MICHEL MARTIN, HOST:
I want to bring in NPR's chief economics correspondent Scott Horsley for a closer look at how the Supreme Court's ruling will affect the U.S. economy, something that Nina was just touching on there. Scott, good morning to you.
SCOTT HORSLEY, BYLINE: Good morning.
MARTIN: Just give us a sense of the scope of this. How much money is at stake here?
HORSLEY: There's a lot of money at stake. You know, the federal government has been collecting about $30 billion a month in tariffs, and this ruling today invalidates about half that total. The number crunchers at the Yale Budget Law say this - Yale Budget Lab say this decision effectively lowers the average tariff rate in the United States from about 17% down to about 9%. So about half the money the government's been taking in in tariffs is now struck down by this decision, so it's a big economic decision.
MARTIN: And the implications for the federal budget are what? Certainly, there are implications for - sort of administratively, as Nina just pointed out. As, in fact, Justice Kavanaugh sort of pointed out, there's some administrative concerns here. But what about the implications for the budget?
HORSLEY: Yeah, it's substantial but not, you know, critical. The tariff revenue, for example, is about 5% of total government revenues. So, you know, it's a big dent. But in the scale of the federal government, it's not, you know, a fatal blow or anything like that. Now, the administration and Republicans in Congress were counting on this tariff revenue to offset a lot of the cost of the big tax cuts that were extended last summer. And now a lot of that tariff revenue is not going to materialize. So the deficit is going to be bigger.
MARTIN: And this whole question of refunds, this is something that obviously came up in oral argument that Justice Kavanaugh, among others, raised this question of, well, how will these refunds actually take place? Is it just assumed that businesses are going to seek refunds for these taxes, which is what tariffs are...
HORSLEY: Oh, absolutely.
MARTIN: ...That they paid?
HORSLEY: Absolutely. I mean, businesses have forked over tens of billions of dollars to the federal government that the high court now says was - you know, the government was not entitled to collect. So they're absolutely going to be lining up. Some of them have already filed paperwork seeking refunds. And, yes, I did share with Nina what I was told by veteran trade lawyers, which is that, yeah, this is messy and cumbersome, but it's doable. And given the amount of money that's at stake, businesses are absolutely going to be putting in for refunds.
And, you know, these customs duties are all computerized. You can go down the bill of lading and see which of the tariffs that were paid are covered under this ruling, which were not. And so it's a manageable process. It will be messy and it will take effort. But if you're a business that's forked over, you know, a sizable chunk of money to the federal government, you bet you're going to put in for it. I mean, filing one's taxes is not much fun either. But if you expect to get a refund, you will absolutely go through the headache of doing it.
MARTIN: And what about consumers? I mean, we've all been hearing from different businesses over the course of this time, talking about the impact on them. There are some businesses who have stopped carrying certain product lines because they couldn't afford to pay the tariffs, in some cases, to get them, you know, out of the docks. I mean, there are some businesses that have tried to pass on cost increases to consumers. You know, the president has not reacted kindly to that. In fact, he sort of jawboned certain businesses to try to keep them from doing that, but some of them clearly have. Will consumers see a benefit from this?
HORSLEY: Well, conceivably. The impact of the tariffs on consumer prices has been visible, but maybe more modest than I think a lot of folks expected. You can certainly see where the tariffs are having an effect or were having an effect, for example, on coffee prices before the coffee tariffs were lifted. There are certain imports where you can certainly see an impact, but it's not been huge. And so if those tariffs go away, some of that price pressure will come off. But it's not going to overnight, you know, drop the inflation rate back down to 2%.
MARTIN: What about sort of the core rationale for this, which is tariffs were supposed to give a boost to domestic manufacturers? Scott, did that happen?
HORSLEY: Yeah, there's very little evidence of that. The manufacturing sector has really been in a slump for the better part of a year. We lost over 100,000 manufacturing jobs in 2025. And the reason is simple. You know, most factories rely on some imported components. A lot of factories also export, and those exports were challenged because of this. So I'm sure there are U.S. factories that have been able to charge higher prices because their foreign competition was subject to tariffs that they were not. But on the whole, this tariff regime has not been a plus for the U.S. manufacturing sector.
MARTIN: And, Scott, how are the markets reacting?
HORSLEY: It's been pretty muted. The reaction has been pretty muted so far. I mean, when you think back to, for example, when these tariffs went into effect, the worldwide reciprocal tariffs back in April, the stock market just tanked. And, in fact, that's one reason that some of those tariffs were then later reduced. The reaction to this has been much more muted. The stock market is up, but not up wildly.
And I think that's an acknowledgment by the markets that, you know, the president still does have other avenues. He will certainly try to impose other tariffs to replace the ones that the high court struck down. But keep in mind, this is a president whose own economic approval ratings have really been challenged by people's concerns with affordability. So slapping import taxes on a whole lot of new goods, maybe something that the White House wants to slow walk.
MARTIN: That's NPR's chief economics correspondent Scott Horsley. We're also joined by our veteran Supreme Court watcher, Nina Totenberg. Thank you both so much for joining us.
HORSLEY: Good to be with y'all.
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