The trend of moving manufacturing to countries like Mexico or Vietnam to avoid China tariffs is often driven by Chinese companies themselves. They establish clone factories abroad, sometimes with Chinese labor, meaning the economic benefits largely still flow back to China.
Trade lawyers express '100% certainty' on tariff refunds because the Department of Justice itself argued in a prior court filing that refunds would be issued if the government lost the case. This previous admission makes it difficult for the government to now refuse payment.
For small parcel shipments, the shipping carrier (e.g., FedEx) is legally the 'importer of record' and receives the tariff refund, not the end consumer who was actually billed for it. This situation exposes carriers to potential class-action lawsuits and significant brand damage.
Despite having no legal claim, large retailers like Walmart are pressuring their suppliers to share tariff refunds. They use their immense purchasing power as leverage, threatening to delist products if suppliers don't share a portion of the government payout.
Fast-fashion retailer Shein avoids the perpetual sales common in retail by limiting its factory purchase orders to a maximum of 200 items per style. This prevents overstocking and the need to dump excess inventory at a discount, protecting its margins.
The share of U.S. trade using a foreign 'importer of record' more than doubled from 9% to 20% since last April. This structure creates a significant incentive for tariff fraud by allowing overseas factories to potentially undervalue goods upon import.
A secondary market for tariff refund claims saw prices leap from 25 to 52 cents on the dollar immediately after the Supreme Court ruling. This reflects a rapid repricing of legal risk, with some CEOs now considering selling their claims for 70 cents.
Experts predicted air freight prices would plummet after the U.S. ended the duty-free 'de minimis' rule for China. Instead, prices remained high because a massive, simultaneous boom in shipping components for AI data centers absorbed all the excess capacity.
On February 6th, just weeks before a Supreme Court ruling expected to trigger billions in tariff refunds, U.S. Customs switched from paper checks to electronic payments. This timely modernization suggests the government may have been preparing for the operational load of a massive payout event.