A washing machine costs more. So does a pair of running shoes, a set of brake pads, and a bag of imported rice. The Supreme Court struck down President Trump’s original tariff orders. A federal judge told the government to start issuing refunds. And yet the average American household is still absorbing roughly $1,300 a year in added costs from import duties, according to modeling by the Penn Wharton Budget Model at the University of Pennsylvania.
The reason is straightforward: within days of losing in court, the administration replaced the old tariffs with new ones under a different law. The legal footnotes changed. The prices did not.
How the legal swap happened
The original tariffs rested on the International Emergency Economic Powers Act, or IEEPA, a statute typically reserved for sanctions against hostile nations. The Supreme Court found that IEEPA did not authorize the broad import duties the administration had imposed. A federal district judge then ruled that importers who had challenged the levies were entitled to refunds of what they had already paid.
The administration pivoted fast. In February 2026, the White House issued a new proclamation titled “Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems.” This time the legal authority was Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132), a provision that lets the president impose a temporary surcharge of up to 15 percent to address balance-of-payments problems. The proclamation set a 10 percent ad valorem duty on covered imports, with a stated end date of July 24, 2026, and a list of product exceptions in its annexes.
Customs officials began collecting the new surcharge almost immediately. One set of duties replaced another with barely a gap in between.
Where the $1,300 figure comes from
The Penn Wharton Budget Model, drawing on U.S. International Trade Commission data, published updated estimates of effective tariff rates and customs revenue as of January 15, 2026. Those figures captured the cumulative weight of all active U.S. tariffs, including duties on Chinese goods under Section 301, steel and aluminum tariffs under Section 232, and the broad IEEPA-era levies that were then still in effect. When the administration swapped IEEPA authority for Section 122 the following month, the effective tariff rate on covered imports held steady, meaning the Penn Wharton estimate remained a reliable benchmark for the household burden heading into mid-2026.
The $1,300 number is an analytical estimate, not a line item on anyone’s credit card statement. It smooths over real differences: a family that buys mostly imported electronics and clothing will feel tariffs more sharply than one that spends primarily on domestic services. But the figure is grounded in actual trade flows and tariff schedules, and it aligns with a well-established finding in trade economics. Research by economists Mary Amiti, Stephen Redding, and David Weinstein, published through the Federal Reserve Bank of New York and the National Bureau of Economic Research during earlier rounds of tariffs, consistently found that U.S. consumers, not foreign exporters, bore the bulk of the cost through higher retail prices.
Customs revenue data from the Daily Treasury Statement reinforces the point. Tariff-related cash deposits flowing into federal coffers did not meaningfully decline after the IEEPA orders were struck down. The money kept arriving under the new authority.
What makes Section 122 different, and legally fragile
Section 122 is not a blank check. Congress wrote it with hard guardrails. The statute caps any surcharge at 15 percent and limits its duration to 150 days, with the possibility of a single 150-day extension. That means the current 10 percent surcharge, as written, must expire or be renewed under a different authority by late July 2026.
The provision has been used exactly once before. In August 1971, President Nixon imposed a 10 percent import surcharge as part of a sweeping economic package that also suspended the dollar’s convertibility to gold. That surcharge lasted about four months before being lifted as part of the Smithsonian Agreement, an international currency realignment negotiated among major trading partners. Nixon’s use of the statute came during a genuine balance-of-payments crisis, with gold reserves draining and the Bretton Woods system collapsing. The Trump administration’s invocation of the same law more than five decades later faces a harder sell: the United States runs a large trade deficit, but it is not experiencing the kind of acute payments emergency that defined 1971.
Trade lawyers have already begun picking at that distinction. Several trade associations and importing firms plan to contest the surcharge in the Court of International Trade, arguing that the administration’s balance-of-payments justification does not meet the statutory threshold. If those challenges succeed, the White House could face another courtroom loss and another scramble for legal authority.
Refunds ordered, but not yet reaching consumers
The federal court ruling entitling importers to refunds of IEEPA-era tariffs was a significant legal victory, but its real-world impact remains unclear. As of May 2026, no public data shows how many claims have been filed, how much money has been returned, or how quickly the government is processing them. U.S. Customs and Border Protection has not published implementation metrics, and Treasury has not broken out refund disbursements in its public reporting.
Even if importers recover every dollar they paid under the struck-down orders, there is no mechanism requiring them to pass those savings to consumers. Companies that absorbed tariff costs by cutting margins might use refunds to restore profitability. Those that raised prices may have no competitive incentive to lower them, especially while the replacement surcharge keeps their cost structure elevated. The refund ruling matters for corporate balance sheets. Its effect on grocery bills and retail prices is, at best, indirect.
The July cliff and what comes after
The July 24, 2026, expiration date written into the proclamation creates a policy cliff. If the administration wants to maintain broad-based import duties beyond that date, it will need to either invoke the 150-day extension provision under Section 122, persuade Congress to pass new tariff legislation, or find yet another statutory basis for the duties.
Each path carries risk. Extending the surcharge requires a continued balance-of-payments justification that courts may not accept. Congressional action would require bipartisan support that does not currently exist for tariffs at this scale. And pivoting to yet another statute would repeat the pattern that has already produced one Supreme Court loss.
None of that changes what households are paying right now. The Supreme Court closed one legal door. The administration opened another. And the $1,300 annual cost kept landing where it always does: on the people buying the goods.
