U.S. tariff refunds provide temporary boost to economic growth

Tariff refunds are providing a temporary boost to the U.S. economy, potentially accounting for 0.2 percentage points of the projected 4% third-quarter GDP growth. This follows a Supreme Court decision in February that struck down tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA).

The Federal Reserve Bank of Atlanta estimates that approximately $166 billion is expected to be returned to affected businesses and importers. Analysis from Apollo Global Management chief economist Torsten Slok suggests these refunds act as a “fiscal expansion,” noting that net federal customs receipts shifted from positive to negative as refund payments surged in May, June, and July.

This growth acceleration occurs despite ongoing inflationary pressures. While the annual inflation rate held at 2.7%, core prices rose 3.1% from a year earlier. The economic expansion follows a contraction of 0.5% in the first quarter and a 3.0% rebound in the second quarter.