions about refunds. The court avoided addressing that.
That topic will surely go back to the courts, kicking and screaming
Personally think it should not get refunded. There’s no sane way to get it back to its source. And no one group should be making profit from it. Best if it stays with the government like a federal forfeiture so in theory we all benefit from it as citizens , maybe it goes against the national debt or lessens our deficit next year.
Not a bad idea, but how do we prevent this from creating incentives to engineer similar situations in the future?
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So illegal actions shouldn't have consequences for anyone?
That's a good way to deter such acts in the future
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>"maybe it goes against the national debt or lessens our deficit next year."
And help to prosecute those who broke the law and raised illegal tax /s
Government is a poor spender, we should not be handing them more money
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It’s worse. Sellers raised prices citing tariffs. Not only does the seller get a one time bonus, the prices are now permanently raised as we all know prices are never coming down
The willingness of the customer to buy from competitors is the only thing that ever effects prices.
Refunds are very complicated. How does the co even know who bought? As it goes thru several layers of distribution chain. Assuming they want to refund of course. I suppose they will claim they reduced prices (or more likely deferred price increases, how nice!)
And then not all tariff was absorbed by importer - some suppliers would have cut prices to compensate wholly or partly. We would never know as it is likely buried in various other discounts and contract terms not a line item that says "for tariff". Down the chain, others with margins could have done the same. That's probably why the inflation impact was less than scary scenarios painted by some economists.
Seller wasn’t involved in the tariffs. Rather the importer paid them, etc.
> Seller wasn’t involved in the tariffs. Rather the importer paid them
Strictly speaking it depends on the Incoterms agreed upon by the seller and buyer[1]. If the Incoterms are DDP, then the seller should pay import duties and taxes and as such is involved.
Of course sellers are typically trying to run a business, so they'll bake the taxes and import duties into the sales price. So effectively the buyer ends up paying for it, just indirectly.
This was relevant when the tariffs were introduced, as sellers with DDP goods in transit had committed to a sales price which included any tariffs and would have to swallow the extra costs when they got the bill from the freight forwarder.
[1]: https://en.wikipedia.org/wiki/Incoterms#Allocations_of_risks...
Who pays the importer?
Seller doing the importing, so they pay the foreign entity for their goods and sends the appropriate cut to the US Government. At that point, they either eat the additional cost of business or make their customers do so. Or something in between.
Tariffs are like a national sales tax.
The person who wants it imported, the buyer?
I guess by seller parent means the US company who sold the product to the US customer not the seller who sold it to that company.
Can I get compensation from UPS or FedEx for making me pay illegal tariffs - and making me pay a fee to them for processing it too?
(I know the answer is practically ’no’, but it does still seem to me that the bureaucracy and companies that went along with this obviously illegal operation bear some culpability...)
> Can I get compensation from UPS or FedEx for making me pay illegal tariffs - and making me pay a fee to them for processing it too?
I can see why you are mad, but it seems like the were fulfilling their legal obligation (at the time).
The good news is that having directly paid UPS and not a middleman makes it much more likely that you will receive the money back. If anybody does.
> it seems like the were fulfilling their legal obligation (at the time)
Rather, their illegal obligation (at the time)?
It was clear from the start these import tariffs are illegal. Only congress can set them. It says so in the constitution! Hand waving at some pretend emergency doesn't give you the right to ignore constitutional law.
The logistics companies should probably have fought these clearly illegal tariffs from the start. Instead they played along and collected the fees. There's probably some interesting legal precedence here to be made, should this argument hold in court.
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That's be nice, but I place more blame on the half of Congress that was OK with this.
If everyone sued them in small claims over it, there probably would be a whole lot of default judgments.
Then you’re on your own to collect.
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Unclear.
I am certainly planning on seeking reimbursement from DHL and FedEx for the difference between the Trump rates, and the previous MFN rates. And if not, request charge backs via my credit card issuers.
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What I think is interesting is if there is going to be a legal distinction between a seller raising their prices 10% for the item itself vs. a seller charging a separate line item for tariffs/customs/duties.
I can see a situation where the courts find that a general price increase is simply they - an offer to sell at a price the buyer accepted regardless of the seller's motivation to increase pricing. However a line item that very clearly states that a charge is for duties paid might be treated differently?
Very curious to see what the legal minds have to say in this scenario. In a way it may punish companies for doing what many to most consumers feel was the "right" thing to do - add a surcharge that can easily be removed if the situation changed in the future vs. using a general increase as a new price anchor.
You are right but the current admin arm twisted folks from showing that kind of line item.
