Who Really Pays Tariffs and What’s Next for U.S. Trade Policy
- Schulz Trade Law
- Sep 2
- 4 min read
Who Really Pays Tariffs and What’s Next for U.S. Trade Policy
Expert Insights on Tariffs, Law, and Global Economics.
September 1, 2025
Clear guidance on who actually pays tariffs, why trade deficits aren’t destiny, and how court challenges could reshape global commerce.
Introduction
On KMOX Radio this Labor Day, international trade attorney Michelle Schulz, founder of Schulz Trade Law, joined the conversation about tariffs, trade deficits, and the future of U.S. trade law. Her insights cut through political soundbites, revealing what tariffs really mean for American businesses and consumers—and how ongoing court battles could change everything.
“Tariffs function like a tax collected at the border. U.S. importers pay first—and most of that cost eventually reaches consumers.”
Who Pays Tariffs—and How They Hit Your Wallet
A common misconception is that foreign governments or manufacturers pay tariffs. Schulz clarified that under U.S. law (Title 19), the importer of record is responsible. If duties aren’t paid, Customs goes after the U.S. importer, not the foreign seller.
Initially, some distributors and retailers tried to shield consumers from price hikes. But as Schulz explained, “it’s becoming less and less sustainable.” Importers now routinely pass costs downstream, and in many cases are “really struggling” to stay competitive.
Tariffs typically increase landed costs by 10–50%, depending on product and country of origin.
Importers pay up front at entry, straining cash flow.
Retailers adjust prices, meaning consumers ultimately feel the squeeze.
“In the beginning, some importers absorbed the costs. But what we’re seeing now is that those costs are being passed on, and in some cases, importers are really struggling.”
Trade Deficits, Reciprocity, and Misconceptions
Another popular narrative is that tariffs are necessary because other nations have been “ripping off” the U.S. with one-sided trade policies. Schulz agreed this concern “has its point” but noted that the U.S. has run trade deficits for 49 years—hardly a new emergency.
She emphasized that trade relationships are usually structured through formal agreements like the USMCA (formerly NAFTA) or GATT/WTO frameworks. These were voluntarily signed, providing both benefits and obligations.
“We didn’t suddenly get this emergency. We’ve had tariffs imposed on us forever, and now we’re imposing tariffs back. It’s really become a big trade war.”
Schulz also explained that deficits are widely misunderstood. Imports often fuel U.S. production and exports. For instance, foreign inputs are embedded in goods that U.S. companies later sell abroad. And in some cases, tariffs have been levied even when the U.S. has a trade surplus with a partner, as was the case with Brazil, where tariffs were imposed “for political reasons."
“A trade deficit isn’t automatically a policy failure; it’s often a reflection of supply chains and consumer demand.”
Legal Challenges That Could Rewrite Tariff Authority
The conversation then turned to the courts. Many of the current tariffs were imposed via executive order under the International Emergency Economic Powers Act (IEEPA)—a Cold War-era statute designed for emergencies, not sweeping trade policy.
Both a lower court and a federal appeals court (in a 7–4 decision) have ruled that these tariffs exceeded presidential authority. The government plans to appeal to the U.S. Supreme Court, where the outcome is uncertain.
Some justices lean toward broad executive power, which could favor the administration.
Others are strict textualists, and since IEEPA never mentions “tariffs,” they may side with Congress as the rightful authority.
“This could go either way. Some judges may want the executive branch to have this power, although it was originally with Congress.” – Michelle SchulzMichelle Schulz on KMOX Radio, …
If the Supreme Court upholds the lower rulings, several scenarios emerge:
Refund Opportunities: Importers who preserved their rights could claim refunds on certain tariffs (such as reciprocal and fentanyl-related duties).
Partial Persistence: Tariffs tied to national security (Sections 301 and 232) would likely remain.
Uncertainty Window: Tariffs are still in effect through at least October, and the Court could take months to decide.
What Businesses Should Do Now
For importers and exporters, this legal limbo is a call to act—not wait. Schulz recommends:
Preserving rights: File protests and maintain meticulous entry records.
Tracking tariff categories: Separate duties paid under IEEPA-based programs from those under Sections 301/232.
Scenario planning: Model financials under three possibilities—status quo, partial rollback, or refunds.
Watching timelines: Tariffs remain active until officially lifted, so plan purchase orders accordingly.
FAQ: Tariffs in Plain English
Do foreign governments pay U.S. tariffs? No. Duties are collected from the U.S. importer of record.
Are trade deficits proof of unfair trade? Not necessarily. They often reflect consumer demand and supply-chain integration.
Could my company get a refund if tariffs are struck down? Possibly—if you preserved your rights through timely protests and documentation.
What tariffs will remain no matter what? Those tied to national security (Sections 301 and 232) are unaffected by these cases.
Compliance Note
This article is for general information only. Tariff law is complex, and outcomes depend on your specific classification, product origin, and documentation. Always consult a qualified trade attorney before making business decisions.
Don’t let shifting tariff law catch you off guard.
Contact Schulz Trade Law for a Tariff & Duty Exposure Review—including classification audits, refund-readiness assessments, and supply chain strategy.
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