Supreme Court strikes down IEEPA tariffs — Flexport's Ryan Petersen on the $175B refund question

Speaker 2: Look at that. Confused. I'm great. I think I'm great.

Speaker 3: Look at that look

Speaker 4: at that smile. You haven't smiled like that on the show.

Speaker 1: And We've had some dark times. We made it through.

Speaker 2: We'll see.

Speaker 1: We'll see.

Speaker 2: I was at you know what? I love you guys so much that I actually dropped from watching the president's news conference. This is time. Here

Speaker 1: I am.

Speaker 4: This is the real There were some all time there were some all time quotes. We were prepping the show, but Tyler on our team was sending over quotes to me in real time. One of them was quote from Trump, I want to be a good boy. And then later he said, I wanna kiss you so badly. And some other things.

Speaker 2: It's that. Who was he talking to? I don't know.

Speaker 4: I think he was talking about somebody who was saying that to him.

Speaker 2: Oh, okay. Well,

Speaker 1: take it through take us through what have you seen? What what's actual the what what's actually the news? What happened? And how have you been processing it?

Speaker 5: Yeah. So the the Supreme Court ruled that

Speaker 2: the tariffs, the AIPA tariffs that's not all the tariffs. There are section three zero one tariffs. There are fentanyl tariffs. There's a there's a bunch of other types of tariffs. But AIPA is the reciprocal tariffs. You may remember them from they they were applied to the Penguin Island. Oh, yeah. Book paper is, most annoying. It's the kind of the global sweeping tariffs. Those have been overturned. Okay. However, the Supreme Court did not give any clarity, and Trump is right to point this out. It's really dumb about do we get refunds or not. A 100 I think they said a $175,000,000,000 Yeah. That they would be owed in refunds. So that is the giant $175,000,000,000 question. What happens to all that money that people paid over the last year?

Speaker 4: Yeah. What how like, is there a meaningful percentage of those potential refunds that people, purchase the right to? Like, is it because I know I know, you know, over the last

Speaker 2: Some of that I I I wouldn't call it a meaningful percentage,

Speaker 4: but I'm I'm

Speaker 2: But I probably I I I have to guess there was probably 50 or $100,000,000 worth of those would be my swag. I don't have to date on it.

Speaker 1: Okay. Yeah. That's pretty pretty small. Like 5,000,000,000

Speaker 2: or 10,000,000,000. Put a $100,000,000 into that, you feel like

Speaker 1: Yeah. You do really well. But, yeah, I mean, I I I was thinking about through my own experience in ecommerce. I was running the numbers, I was like, I think the company might get, like, a couple 100 k back over the next but depending on how it's applied. But we were far too small to actually get, at least that I received any inbound interest to, like, buy those credits back in the day because, like, we're very small.

Speaker 2: You could only, the the people that were transacting now, it was mostly Oppenheimer, the investment bank.

Speaker 5: Okay.

Speaker 2: It were minimum $10,000,000 transaction or they weren't interested.

Speaker 1: Yeah. Yeah. That makes sense.

Speaker 2: But, by the way, good plug. FlexBoard built the tariff refund calculator. So go to tariff.flexboard.com.

Speaker 1: Tariffs.flexboard.com. Head over there.

Speaker 2: Figure it out. Slash refunds or just click the refund calculator button right there and Or go to the report homepage. We've got it on the top now.

Speaker 4: It's free money.

Speaker 2: And it well, for now, it is just a calculator It's free money that you paid. You've already paid this money, and it's a we made this very simple process for you. You have to go to the government website, enter your credit they'll give you a c c s v file, upload that here. We will run all the numbers, calculate it for you instantly, and show you how much you are owed. Yeah. If and it is a giant if right now if the administration agrees to do refunds. Yeah. It was very clear in the press conference just now that because the administrate because the Supreme Court did not have a firm opinion about refunds, that there will be no refunds, for the next five years as it goes into litigation. So this is gonna be a fight, is what he said. It was very interesting because that's counter to what CPP has said in the past, or earlier this, well, end of last year, CPP said they would comply Mhmm. With whatever finding is, whatever the court says. If the court rules that the re the terrorists were illegal, that they would issue a refund. So and that's in court filing. So it's gonna if it gets litigated, yeah, we'll see how this plays out. But we in the meantime, we've got the best calculator in the world. And by the way, trade attorneys told us they're planning to charge 15% as it to get you a refund to get a you

Speaker 1: know, get your money back.