Sometimes the consumer (more) directly pays when buying from overseas, most of the time you're right it gets rolled into the price at checkout if the company is large enough or just in larger prices buying in the US. I've had a few packages I had to pay extra import duties on with the UPS/FedEx agent fees tacked on top mostly kickstarters.
Understandable. With the intentional chaos since last year, tariffs were changing mid-shipment without any prior notice.
It's less that and more that the sender just didn't arrange to prepay it for the receiver rather than it being in flux. A lot of shippers do handle it to avoid the surprise for customers but some didn't have the setup to do the prepayment.
Or the government will not refund, and add more illegal tariffs. That wouldn’t be surprising, unfortunately
> 4) Seller gets to keep the returned tax money as pure profit
Seller may not reduce the price as well. Thus, continues to keep the raised price due to tariffs as free profit.
Unless there's only one seller, why won't one of them just lower their price slightly to gain a market share edge and increase their total profit (even if margins slightly drop)?
In October, I bought a $250 product from a Canadian company + about $30 shipping & taxes and thought I was good. A few weeks later, FedEx sends me an $92 bill for the duty that they had to pay. I just ignored it since I was never given that notice up front. If they really wanted it, they could have had the vendor contact me. But at least they're not getting that bit of profit now.
I'm also ignoring a bill, from UPS, that is a few bucks of duty and a much larger $14 fee. Presumably the large fee is because UPS isn't meant to collect taxes, but they can suck it.
For what it’s worth, FedEx paid the tariff on your behalf .
You owe them, and I wouldn’t be surprised if they withhold future packages to your address until you settle up.
If they’re smart, they set it up so you owe the government.
they may start rcharging you warehouse storage fees and demurrage fees. chec out what happens if you dont take the delivery
There are usually a few companies between the importer and the consumer. So the importers could only refund the business they sold it to and likely won't if nothing was specified in the purchase contract.
Though this is obviously a first so expect a billion lawsuits about this.
>> 1) US customer pays huge import tax on imported goods in the form of higher prices.
Not according to the current administration: https://www.youtube.com/shorts/CODFD3j623E
According to them, China and others are paying the tariffs, so any refunds clearly have to go to China...
You are downvoting the messenger. In a way...its an IQ test...
"Trump says China is paying for his tariffs" - https://www.nbcnews.com/politics/donald-trump/fact-check-tru...
"Trump Incorrectly Has Insisted ‘China’s Paying the Tariffs’" - https://www.nytimes.com/video/us/politics/100000006661985/tr...
"Fact check: Trump and Vance keep falsely describing how tariffs work" - https://edition.cnn.com/2024/09/09/politics/fact-check-trump...
5) US Gov uses a different law 6) Go to step 1
yes, because the US elected a clown, and this is the clown show.
I think people are getting ahead of themselves on the refund business. Refunds might be on the table, they also may not be. It may be a years long battle. Trump and co might put up enough resistance that many firms find it too costly to fight.
When I have bought things internationally, I have always been the one doing the importing. This means I paid some Trump taxes and I will get my money back.
I hope so!
Trump responds that it will be litigated, like 5 years worth . . .
> Seller gets to keep the returned tax money as pure profit (no refund to customer)
Elections have consequences.
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Most of the total tax collected seems to have been absorbed by the importers, lowering margins.
Where did you hear that? It is conclusively the opposite: https://www.cbsnews.com/news/trump-tariffs-consumers-busines...
The price of googs this last year bed to differ. Maybe for some bigger companies on certain products but what stores like Walmart did was spread the price increase across all products so it wasn’t as obvious. And that’s now where it’s going to suck the most, prices are not going to come down. Ends up being a free handout to them.
Why do we repeatedly say that tarrifs are passed off in full to the consumer in the form of higher prices? Isn't that as obviously wrong as the argument for them, that they're paid entirely by the other countries?
Is there a reason to believe, or evidence, that it's not a mixture of the two?
edit: I want to highlight esseph's reply has a link to evidence that last year's tarrifs were passed off 90% to consumers, which is exactly the type of info I was looking for.
Here's evidence : https://www.kielinstitut.de/publications/news/americas-own-g...
"Importers and consumers in the US bear 96 percent of the tariff burden."
I have to assume that some of that 4% has second order negative effects on US importers and consumers.
Profit margins can not always go down by 4% and in those cases goods and services would then not be available to US importers and consumers is only one example.
My assumption is that the 96% statistic does not fully encapsulate the negative costs to consumers. I have to to wonder how much higher the burden is over 96% when all second order effects are taken into account.
That's not just consumers. That is "importers and consumers"
Importer != Consumer. I think that's very obvious to anyone paying attention to this whole thing. In fact, it's a small minority of imports that are direct to consumer.
