- The US Supreme Court has ruled that the tariffs imposed by former President Donald Trump on several countries, including India, are invalid. The tariffs were implemented during his first year after becoming president.
- The ruling has created uncertainty about the money already collected. The court did not provide clear instructions about whether the previously collected tariffs need to be returned. This has created confusion for exporters and businesses who operate in India.
Total Tariff Collections and Legal Uncertainty
- The US government implemented retaliatory tariffs which started on April 2 last year. The US government collected additional duties which reached $133 billion from that date until mid-December. This amount equals approximately ₹12 lakh crore in Indian currency.
- The court ruling did not provide a decision about whether companies should receive back this amount. Multiple companies have approached lower courts to request refunds. Costco, Revlon, and Bumble Bee Foods have submitted petitions which require them to be reimbursed.
- Currently, there is no system which automatically refunds payments. Companies need to submit legal documents which declare their right to get back their paid duties.
Will Indian Exporters Benefit?
- Higher tariffs created negative effects for Indian exporters. Some industries lost market share in the US. The majority of Indian exporters will not get direct refunds.
- The reason is simple. The tariffs were paid by US importers, not by Indian exporters. The money from refunds will go to US importing companies if the government approves their requests.
- Market experts say the US government is unlikely to provide compensation to Indian exporters for past losses. The ruling will create new possibilities for businesses to explore. US markets will show increased demand for Indian products because the tariffs are now declared invalid.
- US-importing Indian companies which conduct business in the United States will benefit from this development. The current situation will have an impact on upcoming trade negotiations between India and the United States.
The refund process requires 12 to 18 months to complete
- The refund process will require time necessary for its execution even when refunds receive approval. The United States lacks a system which automatically returns tariff payments to businesses. Businesses need to pursue their applications through judicial processes.
- The US Customs and Border Protection agency will evaluate every claim for refunds which courts approve. Payment processing will begin only after verification completes.
- Experts estimate the process may take 12 to 18 months. The resolution process for claims may extend to a maximum duration of two years.
Past Examples of Trade-Related Refunds
- The past has shown cases which resemble this current situation. US courts declared harbor maintenance fees on exports unconstitutional in the 1990s. The decision resulted in the establishment of a refund system which returned fees to exporters.
- The current situation involves a significantly larger value. The volume of tariff collections has reached an unmatched level. The US government must undertake additional legal proceedings and administrative processes before it will announce its final decision on refund requests.
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