By Kaden Buss
The Supreme Court struck down most of President Donald Trump’s tariffs two weeks ago, ruling that the administration lacked the authority to impose taxes on foreign goods.
For downtown Lexington business owners, the decision offered some relief. But they say their pain is far from over.
Trump responded to the Supreme Court’s ruling by imposing a 10% global tariff for 150 days under a different authority. Businesses are now expected to receive refunds on tariffs already paid, according to the National Retail Federation, but that could take up to three years.
“We are losing money from our bottom line, and we’re losing customers because they’re not prepared to pay the extra money,” said John Morman, board president of Main Street Lexington and owner of Celtic Tides, a gift shop that imports goods from Great Britain. “It’s hurting us from both ends.”
Across downtown Lexington, stores that import goods from overseas say tariffs have raised their costs anywhere from 10% to 35% over the past year.
“Every time I reorder and restock, I am changing the price tags on my needles,” said Ellie Boylan, owner of House Mountain Yarn. “One pair of knitting needles has gone from $12.50 to $16 over the past six months.”
For many merchants, the bills arrived in the mail with no warning.
“I paid the invoice, and it was the same as usual,” Boylan said. “And about two or three days after that, I got another invoice from UPS regarding the tariffs they paid on the shipment. It was a little bit more than what I paid for the actual product.”
Siobhan Deeds, owner of Pumpkin Seeds, experienced the same surprise cost at her store, which sells clothing, ornaments, and stationary items – some of which come from England.
“I ordered about $340 worth of ornaments, and I had to pay $117 over that,” Deeds said. “They actually wanted the money on delivery.”
At Celtic Tides, surprise bills from shipping companies arrived a few weeks after the product was sold.
“You know, $211 for one kilt is essentially 25% of our cost, which means our margin is negligible,” Morman said. “We’re basically doing it for free.”
Meg Hall, owner of Cheese to You, primarily carries domestic products, but also felt the pain of tariffs. A shipment of dog toys from England arrived with a $130 tariff bill on a $220 purchase.
“The UPS guy came and said, ‘You have a balance,’” Hall said. “I’ve been in business 16 years. I’ve never had that before.”
Colin Reid, co-owner of Lex Running Shop and professor of accounting at W&L, said the damage runs deeper than just price hikes.
“It’s not just that the price is $5 or $10 more,” Reid said. “It’s that we’re all unsure about the future.”
That uncertainty has a ripple effect on every purchase a customer makes, according to Reid.
“When somebody hears that news, they buy the same groceries they buy every week, except now they’re 30% more. So, they start to get nervous and start to save,” he added. “When there’s not spending, that’s what hurts our business.”
Hall said she’s experienced this firsthand.
“The idea that prices are going up are making people not shop as often,” Hall said.
Even with the Supreme Court’s ruling, relief is not coming anytime soon. The refund process is expected to run through U.S. Customs and Border Protection and the Court of International Trade. Morman, who sits on the NRF’s small business council, said the timeline for refunds is unclear.
“They have no mechanism to set up a claims process, no mechanism to adjudicate claims, and no means of processing actual refunds,” Morman said. “We have no optimism whatsoever that anything’s going to happen for at least three years.”
The NRF estimates that approximately $180 billion in tariff charges have been collected above normal rates. Morman added that businesses will likely need to file claims through shipping services like UPS, DHL, or FedEx.
Reid said that retailers who buy goods wholesale from large corporations may not be eligible for claims.
“For any business that directly paid the tariff, they may be able to file for a refund,” Reid wrote in an email. “Any business that buys goods wholesale to resell will not be able to file for a refund.”
According to Reid, most large corporations minimized their tariff costs by raising prices for everyday Americans.
“The consumer pays for the tariff – as many economists have pointed out,” Reid wrote. “However, do you think the consumer will get the tariff refund?”
The NRF released a statement on Feb. 20 calling for a seamless refund process for U.S. importers.
“We urge the lower court to ensure a seamless process to refund the tariffs to U.S. importers,” the release said. “The refunds will serve as an economic boost and allow companies to reinvest in their operations, their employees and their customers.”
For small businesses that do qualify for refunds, Morman said, that income may be taxable.
“It looks like if we do get refunds on tariff costs, that will then be shown as business income,” he said. “It’s going to get built into your tax return and probably you’ll be taxed on it.”
As of now, the only thing business owners can do is start collecting paperwork and preparing to file claims, according to Morman.
“There’s no timeline,” Morman said. “Just get ready.”