In the case Learning Resources Inc. et.al. v. Trump, President of the United States et.al., the Supreme Court ruled on behalf of businesses, against the Trump Administration, 6-3. While most are focusing on the court’s ruling that tariffs are taxes, not regulations, we’ve also learned that taxes on trade, paid by Americans, don’t cut the trade deficit.
And don’t expect a rebate.
Before the Great Depression, President Herbert Hoover and his allies in the Congress (Smoot and Hawley) teamed up on a massive tariff bill. Initially designed to be a modest tax bill, the Smoot-Hawley Bill exploded into a massive tariff piece of legislation that triggered promises of retaliation in 1929, all before the Stock Market Crash. By the time Hoover signed the tariff bill into law the following year, the point was moot…or should I say “Smoot?” Global trade and American industries to be “protected” suffered. As the Great Depression got worse, all three (Hawley, Smoot and Hoover) lost their jobs, courtesy of the voters, in the 1930s.
When Trump decided to invoke the International Emergency Economic Powers Act (IEEPA) he claimed that he had some good reasons. He blamed Canada for drug shipments to the USA and to protect American industries, especially in the Midwest. The theory was that tariffs would reduce the trade deficit. They didn’t.
On January 29, 2026, U.S. Bureau of Economic Analysis reported “The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $56.8 billion in November, up $27.6 billion from $29.2 billion in October, revised.”
And it’s not just that the tariffs aren’t significantly lowering the trade deficit. They seem to be causing more problems for American businesses. A new analysis from the JPMorgan Chase Institute reveals that [w]hile these companies scramble for alternative sources to Chinese manufacturing, they’re paying a big price on imports. Following the implementation of tariff rate increases and new universal tariffs in April 2025, monthly tariff payments by these midsize firms have tripled compared with early 2025 levels.”
JPMorgan Chase’s report adds “The burden of these new taxes has been particularly uneven. While the ‘universal tariffs’ announced in April 2025 did capture new firms that previously paid no duties, the JPMorgan analysis found that the vast majority of the surge in government revenue came from firms that were already paying tariffs.
Essentially, the policy has intensified the financial pressure on existing importers rather than spreading the cost widely across new players.”
Moreover, The Washington Post contended “The U.S. merchandise trade deficit hit a record $1.2 trillion last year, despite President Donald Trump’s promise to eliminate it” (by a future date).
If Americans think they’ll recover that tax revenue that we know now was unconstitutional, I have some bad news. According to Fortune Magazine: “Treasury Secretary Scott Bessent has already suggested consumers will be waiting a while — if not forever — for the cash to trickle its way back into their pockets.”
Trump promised new tariffs of 10 percent, even 15 percent, on everyone, under the 1974 Trade Act, which he is entitled to do… for 150 days. Then Trump needs Congressional authorization, which he claims he does not, setting up yet another Constitutional showdown.
But if anyone was hoping for a tariff rebate, or a reduced trade deficit, they shouldn’t count on either.