Trump admin could be forced to refund $200B in tariffs after SCOTUS ruling: JPMorgan

• Major corporations including Costco, J.Crew, Crocs, Goodyear, and EssilorLuxottica have filed lawsuits seeking tariff refunds, with lower courts now determining actual refund amounts and timing
• JPMorgan forecasts the fiscal deficit could rise to 6.6% of GDP in 2026 (roughly $2.1 trillion), a half-point increase, due to potential refunds and economic disruption
• Administration officials vowed to 'recreate the exact tariff structure' using other legal authorities, but JPMorgan warns this realignment would still create winners and losers while significantly increasing trade policy uncertainty

Summary

JPMorgan analysts warn that a recent Supreme Court ruling could force the Trump administration to refund $150-200 billion in tariffs to U.S. businesses, creating significant economic uncertainty. Michael Feroli, the bank's chief economic policy researcher, noted the ruling remanded refund decisions to lower courts, leaving the exact amount and timing unclear.

Key Market Implications:

• The potential refunds could increase the fiscal deficit to 6.6% of GDP in 2026 (approximately $2.1 trillion), up half a percentage point
• If businesses retain refund cash rather than passing savings to consumers, the economic boost would be "smaller"
• Trade policy uncertainty is expected to stunt business spending even if tariffs are reinstated through alternative legal mechanisms

Companies Involved:

Major corporations have already filed lawsuits seeking tariff refunds, including Costco, J.Crew, Crocs, Goodyear, and EssilorLuxottica (owner of Ray-Ban and Oakley brands).

Administration Response:

Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick vowed to maintain tariffs through other legal authorities, with Bessent stating they could "recreate the exact tariff structure" through different means.

Data Points:

• JPMorgan estimates average effective tariff rates will drop from 9.4% (December) to just over 4% without certain duties
• This remains elevated compared to 2.3% in 2024 before Trump's tariff implementation
• Trump announced plans Friday to impose a 10% tariff on most imports

The ruling creates winners and losers across industries, with JPMorgan warning that any tariff realignment would materially increase trade policy uncertainty regardless of the administration's response.