The $166 Billion Loyalty Test

On Monday morning, a small-business owner named Aaron Powell had his spreadsheet ready. He imports bike parts for Bunch Bikes, and the tariffs Trump imposed last year had what he called an "existential" impact on his company. He uploaded his data to the new CAPE portal within a minute of it going live¹. Sarah Wells, who makes bags for breastfeeding mothers, filed within two minutes. Both are members of We Pay the Tariffs, a coalition of over 1,000 small businesses. Both expect modest payouts — $120,000 and $20,000, respectively — that might help them recover from a year of chaos.

Twenty-four hours later, President Trump went on CNBC's Squawk Box and turned the entire process into something else. Asked about Apple and Amazon — companies that have not yet filed for refunds, reportedly because they worry about offending him — Trump said: "It's brilliant if they don't do that. If they don't do that, I'll remember them."² He then called companies pursuing refunds "the enemy"³ and said the Supreme Court "could have helped us" by letting the government keep money it collected illegally.

I want to walk through what is actually happening here, because the details are worse than the headlines suggest.

The backstory is straightforward. In February, the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump⁴ that the International Emergency Economic Powers Act does not authorize the president to impose tariffs. Chief Justice Roberts wrote that the words "regulate" and "importation" in IEEPA "cannot bear such weight." The Court invalidated both the "reciprocal" tariffs from April 2025's "Liberation Day" and the fentanyl-related tariffs on Canada, Mexico, and China. The government collected roughly $166 billion⁵ under that illegal authority, and the Court of International Trade ordered refunds. CBP built the CAPE portal to process them.

Now, I should be fair about one thing. The portal itself, considered purely as an administrative mechanism, is reasonably designed. Small businesses like Powell's and Wells's reported a straightforward upload process. Over 56,000 importers registered⁶ before launch day. CBP estimates 60-to-90-day processing times. The system handles refunds on a consolidated basis rather than entry-by-entry, which is genuinely more efficient. If you evaluate it as pure plumbing, it works.

But plumbing doesn't exist in a vacuum. And Trump's CNBC comments transformed the context completely.

Here is the core problem. When the president publicly states that he will "remember" companies that forego money the courts say they're owed, he is converting a court-ordered restitution process into a loyalty test. That is not an overstatement. Consider what a company like Apple now faces: it can claim refunds it is legally entitled to and risk the displeasure of a president who controls regulatory policy, antitrust enforcement, and future tariff decisions — or it can leave money on the table and buy goodwill with an administration that has shown it rewards cooperation and punishes dissent. The choice, as one analyst put it¹⁶, is "between their money and his favor."

This is not theoretical. The administration is already working to reimpose tariffs through other legal channels. Treasury Secretary Scott Bessent said last week⁵ that Section 301 investigations could restore tariff levels "by beginning of July." For a company weighing whether to claim a refund, the implicit calculation is clear: take the money now, face new tariffs — and potentially worse treatment — in three months.

That dynamic is corrosive on its own. But the structural problems go deeper.

Consumers are locked out. Under U.S. customs law, only the "importer of record" — the entity that filed paperwork and paid duties at the border — can claim a refund. Consumers cannot apply through CAPE. As NPR reported⁷, experts say consumers will "probably not" see refund money. This matters because the economic research is unambiguous about who actually paid these tariffs. A Kiel Institute study from January 2026¹ found that 96% of the tariff burden was passed through to U.S. buyers. The Congressional Budget Office estimated 95%¹⁵. The Congressional Joint Economic Committee calculated¹ that American families paid more than $1,700 each in tariff costs.

So the system returns $166 billion to importers who passed the costs on, with no legal mechanism requiring those importers to pass refunds back down. A handful of companies have made voluntary pledges — FedEx and UPS say they'll return money to shippers⁸, Costco's CEO told investors the company would return value through "lower prices" — but as Senator Ed Markey documented in March⁹, companies he wrote to "offered no firm commitment to refund their customers beyond what is legally required." Consumers are now filing class-action lawsuits against Costco, FedEx, and others¹⁰, trying to claw back money through the courts because no administrative path exists.

I understand the counterargument here. Importers are the legal entities that paid duties. Customs law has always worked this way. You can't refund individual consumers for diffuse price increases spread across thousands of product categories — it's administratively impossible. That is all true. But acknowledging the administrative constraint doesn't make the outcome less perverse. When the government collects $166 billion through an illegal tax, and the refund goes to intermediaries who passed 96% of the cost downstream, the people who actually paid get nothing. That's not a minor technical limitation. It's the whole story.

And then there's the secondary market. Hedge funds have been buying tariff refund claims¹¹ from small importers at steep discounts. NPR reported¹² that trades have been going for around 45 cents on the dollar, up from 20 cents before the Supreme Court ruling. Fortune estimated¹¹ that between 15% and 50% of claims could be sold to liquidation specialists or hedge funds, with one executive calling it "a $40 billion opportunity." Senator Markey called it profiteering, warning that small businesses "cannot afford a costly legal battle" and are "disproportionately tempted to trade away their claims." The pattern is predictable: small importers who need cash now sell their claims at a discount. Large firms and hedge funds with patience and legal resources collect in full. The system selects for scale and political sophistication.

Benzinga crunched the numbers from CBP court filings¹³: 8% of eligible importers were claiming more than 72% of the refund value, with an average big-filer claim of $4.5 million. The remaining 300,000-plus small importers are splitting $46 billion, averaging about $150,000 each. Small businesses, as Fortune reported¹⁴, lack the personnel and bandwidth to navigate the process — as one coalition leader put it, "what you end up with is small-business owners or someone who does product development, who is now expected to be a tariff expert."

Let me state my position plainly. The CAPE portal, as a technical system for processing court-ordered refunds, is not inherently objectionable. The problem is everything surrounding it. Trump's public statements have transformed a legal obligation into a political favor, where companies that forego money they're owed buy presidential goodwill and companies that exercise their legal rights are labeled enemies. The structure excludes consumers who bore virtually all of the economic cost. The complexity and delay advantage large firms and Wall Street intermediaries over the small businesses that were most damaged. And the administration is simultaneously working to reimpose equivalent tariffs through other authorities — meaning the refund may be functionally temporary, a brief cash-flow reprieve before new duties arrive in July.

The strongest objection to my framing is that no refund system could have been designed to reach consumers directly — the administrative machinery doesn't exist. I accept that. But that constraint is an argument for not imposing illegal tariffs in the first place, not an argument that the refund process is fair. And the political overlay — the "I'll remember them" comment, the classification of claimants as "the enemy" — is not a constraint of customs law. That is a choice. It is a choice to convert restitution into leverage.

What to watch: whether Apple and Amazon eventually file claims (and what happens to them when they do), whether the administration drags out processing timelines beyond the 60-to-90-day estimate, and whether the new Section 301 tariffs expected in July are calibrated to functionally recapture the refund pool. If companies that file refund claims face higher tariff rates in the next round than companies that don't, the loyalty test will have become visible in the data. I expect at least some version of that pattern to emerge.