The Supreme Court ruled 6-3 that the $164.7 billion in tariffs collected under the International Emergency Economic Powers Act (IEEPA) was unlawful. In a constitutional system governed by judicial supremacy, such a decision should have marked the end of the matter. Instead, it has triggered a historic act of executive defiance.

Despite the ruling, the federal government signals it may never return the illegally collected tariffs, offering a logistical excuse rather than a legal defense: The money has already been spent. This position is both unethical and a breakdown of the rule of law. Every American who has filed a tax return understands the principle: If you overpay, you get a refund. The Internal Revenue Service knows what you paid and what you owed; the difference is returned as a matter of routine. The government’s accounting infrastructure exists precisely to make such calculations transparent and prompt.

The same accounting logic applies here. The court ruling was unequivocal: The illegally collected tariffs belong to the entities that paid them. In legal and operational terms, this is indistinguishable from a tax overpayment reflected on an IRS 1040 form. The obligation to return these tariffs does not depend on their current location within the Treasury, but on the legality of their collection.

However, the Trump administration’s position on returning this $164.7 billion has evolved with remarkable speed, pivoting through four distinct and contradictory narratives.

First, at every level, the government assured the courts that tariff refunds would be guaranteed, simple and prompt. It was only because of these promises that the courts allowed the collection to continue while the appeals were pending.

Second, Treasury Secretary Scott Bessent told the public the money was difficult to locate, having been commingled with general federal revenues. This claim swayed Supreme Court Justice Brett Kavanaugh to note this version of the administration’s fabrication in his dissent, which will be forever linked to this administration’s subterfuge.

Third, reports confirmed by five sources to Politico revealed the administration was actively negotiating with importers to accept partial repayment. The Treasury began offering faster processing only to businesses willing to voluntarily forfeit a portion of what the Supreme Court determined they are legally owed in full.

Fourth, Politico then shifted to the latest ploy that officials across the current administration are scrambling to devise any legal strategy available to keep money the Supreme Court has explicitly said was illegally collected.

These conflicting stances are more than political flip-flopping; they represent a betrayal of the judicial system.

Bessent’s rhetoric has been particularly jarring. Hours after the Supreme Court’s ruling, he told the Economic Club of Dallas he had a “feeling” the American people “won’t see it.” On Fox News, he characterized court-ordered refunds as the “ultimate corporate welfare.” This is the same secretary who told Reuters in January, before the ruling, that refunding the money “won’t be a problem.”

The claim that these refunds are difficult to process does not survive basic scrutiny. Every IEEPA tariff payment was processed through U.S. Customs and Border Protection’s Automated Commercial Environment (ACE). This centralized digital system recorded every transaction with precision: importer identity, entry number, commodity classification and payment date.

The federal government does not simply misplace $164.7 billion. It processed those payments one transaction at a time through the ACE system specifically designed to track this information for audit and transparency. As Democratic Sen. Maria Cantwell of Washington noted, the data exists, the documentation is complete and the obligation is undisputed.

By ignoring this, the administration is pushing 300,000 American importers, including major employers such as Costco and FedEx, toward financial instability. Many small businesses paid these illegal tariffs at great cost, some reaching the brink of bankruptcy. They are awaiting refunds that are already documented in a federal database accessible at the touch of a button.

The government obtained favorable procedural rulings by promising exactly what it now suggests will never happen. As former Acting Solicitor General Neal Katyal has noted, those promises were binding legal commitments. Senate Democrats, led by Minority Leader Chuck Schumer, have rightly called the response “stonewalling,” noting that these funds do not belong to the federal government.

The strategy of pressuring importers to accept partial repayment is a transparent attempt to delay a mandated obligation. It raises a question every taxpayer understands: Would the IRS ever be allowed to negotiate down a refund you are legitimately owed?

Each new tactic moves the executive branch further from compliance and closer to open defiance of a binding judicial ruling.

Why is the president fighting so hard to retain funds that were never legally his to collect?

The Supreme Court has ruled, the records exist and the legal obligation is unmistakable.

The government knows exactly where the money is and who paid it. Claiming that compliance is optional and the refund can be negotiated is not simply an administrative oversight. It is an intentional decision to ignore the country’s supreme law.

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Mark Pirie is a trauma psychologist and independent researcher. Christopher Tang is distinguished research professor at the UCLA Anderson School of Management.

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