Tariffs Are a Wild Card for the Economy Again

Will Trump’s new 15% tariff meaningfully change trade flows and business operations?

Will the federal government still be able to reap trillions in tariff revenues that could help slow the surging national debt?

Will billions of dollars from the overturned tariffs flow back to the hundreds of businesses demanding refunds?

The answers will largely turn on how aggressively the Trump administration pushes to permanently replace the struck-down tariffs with new ones, and how trade partners and U.S. political leaders respond. On the one hand, higher tariffs allow the government to bring in more revenue to shrink the runaway government debt, and help re-energize sectors of the U.S. economy. But a lower tariff rate—as well as potential tariff refunds—would likely keep more money in the hands of U.S. businesses and consumers, which could spur economic growth.

The decisions will help determine the direction of an economy that powered through an avalanche of change in 2025 and emerged in the new year on a better-than-expected footing.

By comparison, over the course of 2025, the effective tariff rate soared over 10 percentage points, to levels not seen for decades.

The economic effect of that sizable increase wasn’t nearly as dire as many economists predicted. But it wasn’t negligible either. U.S. companies and consumers shouldered more than 90% of the costs from Trump’s tariffs for most of 2025, according to the Federal Reserve Bank of New York.

The new tariffs can only stay on for a maximum of 150 days because of the specific law Trump used to impose them. Assuming they end after that time, the Yale Budget Lab estimates the average effective tariff rate will drop to 9.1%. Whether that level sticks is unclear, however, as Trump has vowed to add more duties using other legal means.

Some companies could decide that a floor on tariffs is here to stay and move forward with decisions like raising prices to transfer more of the tariff burden to consumers. Others may continue to put off investment and hiring.

“The whole uncertainty of tariff policy is really not favorable for employment or investment in the real economy,” said Gary Clyde Hufbauer, economist at the Peterson Institute for International Economics. “The temptation to postpone business decisions will be very strong.”

Ford Motor recently reported an additional $900 million tariff hit because of an unexpected change in a tariff-relief program.

Clifton Broumand, owner of a Maryland-based business that assembles waterproof keyboards and computer mouses for the healthcare industry, is looking to shift his purchases of silicone parts from China to Mexico to avoid tariffs. “Nobody makes what we need in the U.S.,” he said.

To make his planning easier, he is hoping that Trump doesn’t change Mexico’s arrangement with the U.S. that allows many of its products to enter duty-free. Negotiations over the terms of USMCA, the free-trade deal between the U.S., Canada and Mexico, are scheduled for later this year.

Now, even with Trump imposing a fresh 15% tariff, estimated revenues will be cut by about half: The Lab estimates that Trump’s tariff regime will raise $1.3 trillion in total if 15% stays in effect for 150 days. In the scenario that the 15% becomes permanent, Trump’s tariff regime would raise $2.2 trillion.

U.S. Treasury Secretary Scott Bessent has said that he expects his department to take in about the same amount of tariff revenue in 2026 as before, with the help of Trump’s newly imposed tariffs.

The Trump administration raised more than $133 billion in Ieepa tariffs as of mid-December. The Supreme Court didn’t address refunds in its ruling, and Trump said he expects it will be litigated “for years.” Hundreds of businesses have already filed cases with the Court of International Trade, a New York-based federal court, to increase the likelihood of getting money back.

Broumand, the keyboard business owner, says he paid tariffs totaling $35,000 last year, but has yet to figure out how much of that might qualify for a refund. “If there is a class-action lawsuit [to recover money], I’ll join it,” he said. “But the problem is, even with a class action, how much is the lawyer?”

“Rather than trying to build business and sales, I waste my time trying to manage this,” he said.

The Trump tariffs before the Supreme Court ruling amounted to an average tax increase per U.S. household of $1,000 in 2025, and would have added an increase of $1,300 in 2026 had Ieepa stayed in place, according to the Tax Foundation. After the recent changes, the average burden per U.S. household will be $700 in 2026, according to a Tax Foundation forecast, about $250 of which will come from the new, temporary 15% tariff.

When asked Friday about the possibility of a refund for consumers, Bessent said, “I got a feeling the American people won’t see it.”

Sen. Elizabeth Warren (D., Mass.) has called on the administration to set up a legal mechanism in which consumers and small businesses can recoup money they paid. “It is the job of the secretary of the Treasury to put in place a way for the American people to get the money that was illegally taken from them,” she told CNN Friday. “That is Scott Bessent’s job.”

Write to Chao Deng at chao.deng@wsj.com