Trump's "Liberation Day" Tariffs Cost Small Businesses $151 Billion -- And He Won't Pay Them Back

The Tariffs Were Illegal. Trump Won't Return the Money.

It's been just over a year since Donald Trump declared "Liberation Day" and slapped massive tariffs on America's major trading partners using emergency powers never intended for trade wars. The Supreme Court has since ruled those tariffs -- collected under the International Emergency Economic Powers Act -- were applied illegally. The U.S. Court of International Trade ordered the administration to refund the money companies paid.

Trump's response? Radio silence on refunds. And a promise to impose new tariffs to replace the ones the courts overturned.

According to analysis of U.S. Census Bureau data by small business advocacy group We Pay the Tariffs, Trump's emergency tariffs cost American businesses $151 billion in the year ending February 2026. That's $151 billion extracted from companies that were following the law, ruled illegal by the courts, and still sitting in government coffers while small businesses across the country bleed out.

"We Will Not Be Getting Any of That Summer Action"

Daniel Rivera owns Misfit Toys, a vintage toy shop in Houston's Heights neighborhood. His business model depends on a mix: 70-80% vintage collectibles that draw customers in, plus new toys tied to summer blockbusters and Christmas releases to keep the cash flowing.

Those new toys? Made in China. And since Trump's tariffs hit, Rivera can't afford to stock them.

"The big box retailers will be fine," Rivera said. "People go to Target, also for soap and, you know, drinks and food. And while they're there, the kids will grab a toy. But here we will not be getting any of that summer action, any of that money. And we will certainly see that in Christmas."

Rivera's wife and business operations manager, Paulina Gamino, laid out the math: Misfit Toys can't absorb tariff costs the way Target, Walmart, and Amazon can. For small retailers, the only option is raising prices.

"We're talking about brand-new toys that maybe would have been $25. Now, it's like $40, $45 for a brand-new toy," Gamino said. "That's such a huge jump and increase."

To survive, Misfit Toys has pivoted harder into vintage collectibles, buying up toys from unemployed Houston tech workers forced to liquidate their collections. Gross sales are up. They've hired more staff. But profits are down.

The Uncertainty Tax

Luis Torres, senior business economist for the Federal Reserve Bank of Dallas, said the bank's regular surveys of Texas business owners show a consistent pattern: increased costs, squeezed margins, and crippling uncertainty.

That uncertainty is killing deals before they happen.

Kacie Wright manages Houghton Horns, a brass instrument shop north of Fort Worth. The store sells student instruments from China and professional-grade horns from Germany, the UK, and Japan, plus cases and accessories from India and Brazil. Wright's had to raise prices 20% while cutting what customers get for their money -- no more mouthpieces or cleaning kits included.

But the real problem is that Wright can't quote a firm price anymore.

"If a customer wants to order a custom trombone from us, we can say, 'Well, at current pricing, it might be $7,000, but then the tariffs could change tomorrow, and your price could end up being $6,000 or $9,000,'" Wright said. "And these instruments take three or four months to make. So, if a customer wants to place an order now, we have no idea what price to charge them."

Customers are walking away rather than gambling on what the final bill will be.

The Onshoring Myth

Trump's pitch for tariffs has always been that they'll force companies to bring manufacturing back to the United States. For small businesses, that's fantasy economics.

Ryan Guay runs FLATED, a Montana-based company that makes inflatable truck tops and camper shells using specialized PVC drop-stitch fabric. FLATED has employees in California and Colorado, but manufacturing happens in Vietnam.

Guay said there's a dynamic Trump either doesn't understand or doesn't care about: when tariffs spike costs for American small businesses, overseas factories don't scramble to move to Ohio. They just cut out the American middleman.

"When those costs and with the tariffs go up unexpectedly, it makes it a lot easier for the factories in Asia, overseas, other places, to really simply cut out the American business and just sell directly to online in the States, or even directly to Amazon," Guay said. "So they can eat that tariff and just sell direct consumer, which is great value for some of the consumers out there, but it does affect small businesses like ours."

Guay would love to manufacture in the U.S. -- but the infrastructure, expertise, and supply chains for his specialized materials don't exist domestically. The choice isn't between Vietnam and Montana. It's between Vietnam and going out of business.

Illegal, Unreturned, and About to Get Worse

The Supreme Court has spoken: Trump's "Liberation Day" tariffs were illegal. The Court of International Trade has ordered refunds. And Trump's administration is ignoring both rulings while promising to impose new tariffs to replace the ones struck down.

Small businesses paid $151 billion for tariffs that violated the law. They're still waiting for their money back. And they're bracing for the next round.

This isn't economic policy. It's a shakedown with a patriotic slogan slapped on top.