🥛 $166B in tariff refunds: Who actually gets paid? 💰

330,000 companies want their money back from Uncle Sam.

MACRO

John Gillen

MAY 28, 2026

GM. This is Milk Road Macro, the newsletter that makes economic panic feel as entertaining as reality TV with a $166B budget.

Here’s what we’ve got for you today:

✍️ The great American tariff tantrum & refund nightmare.
🍪 A possible U.S.-Iran deal may reopen the Strait of Hormuz.

Kalshi is a regulated prediction market where you can trade on real-world events. Special offer for Milk Road Readers: Trade $10 on Kalshi → Claim $10 for free.

Prices as of 10:20 a.m. ET.

THE GREAT AMERICAN TARIFF TANTRUM

Remember Trump’s Liberation Day tariff tantrum?

Source: ABC11

Well, we thought it would be a good idea to provide an update on the situation.

In February 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) did not authorize the unilateral imposition of nationwide tariffs. This made Donny T sad because he wanted them to rule the other way.

The court reasserted that Congress holds sole authority over taxes and import duties under Article I of the Constitution. Which is an old legal document, but apparently still matters.

This judicial constraint was reinforced on May 7th, 2026, when the U.S. Court of International Trade (CIT) ruled 2-1 that President Trump's backup 10% universal global tariff was also unlawful. Another big loss for Trump.

Source: BBC

The administration had implemented this tariff under Section 122 of the Trade Act of 1974. The court determined that contemporary economic conditions do not present the "large and serious balance-of-payments deficits" required by the statute to justify emergency tariff measures.

Brutal news for America’s Chief Tariff Officer.

It’s not over yet, though. The federal government continues to collect Section 122 tariffs from all non-plaintiff importers while the Department of Justice appeals the decision to the U.S. Court of Appeals for the Federal Circuit.

But how is Trump going to pay these court-ordered refunds?

I’m glad you asked.

CRYPTO’S THIRD PMF MOMENT IS HERE

PMF = Product Market Fit

Until now, crypto has really had two major PMF moments: 24/7 trading and stablecoins.

Now a third one may be emerging with Kalshi: Prediction Markets.

Kalshi is a regulated prediction market exchange where people trade on the outcomes of real-world events (elections, inflation, sports, crypto prices and more).

And their growth has been massive:

Recently raised $1B at a $22B valuation
Institutional trading volume is up 800% in six months.
Annualized volume is somewhere around $178B.

Kalshi is giving Milk Road readers $10 free when you trade $10.

Trade $10 → Claim $10 on Kalshi.

THE GREAT AMERICAN TARIFF REFUND NIGHTMARE

To administer the billions of dollars in duties collected under the invalidated IEEPA programs, U.S. Customs and Border Protection (CBP) launched the first phase of an online claims system. Importers and customs brokers access the portal using a specialized processing tool known as the Consolidated Administration and Processing of Entries (CAPE).

Capes are usually a lot more fun, but at least this one has billions of dollars:

Because CBP is processing the refunds in phases, prioritizing more recent tariff payments, the return of capital is expected to trickle into corporate cash reserves slowly throughout the remainder of 2026.

I love it when refunds trickle into my cash reserves, don’t you?

Well, you definitely would if you were the one who actually paid the tariffs!

Consumer litigation and corporate cash windfalls

The return of $166B to corporate balance sheets has generated a complex secondary legal crisis in the retail and wholesale sectors.

Nothing says fun for the whole family like a good secondary legal crisis, am I right?

Source: News Businesses

Consumer class-action law firms have begun targeting major brands and retailers that raised prices to offset the cost of the tariffs. The plaintiffs in these lawsuits argue that because these brands passed the tariff costs entirely on to their customers, pocketing the government refunds constitutes an "unjust windfall".

“Unjust windfall” sounds like the name of an Elizabethan English rapper, but it’s also grounds for a big ol’ legal battle.

These consumer lawsuits have multiplied rapidly. They’re going after both mid-sized brands and large retail giants serving as importers of record.

In response, corporate defense counsels are whipping up their biggest, most complex arguments to mitigate class-action exposure. Key corporate defenses include:

Absorption of costs: Claiming the brand absorbed the initial tariff burden, meaning retail price increases did not make the company whole.
Arbitration agreements: Invoking customer terms of service, which frequently include class-action waivers and mandatory arbitration clauses. Basically, hiding behind fine print. A classic maneuver.
Lawful pricing at transaction: Arguing that prices charged to consumers were entirely lawful, justified, and reflective of market conditions at the time of purchase.

Buyer beware, I guess.

Speaking of buying things, I break down the latest macro news for our PRO subscribers in discord while it’s happening.

If you want to join in the conversation and see how the other Milk Road PRO analysts and I are navigating all of this in our portfolios, try Milk Road PRO for only one dollar, here.

Wrapping up

Okay, so what does this mean for markets?

Well, the tariffs remain mostly in effect while the appeals process plays out.

The huge mess of legal friction probably means that the huge liquidity injection of the $166B refund will remain constrained. It’s not just going to come spilling out into the market overnight.

Rather than immediately deploying these funds, many corporations are retaining these capital inflows as legal reserves to hedge against ongoing consumer litigation.

So this is a huge story with a lot of money at stake. It’s definitely worth continuing to monitor the situation, but at least for now, this nightmare is mostly just a legal one, not a market one.

The bull run seems to be safe for now.

Make sure you stay safe, stay educated, and stay bullish, too!

Real Finance Blockchain is an EVM-compatible L1 that is built specifically for RWA tokenization. Read more about Real Finance Blockchain here.

Arc is an open Layer-1 blockchain built for real-world financial applications. Public testnet is live, App Kits are here, and mainnet is getting closer. Start building on Arc.