Trump Tariffs Blocked—You Pay, Corporations Collect, Insiders Profit

Court Rules Tariffs Illegal, Lutnick's Family Profits, Trump's Tariffs 2.0

On Friday, the Supreme Court delivered a major blow to President Trump’s trade agenda. In a 6-3 decision, the justices struck down the majority of his tariffs, ruling them unconstitutional under the International Emergency Economic Powers Act (IEEPA).

Trump's critics celebrated the decision. His supporters fumed. But regardless of which camp you're in, if you're waiting for relief at the checkout counter, don't hold your breath.

In today’s essay, I want to take time to explain why.

The Bad

Now, as I’ve written to you before, I’m no fan of tariffs. History shows they tend to raise consumer prices, trigger retaliatory measures, and distort markets. Businesses—and especially consumers—ultimately end up paying the price, not the foreign countries they’re aimed at.

We’ve seen this play out before. The script never changes.

So when Trump imposed his tariffs on his so-called "Liberation Day," corporations didn't absorb the cost—they passed it directly to you through higher prices. Every time you bought something subject to those tariffs, you were paying that extra tax at the register.

But that’s just the beginning of where consumers really get screwed.

Now that the tariffs have been ruled illegal, here’s what happens next: Thousands of companies—including Costco, FedEx, and major retailers—are already lining up for refunds on what could be as much as $175 billion in tariffs. Justice Kavanaugh explicitly noted that the government may be required to refund billions to importers who paid the illegal tariffs.

And who gets those refunds? The corporations.

Under U.S. Customs law, they can file refund claims on tariffs they’ve already passed on to consumers. That’s right—even if a company raised prices and collected the tariff costs from customers, they can still claim a government refund when the tariff is ruled illegal.

The company pays, say, $30 in tariffs on a $100 product. They charge consumers $130. The tariff gets struck down. The company gets $30 back from the government plus interest. The consumer? Still paid $130. Gets nothing back.

And when corporations win these cases, they don’t just get their tariff payments back. They get their money back plus interest—sometimes compounded over years of litigation.

So what you’re basically getting is—whether intentional or not—wealth transfer disguised as trade policy. Companies collect from consumers through higher prices, then collect again from the government through court-ordered refunds.

Meanwhile, consumers—the ones who actually bore the economic burden—are left holding the bag.

But as bad as this sounds, that's not even the worst part.

The Ugly

You may not know it, but there’s actually a secondary market for tariff refund claims.

Wall Street firms discovered they could approach companies and offer to buy the rights to future tariff refunds for pennies on the dollar. The pitch goes something like this:

“Your company paid $10 million in tariffs. You might get it back if the courts rule the tariffs illegal, but that could take years of litigation. Sell us the right to collect that refund for $2-3 million right now—cash in hand—and we’ll take on the legal risk.”

For struggling companies desperate for liquidity, it’s attractive. They get immediate cash flow. The financial firm gets a 400-500% return if the tariffs get struck down.

This isn’t the “worst part” I mentioned earlier. This is just capitalism at work.

What’s not capitalism—unless you mean the crony type—is that the firm reportedly pursuing this business is Cantor Fitzgerald, once run by Commerce Secretary Howard Lutnick.

According to a July 2025 Wired report, while Lutnick was designing Trump’s tariff policy, his old firm was quietly exploring buying tariff refund rights at 20-30 cents on the dollar.

A Cantor representative told Wired: “We’ve already put a trade through representing about ~$10 million of IEEPA Rights.”

Not great optics, right? But at least Lutnick is no longer at the helm of that company, right? Well, sort of... When he became Commerce Secretary, ethics rules required him to divest from Cantor Fitzgerald. So what did he do? He transferred ownership to trusts for his sons Brandon (27) and Kyle (28)—who now run the firm as chairman and executive vice chairman.

Let that sink in.

The same Howard Lutnick who went on television championing tariffs as brilliant policy had a family firm positioned to profit when those tariffs got struck down.

I guess he's just the kind of guy who likes to win no matter what—politically if the tariffs stick, personally if they don't.

Now, Cantor denied executing trades and called reports “completely false.” Their explanation? A rogue salesperson “erroneously” believed the firm would greenlight the business.

But they haven’t disputed exploring the scheme. And that’s damning enough.

Off-topic, but this reminds me of Lutnick's Epstein denials. Last October, he claimed one meeting in 2005, found him “disgusting,” never spoke again. January files showed island visits in 2012, business dealings, emails through 2018.

I liked his grasp of America’s problems and the “monetize the asset side” solution in Trump’s Reset. But this pattern of saying one thing, doing another, is hard to overlook.

Probably not someone you can trust.

The Cycle

Now, Trump has already announced plans for new tariffs under Section 122 of the Trade Act. Instead of using IEEPA—the law he just lost on—he’s switching to a different statute that gives the President authority to impose tariffs in response to balance-of-payments deficits.

But here’s the problem: Section 122 has a similar constitutional vulnerability as IEEPA.

The Supreme Court didn’t just strike down Trump’s specific tariffs—it reaffirmed a basic principle: only Congress has the power to levy taxes, and tariffs are taxes. The President can’t just unilaterally impose duties without explicit Congressional authorization, regardless of which law he claims gives him the authority.

That means Section 122 doesn’t give the President much more constitutional authority than IEEPA did. It’s another delegated power that could still crash into the Constitution’s clear assignment of taxing authority to Congress. Different legal wrapper, the same constitutional problem.

Which means we’re probably headed for the exact same cycle:

Tariffs go up. Companies raise prices. Consumers pay more. Courts rule the tariffs unconstitutional. Companies collect refunds. Consumers get stuck with the bill.

Regards,

Lau Vegys