At 12:01 this morning, the United States officially ended collection of its International Emergency Economic Powers Act (IEEPA) tariffs, which were ruled unconstitutional by the Supreme Court last Friday. By now, you’re probably aware that President Trump has replaced these tariffs with a 15 percent levy based on Section 122 of the Trade Act of 1974, which allows for a tariff of that size for up to 150 days to deal with a balance-of-payments deficit.

The administration has been planning this switch for months, once the Supreme Court’s position on IEEPA became clear at oral arguments. It is interpreting a trade deficit, which has essentially not changed at all despite nearly a year of tariffs, as fitting the balance-of-payments standard; some experts do not agree with that interpretation, meaning that litigation could ensue on these tariffs, too. As these tariffs must not extend beyond July, such cases will likely not end before yet another version is rolled out, in which Trump will use Section 301 and Section 232 investigations to levy tariffs on countries and sectors. These have specific processes that must be followed, which is not Trump’s strong suit.

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The White House is confident that this will substantially rebuild the tariff regime the Court struck down. But Trump has two problems. First, in all likelihood he can’t yell tariffs and instantly bully the world anymore, which was his main goal with tariffs anyway. His remaining options require longer-term planning; the only tariff available with less stringent fact-finding, an open-ended levy up to 50 percent under Section 338 of the Smoot-Hawley Tariff Act of 1930 on countries that the president defines as discriminating against U.S. trade or commerce, has never been tried before and would likely also lead to a lawsuit.

But more important, the administration must figure out some way to return the money it’s collected from illegal IEEPA tariffs for more than ten months. And this tug-of-war will roil the rest of Trump’s presidency and beyond, with the possibility for a rerun of this scenario if the newly implemented Section 122 tariffs or others get invalidated by the courts as well.

Importers paid, by some estimates, $175 billion in IEEPA tariffs since they were imposed last April. In its ruling, the Court did not resolve how they would be paid back. While some CEOs may just clam up rather than run afoul of Trump, lobbying organizations like the National Retail Federation and the U.S. Chamber of Commerce are already demanding their money back through a rapid, automatic process. Costco and about 150 other companies already had existing lawsuits before the Court of International Trade for refunds. More lawsuits are expected; FedEx filed one on Monday.

That won’t happen without a fight. Though the administration insisted multiple times in court cases that it would promptly refund any tariffs found to be invalid, Treasury Secretary Scott Bessent is now echoing Trump by saying that litigation over the refunds will play out over years. Each individual importer will have to make their case.

Of course, those business groups are being substantially quieter about the fact that they passed on the cost of these tariffs to their customers. According to Germany’s Kiel Institute, American consumers paid well over 90 percent of the cost of tariffs. There’s no mechanism in place for the American people to get any refunds on payments for illegal tariffs at all. Democrats are pulling off political stunts, like Illinois Gov. JB Pritzker sending the White House an invoice. (So did Nevada State Treasurer Zach Conine.) But the tell here is that the actual legislation on tariff refunds that Democrats have introduced is all about payments to businesses and manufacturers.

“I think at the end of the day, the administration is going to be completely happy if the largest firms pocket this as profits as the rest of us hold the bag,” said former Consumer Financial Protection Bureau director Rohit Chopra on MS NOW.

There’s a third factor here: the tariff refund traders. If you’re a business that paid a lot of tariffs, and you’re looking at the possibility of a yearslong wait to get paid, you might believe that selling the right to collect at a discount, and then not incurring the legal fees or the hassle, is a reasonable trade.

There is some reporting out there that Cantor Fitzgerald, the bank once run by Commerce Secretary Howard Lutnick and now run by his two sons, was out making these trades last year, and is due for a huge payday on a policy that Lutnick helped craft. Cantor Fitzgerald is now denying that they ever made this trade, but I’m pretty sure somebody did. Betting on such claims is a perfectly normal trade on Wall Street, and in the tariff context, such trades were conducted during Trump’s first term.

The New York Times, The Washington Post, and Bloomberg all reported last fall that Wall Street banks like Jefferies and Oppenheimer were structuring the trades, matching companies willing to sell their claim to specialized hedge funds willing to buy it. One report suggests that hedge funds are in possession of “hundreds of millions” in tariff refund claims, a small amount of the total but significant in terms of the adversary Trump will face in court.

Participants in these kinds of vulture fund trades can be ruthless, as we saw with holders of Argentine and Puerto Rican debt. These are not piddling small businesses that fear being swamped with legal fees, but well-heeled financiers with infinite patience, experienced lawyers, and lots of practice. Much like, say, Donald Trump, only on the other side of this bet. And whatever precedents they secure will be available to everyone else. “It will be the people who can afford lawyers, the people who can afford protracted legal battles, who will be first in line,” said former FTC commissioner Alvaro Bedoya on that same MS NOW program.

Trump’s Tariffs Weren’t Really About Trade Policy

There are other elements to this. Countries that made trade deals with the U.S. under threat of the IEEPA tariff are now getting worse deals than the countries that held out. At some point, they might rethink those deals. Already, the Section 122 tariffs have led the European Union to suspend prior trade agreements. The rough certainty that had settled in over the past few months has given way to chaos and uncertainty. Stocks tumbled on Monday.

And as mentioned before, the same exact thing could happen if Section 122 tariffs get struck down in the future, or if other unilaterally imposed Trump tariffs get tossed out for some reason. You could have these overlapping refund fights and reimposition of new tariffs for the indefinite future.

Trump hasn’t actually done as much on tariffs as he has led people to believe. He actually scaled back sector-specific tariffs on steel and aluminum that have a more legitimate legal precedent because of industry pressure, and he has been giving out exemptions like candy. But now, the refund fights and new tariffs to layer atop invalidated old ones returns everyone to the disruptions of last spring.

Meanwhile, looking at the hard data from one year of tariffs shows the pointlessness of the entire enterprise. The trade imbalance didn’t change (on goods, it was actually marginally higher), shipments of U.S. goods were down, manufacturing construction is way down, and manufacturing jobs fell by 88,000. Absolutely none of the theoretical goals of the tariffs were met.

The second-order goals, to reduce the federal deficit (remember when tariffs were going to replace the income tax?), didn’t pan out either, and now there’s a smoldering hole where the illegally collected tariff revenue was. And Trump’s actual goals—to bully the world and lord power over it—have now run out, too. If you wanted to create the perfect own-goal policy to drag down what was a pretty solid economy, you couldn’t do much better than this.

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David Dayen is the executive editor of The American Prospect. He is the author of Monopolized: Life in the Age of Corporate Power and Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud. He co-hosts the podcast Organized Money with Matt Stoller. He can be reached on Signal at ddayen.90.