Tariff mess is Trump's to clean up

In a decision with international shock waves, the Supreme Court ruled that President Donald Trump must have "clear congressional authorization" to impose tariffs. It was a staggering blow to Trump's revenue plans and the unilateral clout he wielded to impose them. Importantly, the ruling comes amid Trump's push to expand his executive powers over the next three years.

Now the president must act carefully to end the economic uncertainty caused by the failure of his brash approach.

The court found the president had no authority to issue the blitz of executive orders imposing billions of dollars in import taxes on products from elsewhere. Calling his gambit an "emergency" response to a national threat doesn't give the president arbitrary power to mandate tariffs of limitless scope and duration.

The ruling did not touch on the matter of whether tariffs when done the right way can be useful for legitimate national goals — on which there is substantive bipartisan agreement. Nor did the court address how U.S. businesses large and small and their customers could get refunds.

REFUND PROBLEM

The fiscal and commercial consequences are huge. And one of the biggest problems now is how to give back an estimated $175 billion in import taxes likely to be subject to refund. Most of the money collected came from "importers of record" — mainly U.S. companies and businesses who either absorbed the higher costs or passed them along to consumers.

The fact that these tariffs are taxes that drive up costs isn't lost on businesses big and small. FedEx, the global transportation company, filed a lawsuit Monday in the U.S. Court of International Trade seeking to recover what it paid as an importer of record. Costco, also seeking its money back, was a key party in the lawsuit decided by SCOTUS. As of Friday, there were an estimated 2,000 claims filed for refunds.

Locally, Arthur Gschwind, founder and CEO of Suffolk Machinery Corp., creator of Timber Wolf Bandsaw Blades, noted Friday in a Newsday Opinion piece: "Like so many other small-business owners, we don't have large profit cushions. We operate on thin margins, and [tariff] policies like this cut straight into the core of our survival."

"A friend asked if I expect a refund for all the tariffs I've already paid," Gschwind wrote. "I doubt it."

In this digital age, electronic records can readily identify which entities paid how much in tariffs. But confoundingly, administration officials were already reportedly discussing ways to allow the federal government to keep the billions collected. They could claim the payments to be valid under different legal justifications for revamping the schedules of import duties. Or, they could try to draw out proceedings to prod businesses to settle for far less than they'd be owed.

Common sense says that now is no time for government to find ways to chisel those who deserve money back for paying an illegal tax. First the nation needs proper, straightforward policy to fill the trillions in projected long-term budget gaps that Trump's legal boondoggle will cause.

Trump in his first administration used different sections of federal law to rationalize tariffs. One put tariffs on sectors deemed vital to national security such as steel. A second imposed tariffs on China over unfair trade practices. Trump is resuming such rationales for the 15% across-the-board tariffs he said he'd set.

INAPPROPRIATE USE

President Joe Biden used rationales similar to Trump's to keep tariffs in place. The difference is Trump uses tariffs inappropriately for personal political whims. At one point he signaled he'd use tariffs as a threat to force the acquisition of Greenland. At another he wielded tariffs to punish Brazil for prosecuting his friend, ex-President Jair Bolsonaro, on corruption charges.

For American commerce, the cancellation of "reciprocal" tariff deals improperly based on the "emergency" claim may prove even more chaotic than the talks to reach them. Foreign nations agreed on certain investments based on what the United States imposed. Nobody at the moment can say for certain if those deals remain in force. How Trump handles this will likely sway the direction of the economy.

Also under a cloud is the federal budget. Can a deepening federal deficit be patched by recasting tariff schedules? The traditional way is to raise revenues or cut government services. House Speaker Mike Johnson has been pushing for large-scale health care cuts but also continued tax cuts. A bipartisan direction for better budget balance is hard to see in the short term.

The tariff storm that began with Trump's strangely named "Liberation Day" on April 2 last year now becomes a chaotic whirlwind of unpredictability on revenues, refunds, trade terms and enforcement.

To clear up the confusion he has created over the past year, Trump would have to admit he failed on the law, stop blaming judges or anyone else, set real goals, and let Congress advise and consent. Together they could figure out how to clean up this mess.