US refunds $81bn after court ruling, new tariffs loom

The US government has refunded $81bn in tariffs this fiscal year after the Supreme Court struck down a major portion of the administration's import taxes. Budget figures released on Monday showed the payouts surging from $5bn in the same period last year. A Treasury official confirmed the spike was almost entirely due to the February court ruling, with the vast majority of refunds processed in May and June.

The sudden reversal of tariff revenue is pushing the federal deficit higher, undermining a central pillar of the administration's fiscal strategy. Trump had previously pitched the import taxes as a way to shrink the budget deficit while reshoring manufacturing and securing better trade deals. Instead, the deficit reached $1.367tn in the first nine months of the fiscal year, up 2%, as refunded duties coincided with surging debt interest costs exceeding $1tn, up 14%, and a 5% increase in military spending tied to the Middle East.

To replace the invalidated measures, the White House is developing a new tariff framework designed to circumvent the court's restrictions. A temporary 10% global tariff is set to lapse on 24 July. In its place, the administration is preparing duties of 10% to 12.5% targeting the UK, Japan, India, Taiwan and China. These new levies would be justified by claims of lax enforcement of anti-forced labour laws and excess industrial capacity, rather than the broad executive authority previously rejected by the courts.

Brazil faces a separate threat of a 25% levy, while European markets are confronting a distinct risk tied to their taxation of American technology firms. The UK raised more than £800m in 2024-25 through its 2% digital services tax on large platforms like Apple, Google and Amazon. France, Spain and Italy impose a 3% tax on similar companies, with several other European nations implementing or proposing equivalent policies.

The administration has explicitly warned that these European digital tax regimes will trigger an immediate trade war. “Please let this statement serve to represent that any Country that imposes such a Tax will immediately be met with a 100 per cent TARIFF on any and all Goods sent to the United States of America,” Trump wrote on Truth Social.

He clarified that existing commercial agreements would offer no legal safeguard against such retaliation. “This TARIFF will supersede Trade Deals made with the Country, whether implemented, signed, or not,” he stated. For investors and corporate executives, the statement underscores that negotiated trade pacts remain highly vulnerable to abrupt unilateral tariff actions.