In May 2026 the Treasury Department refunded slightly more in customs duties than it collected, and in June the gap widened dramatically, turning the net customs revenue for those months negative.
Refunds exceed collections
- May 2026: $21.97 billion refunded vs. $21.93 billion collected → net ≈ $0.04 billion loss.
- June 2026: $49.18 billion refunded vs. $23.63 billion collected → net ≈ ‑$25.56 billion.
Together, the two months saw $71 billion in refunds, the bulk of which stemmed from duties later deemed illegal.
Legal background and court orders
- The tariffs at issue were imposed under the International Emergency Economic Powers Act (IEEPA) and had accounted for roughly half of all customs collections through 2025.
- In February 2026, the Supreme Court struck down the IEEPA tariffs. The Court of International Trade subsequently ordered Customs and Border Protection to refund the illegally collected duties.
- The refund process is being rolled out in phases: the first phase covers “simpler” claims, while more complex, “finally liquidated” entries remain subject to procedural uncertainty.
- Interest on overpayments accrues at 4.5 % for amounts over $10,000 and 6 % for smaller amounts; the Treasury has appealed the order requiring refunds to importers who never sued.
Scale of IEEPA collections and remaining liabilities
- Approximately $165 billion in IEEPA duties were collected before the Court’s ruling.
- Refunds in May and June represent only a portion of that total; well over half of the illegally collected duties remain unreturned.
Ongoing tariff measures
- Gross customs collections peaked at $33.09 billion in October 2025 and fell to $23.63 billion by June 2026.
- After the Supreme Court decision, the administration invoked Section 122 of the Trade Act of 1974 to impose a temporary 10 % tariff on most imports through July 24. The Court of International Trade ruled against these Section 122 tariffs in May, though the ruling is pending appeal.
- On July 23, the U.S. Trade Representative (USTR) issued final actions under Section 301 (forced‑labor investigations), imposing 10–12.5 % duties on imports from 86 countries, with broad exemptions for USMCA‑qualifying and Section 232 goods.
- The administration also invoked Section 338 of the Tariff Act of 1930, a provision never previously used, to levy a 50 % tariff on selected Canadian goods effective August 19. Both the Section 301 and Section 338 measures are expected to face litigation.
Economic impact and limits of refunds
- Refunds to importers do not automatically compensate consumers or downstream businesses, which the Harvard Pricing Lab estimates bore a substantial share of the tariff burden through higher prices.
- Some shoppers have filed class‑action lawsuits seeking refunds, but such actions are unlikely to reverse the broader economic effects.
- Over the 18‑month period since the start of President Trump’s second term, U.S. tariff policy has changed more than 50 times, creating legal and regulatory uncertainty that suppresses long‑term investment, hiring, and pricing decisions.
- The economic damage from this chaotic tariff regime can exceed the revenue generated, and unlike the collected duties, the damage cannot be refunded.
Source article: taxfoundation.org
