While large corporations have managed to absorb the extra costs associated with President Donald Trump’s tariffs, small businesses have suffered significantly. These businesses are now seeking to recover losses after the U.S. Supreme Court ruled the tariffs unconstitutional.
In a decisive 6-3 ruling on February 20, the Supreme Court criticized Trump’s approach, declaring his use of the Economic Emergency Power Act to impose tariffs unconstitutional. However, the justices did not provide guidance on how to handle refunds for the approximately $175 billion collected thus far.
For now, the next steps regarding refunds may be irrelevant.
In response to the ruling, Trump quickly shifted to another legal justification—Section 122 of the Trade Act of 1974—and issued an executive order to maintain the tariffs. This new global import tariff of 10 percent on nearly all untaxed goods took effect shortly after the court’s decision.
Trump also expressed intentions to raise the tariff to 15 percent, the maximum permitted under Section 122. These tariffs are temporary and set to expire after 150 days unless Congress approves an extension.
Small Businesses Should Be Prioritized, Say Democrats
Democratic lawmakers and advocates for small businesses assert that Main Street enterprises should be prioritized for refunds. A recent analysis from the Federal Reserve Bank of New York indicated that nearly 90 percent of the financial burden from tariffs has fallen on consumers and small businesses.
According to the U.S. Small Business Administration, small businesses make up 99.9 percent of all U.S. businesses, employing about 45.9 percent of the population, or 62.3 million individuals.
On Monday, Democratic Senators Ron Wyden (Oregon), Ed Markey (Massachusetts), and Jeanne Shaheen (New Hampshire) introduced a bill mandating that Customs and Border Patrol issue refunds within 180 days and include interest on the refunded amounts.
“Trump’s illegal tax scheme has already inflicted lasting harm on American families, small businesses, and manufacturers who have faced relentless waves of new tariffs,” stated Wyden, emphasizing that the “essential first step” to remedying the situation is to “return money to the pockets of small businesses and manufacturers as quickly as possible.”
The proposed legislation prioritizes refunds for small businesses and encourages larger companies to pass on their savings to consumers. While the bill is unlikely to become law, it highlights the pressure Democrats are placing on the Trump administration, which has been resistant to returning tariff revenues.
97% of Importers Are Small Businesses
According to a report from the U.S. Chamber of Commerce, approximately 97 percent of U.S. importers are small businesses, highlighting their disproportionate burden from tariffs.
These enterprises often operate on tight profit margins and limited financial flexibility, and tariffs have more than tripled for many of them.
Even minor tariff increases can compel them to either raise prices for consumers, absorb the additional costs and diminish their profits, or cut back on inventory or operations.
On average, small business importers paid around $25,000 more per month in tariffs from April through September 2025 compared to the same period in 2024, as per an analysis by the Center for American Progress, a left-leaning think tank in Washington, D.C. Businesses with fewer than 50 employees incurred over $86,000 on average during this timeframe.
‘This Was A Raw Deal’
Richard Trent, executive director of Main Street Alliance, a network representing 30,000 small business owners, stated that small businesses were faced with a series of challenging decisions.
“This was a raw deal,” Trent remarked in a statement.
“They had to absorb increased costs or pass them on to customers. This isn’t economic strength; it’s a squeeze on Main Street,” he added.
According to a survey conducted by the group:
- 81.5 percent raised prices to offset tariff costs;
- 31.5 percent anticipated laying off staff;
- 41.7 percent postponed expansion plans;
- Only 14 percent believed they could realistically shift production to the United States.
Main Street Alliance is collaborating with lawmakers on reimbursement strategies, building on bipartisan proposals previously introduced to refund small businesses affected by excessive tariffs.
“Every cent taken from small businesses under this framework should be returned,” Trent asserted, noting that refunds would help restore working capital, stabilize hiring and investment, and alleviate the inflationary pressures that tariffs have exacerbated.
Many businesses faced tariff rates exceeding 100 percent, with no grace period and frequent revisions. In some instances, rates surged from 104 percent to 125 percent to 145 percent within days, causing planning paralysis for manufacturers, retailers, restaurants, and service providers, according to Trent.
“Our members weren’t just facing higher costs; they were dealing with chaos,” he explained. “You can’t build a factory in two weeks. You can’t grow coffee in Minnesota. And you can’t plan payroll when tariff rates change overnight.”
Large Corporations Pursue Legal Action
Over 1,000 companies, including major U.S. corporations like Costco and Revlon, have filed lawsuits in the U.S. Court of International Trade to recover costs from the unlawful tariffs. Many of these lawsuits were already in progress before the Supreme Court’s ruling.
Small businesses and consumers face challenges in recouping funds already paid, as there is no “legal mechanism” available for them, according to Massachusetts Democratic Senator Elizabeth Warren in a statement.
“In contrast, large corporations with their teams of lawyers and lobbyists can sue for tariff refunds and pocket the money themselves,” she added. “This is just another example of how the system is rigged.”
In his dissenting opinion, Justice Brett Kavanaugh noted that refunds could have “significant consequences for the U.S. Treasury.”
In January, Treasury Secretary Scott Bessent expressed confidence that refunding the money “won’t be a problem,” although he cautioned it could become a “corporate boondoggle” regarding companies like Costco sharing the funds with their customers, as reported by Reuters.
FedEx, which filed a lawsuit on Thursday, stated that if refunds are issued, they will be distributed to shippers and consumers who initially bore the charges.
“The timeline for this process and the specifics of requesting and issuing refunds will depend partly on future guidance from the government and the court,” FedEx mentioned in a statement.
It may take anywhere from several weeks to over a year to process refunds for tariffs already paid, Bessent told Reuters.
Irreversible Damage Already Done
Even if refunds are processed, some small business owners believe the damage caused by the tariffs cannot be undone.
Tariffs can lead to business closures or workforce reductions, creating ripple effects throughout communities, including fewer job opportunities and losses to the local tax base. In fact, small businesses laid off 120,000 workers in November, marking the highest monthly total in five years.
Tariffs also contributed to a 12 percent increase in retail closures, totaling over 8,200 stores in 2025, which is one of the highest years on record for store shutdowns, according to retail analytics firm Coresight Research.
“When I say the damage cannot be refunded, I mean that our market has suffered significant losses due to job losses and inflation, and these issues won’t be resolved by a tariff refund,” stated Tom Wetzel, owner of Red Raven Games, a board game publishing company in Utah, in an interview with NBC News.
According to the Center for American Progress analysis, 74 percent of small business owners are concerned about their survival in the coming year due to the tariffs. They are making tough decisions, such as raising prices and delaying growth, which they believe threatens their long-term viability.
“I had to raise my prices, but I feel that this has made customers less inclined to shop with me, especially since my target demographic is Black audiences, who are also affected by layoffs,” shared 32-year-old Domonique Brown, owner of Domoink, a home decor and apparel brand in Pomona, California, in an interview with NBC.
Jennifer Bergman, who ran West Side Kids, a toy store in New York City founded by her mother and in operation for 44 years, stated that the tariffs were “the last straw.” NPR reported her saying, “Tariffs are essentially a tax.” She noted that vendors stopped shipping some of the best-selling toys, and she had to raise prices at a time when consumers were tightening their spending.
“This led to a decline in our sales,” she explained.
