Tariff refunds add a modest lift to U.S. Q3 growth after Supreme Court reversal

After the Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act, the federal government is returning an estimated $166 billion to importers and businesses. Apollo Global Management’s chief economist Torsten Slok calculates that these refunds will add roughly 0.2 percentage points to the third-quarter GDP growth, keeping the annualized rate above 4% in the Atlanta Fed’s GDPNow forecast.

The economy had contracted at a 0.5% annualized rate in Q1, rebounded to 3.0% in Q2, and is now expanding despite higher consumer prices and ongoing pressures from the Iran conflict. Inflation remains at 2.7% year-over-year, with core prices up 0.3% in July. The refunds have turned net customs receipts negative, a shift the analyst describes as a fiscal expansion that boosts corporate profits but does not create new recurring activity. The Atlanta Fed cautions that only about one-third of the money may fund investment or hiring, while major firms such as Walmart, Apple, Ford and Nike have already reported receiving billions in reimbursements.