A surprise credit after an overseas purchase: The tariff refunds now flowing through shippers

A surprise credit for consumers is emerging as shippers such as FedEx, UPS, and DHL begin distributing tariff refunds that were initially collected from the U.S. government. These refunds stem from a legal reversal involving tariffs imposed by former President Donald Trump under the 1977 International Emergency Economic Powers Act. The Supreme Court ruled in February that these tariffs were unlawful, prompting the government to return approximately $100 billion in collected fees to businesses that had paid them. Now, some of this money is reaching individual consumers through shipping companies that acted as intermediaries during the import process. The process began several months ago following the Supreme Court's decision. Since then, U.S. Customs and Border Protection (CBP) has processed refund claims submitted by companies that paid the tariffs. Shippers, which often collected the tariffs on behalf of customers, are now passing these refunds along to individuals who paid them directly. This marks a tangible shift for many American households, as the Trump-era tariffs had previously increased the average family’s tax burden by around $1,000 annually, according to the Tax Foundation. FedEx has already initiated its refund distribution, allocating $800 million in returned funds to customers who paid tariffs directly. Consumers can track their eligibility using a dedicated online portal, where they input tracking numbers associated with their purchases. Similarly, UPS announced earlier this year that it had paid $5 billion in tariffs on behalf of clients and has begun submitting refund applications to the government. The company expects to distribute refunds in stages, with initial payments anticipated within one to three months after receiving reimbursements from the Treasury Department. DHL has also taken action, filing claims for nearly all eligible shipments where it was designated as the importer of record. The company emphasized that the speed and scale of refunds remain contingent upon CBP’s ability to process these claims efficiently. Unlike shippers, major retailers typically did not collect tariffs directly from consumers. Instead, they either adjusted their product offerings or absorbed the additional costs internally, making direct refunds less common for retail buyers. Major retailers have indicated plans to utilize tariff refunds in different ways. Amazon, for instance, received $600 million in refunds during the second quarter. However, the company’s chief financial officer noted that it is not the importer of record for most products sold. As a result, the company has opted to absorb some of the cost rather than pass it on to customers. Nevertheless, in cases where specific import charges were clearly passed to consumers, Amazon stated it would proactively reach out and issue refunds automatically. Best Buy, the country’s leading consumer electronics retailer, has also signaled its intent to return some portion of the tariffs it received. Its outgoing CEO mentioned that the company is responsible for importing only 2% to 3% of its total sales and plans to use refunds to provide value to customers. Costco has expressed a similar stance, stating it intends to return tariffs passed on to consumers in some capacity. However, the exact amount and timing of these returns depend on the availability of refund funds and ongoing legal proceedings related to the refund process. Meanwhile, some consumers are taking legal action to recover the tariffs they believe they paid indirectly through higher product prices. These lawsuits aim to hold retailers accountable for passing on the costs to end-users, even if the companies themselves did not collect the tariffs directly. The outcome of these cases could influence how much, if any, of the refunds ultimately reach individual consumers beyond what shippers are currently distributing. The refund process continues to unfold gradually, with each company managing its distribution based on the pace of government reimbursements. For now, the most visible impact is being felt by those who paid tariffs directly through shipping services, offering a rare glimpse of relief amid broader economic challenges linked to the previous administration’s trade policies.