It absolutely is a mix of the importer (e.d. manufacturer, producer, wholesaler, retailer, etc.) absorbing some in their margin and the consumer picking up the bill via price increases for the rest.
It's quite obviously not 96% being paid by the consumer across the board just from looking at the CPI numbers.
All this study states is the obvious: foreign producers didn't lower their cost by much in response to tariff burden. They largely charged the same rate to a buyer in the US vs. a buyer in Germany.
This isn't to defend the tariff situation - just that this study gets trotted out a whole lot in an extremely disingenuous manner. Other data that exists is better that measures direct consumer impact.
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For goods for which no domestic equivalent alternatives exist, why would the foreign suppliers lower their prices to compensate for the tariffs (which are paid by the importers to the government)? More generally, the cost of the tariffs will be split between foreign suppliers and local importers/consumers according to the competitiveness and availability of domestic suppliers, and according to market elasticity for the respective goods.
Well, they would likely have to lower their profit margin because the demand is reduced by the higher prices. Fewer purchasers will want to/be able to buy the item at the higher price. The supply and demand curve will find a new equilibrium, but it isn’t like the sellers are going to sell the exact same quantity of items with the price exactly increased by the tariff amount.
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> by the other countries
That makes zero sense. You mean “by lowering the profit margin on the goods sold to the US by that specific company”.
Countries don’t pay tarrifs (bar state intervention), companies do.
But yes, it’s probably a mix of the two: raising prices and lowering profit margins.
It is a mixture of the two. But my reading of various studies indicates that in this mixture, the majority was passed to consumers in the form of higher prices.
What an odd thing to say.
The businesses in the other countries are, you know, businesses. Even if it were Chinese companies that were paying the tariffs, that will be baked into the cost of the good.
This is literally first-day economics. No such thing as a free lunch. The cost of the item that the end user pays should reflect all costs associated with production and distribution to that end user.
I have no idea how the fuck the rumor that these tariffs will be “paid by other countries” started. If there are suspicions that the tariffs are temporary then they might be willing to eat the cost temporarily so it’s not passed onto the consumer immediately, but that’s inherently temporary and not sustainable especially if it would make it so these companies are losing money.
https://en.wikipedia.org/wiki/Tariff
If an analysis says that "domestic consumers are paying 90%" of a tariff then they are simplifying the process that others are describing here as "baked into the cost" and I would say, more accurately, "the cost of tariffs are recouped from consumers/businesses by those who paid them (the importer)"
If economists are saying "consumers pay tariffs" then I would expect to see a notation on the price tags and a line-item on my receipts, but the cost of the tariff must be paid by the importer, or there won't be a consumer who can purchase the goods, let alone bear the costs of their tariffs.
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> The cost of the item that the end user pays should reflect all costs associated with production and distribution to that end user.
Eh, standard business school logic these days is that if you want to maximize profits, you should charge what the market will bear, not your costs + some fixed profit.
So if you're already charging what the market will bear, there may be more wiggle room to absorb some of the hit of tariffs, so long as it still leaves you making enough profit or in a favorable position. It still comes down to what maximizes tariffs: at higher prices, demand drops, but at lower prices, your profit/item drops.
Still, yeah, from what I understand, the bulk of the tariff costs were passed along to customers.
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It wasn't a "rumor" it was explicit deliberate disinformation. Unfortunately many people in the US have insufficient education and accurate news feeds to realize.
See also: disinformation that "other countries charge us the same tariffs", which turns out to be either a plain lie, or they mean VAT (a sales tax, like we have in the US).
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> I have no idea how the fuck the rumor that these tariffs will be “paid by other countries” started.
It's what POTUS was saying since day 1. That we've been getting ripped off and we're gonna make the other countries pay us etc etc etc.
It is, as I said in the post, obviously wrong - but that's where it comes from.
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"American consumers bore 90% of last year's nearly six-fold tariff increase, adding $1,000-$2,400 to average household budgets, despite overall inflation dropping to 2.4% in January 2026."
https://www.forbes.com/sites/petercohan/2026/02/15/consumers...
Exactly the type of info I was hoping for, thank you.
Well, the analysis by the Federal Reserve said that domestic entities (consumers and companies) paid 90% of it. So, yes, saying that consumers pay it all is wrong, but it's less wrong than saying that foreign countries pay it all.
I don't recall seeing a split between domestic consumers and domestic companies, but I'm fairly sure that consumers are paying more than the 10% that foreign entities are.
It's much more true than saying that the foreign company pays it. Depends on how much slack there is in profit margins for both the exporter and importer, but the consumer does pay most of it, like 90%.
I recommend that commenters shell out and pony up for a thesaurus before its import duty is magnified sixfold.