Now that the Supreme Court has struck down a big chunk of the president’s tariffs, Customs and Border Protection has started accepting and processing applications for refunds — and some businesses are already getting them.
Meanwhile, businesses all over the country are deciding whether or not to apply, and what to do with the refund money if and when they receive it. Some businesses are deciding to share some of those refunds with consumers, since they’re the ones who ended up footing the bill for those tariffs.
But the question of who paid how much of a tariff can get complicated along supply chains that run from importers to manufacturers and wholesalers, and ultimately to retailers.
Norman S. Wright Mechanical Equipment Corporation is an HVAC equipment supplier based near San Francisco. It buys equipment from manufacturers and re-sells it to contractors that install the equipment in buildings.
Rich Leao, the president and CEO of Norman S. Wright Mechanical Equipment Corporation, said the manufacturers and importers it works with passed on plenty of tariff charges. But his company can’t apply to the government for a tariff refund.
“There lies the problem, because it has to be the importer that has to apply for the credit,” Leao said.
Leao could ask his suppliers for a refund, but that’s really all he can do.
“I asked a major manufacturer a week ago that we do a lot of work with. I said, ‘Hey, are you guys going to be filing for any of these refunds?’” Leao said. “And they said, ‘We made an executive decision, we met, and the answer is no, we’re not going to file for it.’”
Plenty of companies are deciding to go for the money.
“We did file immediately on the first day of the filing,” said Peter Furth, CEO of FFF Associates, which imports fig paste from Turkey and Spain and sells it to manufacturers that make fig bars.
Furth said that if and when he gets his refunds, he’s planning on giving all of the money back to his customers.
“To me it’s clear I owe the money back to the customer,” Furth said. “And by the way, I need to tell you, my customers believe it’s very clear to them as well. They’ve already asked.”
When Furth’s company passed along the cost of tariffs to the food manufacturers that are his customers, the contracts broke out the tariff charges as separate line items and clearly stated that the charges were based on the “current tariff rate.”
“And if it’s based on the current tariff rate, and if the tariff is struck down, then it seems obvious to us that it’s owed back to them,” Furth said.
But not every business spelled out tariff charges so clearly. Many simply raised prices, and customers paid them.
“If you just agree to pay a price for the good, then it’s not clear that you have any legal entitlement to get that tariff back,” said Rachel Brewster, a law professor at Duke University.
Brewster said in those cases, businesses are going to decide whether to share refunds with their customers based on their relationship.
“Who has the most bargaining power in the relationship?” Brewster said. “How longstanding is the business? How many competitors are there out there?”
Businesses that do have a lot of competition might be more inclined to share tariff refunds.
Lyman Munson, the president of S.L. Munson & Company, which imports metalworking tools from Europe, said in most cases, he baked the cost of tariffs into his prices.
“In terms of a refund, I don’t think we have any responsibility to do that,” Munson said.
But Munson knows his customers have plenty of other tool suppliers they can work with, so he’s open to sharing the refunds.
“If they want to come back and look at this again, I certainly want to do it,” Munson said. “It takes a long time to build a customer relationship. It doesn’t take long to disassemble it.”
But not every business has the leverage to ask for a tariff refund.
“Basically, we don’t have any power in the situation,” said Spiro Pappadopoulos, CEO of Schlow Restaurant Group, which owns restaurants in several states.
Pappadopoulos said tariffs have raised the prices he’s paid for tables, takeout containers, and other supplies and equipment. But the supply chains for those kinds of goods are so long that if Pappadopoulos were to ask his supplier for some of that tariff money back, he likely wouldn’t get it.
“They’re probably just going to say, ‘Hey, we paid tariffs, too. We’re not getting it back either, somebody else we bought it from is getting it’,” Pappadopoulos said. “It’s just a dead end.”
Pappadopoulos said at the end of the day tariffs are still pushing up his costs, and pushing up the prices he charges his customers.
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