When tariffs hit home

"Last month, a federal appeals court ruled that many of the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were illegal. Gulp. The tariffs in question sometimes called reciprocal tariffs had raised import tax rates up to 50% on India and Brazil and as high as 145% on certain Chinese goods. As a result, American importers paid over $210 billion in these tariffs (as of late August 2025) that courts have deemed invalid."

"The Cobell loss ($3.4 billion) is a large expenditure, but in the context of the U.S. government's overall budget, it's a manageable hit. It's roughly the cost of running the Department of Education or the Department of Veterans Affairs for a year. The potential tariff loss ($200 billion) is another bag of burritos. A loss of this size would be larger than the combined annual budgets of the Departments of Transportation, Homeland Security, Justice, and State."

A federal appeals court determined that numerous tariffs enacted under the IEEPA were illegal, with reciprocal tariffs raising import taxes up to 50% on India and Brazil and up to 145% on certain Chinese goods. American importers have paid over $210 billion in these duties through late August 2025. The court temporarily stayed its decision to allow an appeal to the Supreme Court. If the Supreme Court declines review or upholds the ruling, the government could owe roughly $200 billion plus interest in refunds, necessitating unexpected Treasury issuance, which could push bond prices down and yields up amid heavy existing supply.

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