Prof G Markets

Episode: Billions in Tariff Refunds — Who Gets the Money?

Host: Ed Elson
Guests: Peter Harrell (Georgetown Law), Ryan Peterson (Flexport)
Date: February 24, 2026

Overview

In this episode, Prof G Markets tackles the fallout from the Supreme Court’s recent decision striking down Trump’s use of emergency powers to impose sweeping tariffs. The discussion centers on what this ruling means for global trade, the rapid response from the Trump administration, the process and politics of tariff refunds, and—most critically—who stands to actually receive billions in tariff refunds. Panelists Peter Harrell and Ryan Peterson join Ed Elson to dissect the legal realities, economic impacts, and the likely winners and losers of America’s ongoing tariff saga.

Key Discussion Points & Insights

1. Supreme Court Ruling & Trump’s Response

[04:23]

• Supreme Court Decision: The Court invalidated Trump’s use of emergency powers for tariffs; this was not a surprise to many legal observers or the administration.
  • Peter Harrell: “You could also tell the administration wasn’t really surprised…the administration was also quite ready to go with their backup plans.”
• Immediate Policy Pivot: Trump invoked Section 122 of the Trade Act of 1974, announcing within hours a 10% blanket tariff on all imports, threatening a bump to 15%.
  • Section 122 powers last only 150 days without Congressional approval; new schemes are rumored for once that limit is hit.
• Whiplash in Markets: Stocks first climbed on the Court news, then plunged as new tariffs rolled out.

2. The “Tariff Whack-a-Mole” and Legal Loopholes

[06:23–07:58]

• Trump’s Tactics: Ryan predicted, “150 days from now the tariffs will be paused for 15 minutes and then immediately reinstated for another 150 days.”
• Legal Outlook: Courts likely wouldn’t permit this “pause and renew” strategy; nevertheless, Trump could buy a few extra months before legal challenges kick in.
  • Peter Harrell: “If Trump tries this strategy… the courts will throw that out… but it might take them a couple months.”

3. Impacts Abroad: What Do Other Countries Do?

[09:01–10:33]

• Foreign Response: Other nations (Europe, Japan, UK, etc.) are consulting expensive trade lawyers and weighing whether to maintain semi-informal tariff “deals.”
  • Peter Harrell: “The biggest true winners of Trump’s trade war are the trade lawyers. It is going to be true in 2026 as well.”
• Will deals hold? Most countries likely stick to current agreements—unless Trump pushes for higher rates than previously agreed.

4. Business Reactions & The Refund Windfall

[10:55–13:58]

• U.S. Companies Respond: Many are preparing to file for refunds and “popping champagne.” Importers can use customs protests to file claims for refunds within 494 days of entry.
  • Ryan Peterson: “First of all, calculating the dollar amount likely owed…and then getting you enrolled…we’ll go file those protests for you.”
  • Flexport has built refund calculators and automated the process for businesses.
• But It’s Not Simple: The mechanics of how exactly refunds will flow aren’t yet fully clear—protests filed now may take months to actually be processed.

5. Who Actually Gets the Money?

[14:01–18:45]

• Importers, Not Consumers: Legally, refunds go to the “importer of record,” usually wholesalers or large retailers—not the American individual consumer, even though up to 63% of tariff costs were likely passed on through price increases.
  • Peter Harrell: “There’s nothing magic about tariffs that make them different from any other tax… If a tax is illegal, you get your money back. But for consumers, it’s different—you have no claim.”
• Possibility of Complexity: The government could make refunds administratively difficult—requiring lawsuits instead of protests—which would slow the process.

6. Foreign Importers & Shady Maneuvers

[20:27–21:46]

• Tariff Evasion & Windfalls: A sharp rise in foreign companies acting as importers of record (from 9% to 20%)—sometimes to under-declare the value of goods and minimize duties.
  • Ryan Peterson: “Those are the guys going to get the checks… Trump's going to be wiring money offshore directly… It’s going to really drive him crazy.”
• Summary of Upshot: U.S. consumers end up paying higher prices, much of the refund flows to importers—some of them foreign and possibly fraudulent.

7. Legal & Political Legacy

[23:35–26:19]

• Trump’s Real Constraint: Losing broad AIPA powers means Trump can’t instantly slap tariffs on any country/product—new tariffs now require fact-finding and process.
  • Peter Harrell: “None of these other laws let him just kind of pull out the tariff sharpie and sign an executive order and impose tariffs.”
• Industry Winners: Law firms and customs brokers will benefit from heightened complexity in sector-based tariffs; trade battles will rumble on.
  • Ryan Peterson: “Trade attorneys are the ones who are really going to benefit here… Now it’s these sector-based things with all kinds of nuance.”

Notable Quotes & Memorable Moments

• On Legal Shuffling:
  Peter Harrell [07:28]: “There’s one question about how do I think the courts are going to interpret the law, which is not really the question of what Trump will do. Right? Because Trump’s going to do what Trump’s going to do.”
• On Refunds:
  Ryan Peterson [11:13]: “You just… read the motion the DOJ filed in the appellate court, and it’s just like, we will give refunds if we lose this case. You’re like, OK, great, now you’re going to give refunds.” Peter Harrell [14:02]: “There’s nothing magic about tariffs that make them different from any other tax.”
• On Winners and Losers:
  Peter Harrell [23:35]: “In 2025, the biggest true winners of Trump’s trade war are the trade lawyers. I think it is going to be true in 2026 as well.”
• On Foreign Importers:
  Ryan Peterson [21:46]: “Trump’s going to be wiring money offshore directly in this thing. It’s going to really drive him crazy.”

Timestamps for Important Segments

• [04:23] – Supreme Court ruling explained; legal context and administration’s preparedness.
• [06:23] – Trump’s legal loophole strategy with Section 122 and panel’s predictions.
• [09:01] – How other countries might react; the trade lawyer bonanza.
• [10:55] – How U.S. firms are preparing for tariff refunds (mechanics and deadlines).
• [14:01] – Why businesses, not consumers, will get refunds.
• [20:27] – Surge of foreign importers exploiting the refund system.
• [23:35] – Outlook for future tariffs; why the era of instant tariff threats is (mostly) over.
• [26:19] – Complexity of sector-based tariffs and why legal/jargon mastery matters now more than ever.

Takeaways & Big Picture

• Tariffs “Called Off” but Not Gone: Supreme Court struck down broad emergency tariff powers, but Trump’s administration quickly invoked less sweeping, time-limited statutes to keep tariffs in place (at 10%–15%).
• Refunds Primarily Go to Importers: Legal refunds flow through importers of record—often large companies, not the consumers who bore the brunt through price hikes.
• Consumers Left Out: Despite paying much of the real cost, regular Americans will see no direct compensation.
• Foreign and Even Fraudulent Actors Stand to Gain: The flaw in administration lets even foreign companies—sometimes via tariff fraud—collect refunds.
• Biggest Winners: Trade attorneys and customs consultants, due to surging complexity—as sector-by-sector tariffs replace blanket ones.
• Outlook: Tariff battles continue, but with more procedural hurdles and less executive agility. The legacy, according to the hosts: America’s “Brexit”—expensive, disruptive, and with lasting damage.

Final Quote (Ed Elson’s summation, [29:29]):
“Big picture, that is what happened here… Trump’s tariffs will go down as America’s Brexit—minimal upside, maximal downside, and an economic outcome that made regular Americans, for the most part, poorer. That will be the legacy of tariffs. And we are now watching that legacy unfold before our very eyes.”