Speaker 2: We've got an automated process, so I intend to do that for much, much, much less.

Speaker 1: That's great. That's great. That's great. Zooming out, how I mean, 2025 was obviously a very rocky year on the trade front, but how were you processing just the overall economic picture? There were so many different statistics like health of the consumer, health of small businesses. Like, how did you feel like 2025 went as you look back on it now?

Speaker 2: I'll you know, I'm not like the macroeconomics expert in the world. You got the stock market rate if the people who own stocks did really well. Then the mags have, I guess, drove most of that. But, so I think small business really suffered last year. The ecom businesses, like, something like 40% of Shopify merchants were doing fulfillment from overseas and therefore using de minimis

Speaker 1: Yeah.

Speaker 2: And not paying any duties. And so all of those people just got hit with, like, this huge new disruption and and tariffs. I think a lot of them are under intense stress. It's a lot of our customers going through that. I I was on your show last year. I talked about a fraud that we're seeing.

Speaker 1: Oh, yeah. A couple

Speaker 2: of these stacks are against the wall and are just starting to imp let their factories import goods. Actually, those people are the most effed by this because if there are refunds, it goes to their factory, not to them. I'm

Speaker 1: like Yeah.

Speaker 2: Cheaters cheaters get effed. You know?

Speaker 1: That's funny. Yeah. What about, the location of factories? I I had this thesis that, like, even if the tariffs didn't hold, just the fact that there was this, like, oh, wow moment for at least one quarter meant that there was a whole cycle of board meetings where anyone who was on the fence about, oh, maybe we should finally pull the trigger on that American factory. Like, they might have done it then, and then that decision stuck sticks even if the tariffs get rolled back because in that moment, they made the decision sort of like how during COVID, people, like, decided to start working from home, and then it took, like, two years for them to get back in the office. Like like, you could see people saying, like, I'm gonna reshor my operation a little bit, and some of that some portion of that's gonna be sticky even in a low tariff regime.

Speaker 2: Yeah. I you know, I haven't seen the the manufacturing statistics. I think manufacturing is going is growing in The United States pretty quickly. I'm sure tariffs are helping with that.

Speaker 1: Yeah.

Speaker 2: The but it's they're so unevenly applied. I mean, one of the silly things about the way tariffs are done in they and put new tariffs in today that I think are a better tariff policy. Mhmm. You know, I'm I'm not I'm I'm I'm famous anti tariff, but if because it's bad for my business, bad for my customers. But if you are if just looking at it from a what's your goal as a president who says he wants to boost manufacturing, it's better to have a blanket tariff on everybody Mhmm. Than just target one country. And the reason for that is is tariffs are equivalent mathematically to an exchange rate, like a fixed exchange rate

Speaker 1: Mhmm.

Speaker 2: With another country. And you would never have a bilateral exchange rate. You can't say, hey. The United States is gonna trade with the renminbi Chinese currency Yeah. At six to one, but we'll let the other ones we'll do the other ones at a different ratio because, obviously, the money will just flow around. And that's what happens. With cargo too, it's like, okay. Cool. I let's say, the Americans, we're we're putting this tariff in, so we instead of buying from China Mhmm. We buy from Peru.

Speaker 1: Mhmm.

Speaker 2: Now the Peruvians have more money. What do they do? They buy stuff from China. Like, it ends up in the exact same

Speaker 1: Yeah.

Speaker 2: Place. Whereas a blanket tariff, it's like, okay. This is helping make American, goods more competitive versus foreign goods no matter where they're from. So I think from

Speaker 4: a policy standpoint, it's better

Speaker 2: to be

Speaker 4: What's the what's the legal justification for this new round of tariffs that just got announced? These were this was a type of tariff that the Supreme Court didn't rule against today, so he's like, we'll just ramp that up.

Speaker 2: These ones are, it's called section one twenty two. And under section one twenty two, it's very clear that the president has statutory authority. It has a 15% maximum. He only did 10%, so he's got some cushion. I would expect him to get mad at somebody and raise it to 15 at some point. That would be my one of my predictions in the near future. Yeah. I can pull a cushion to go upwards later. Yeah. And then second is it has a maximum of one hundred and fifty days that he can impose this.

Speaker 5: Mhmm.

Speaker 2: Now what I predict is I was I haven't done the math, but a 150 a hundred and forty nine a hundred and fifty days from now, I think that section one twenty two will experience a pause of around fifteen minutes, and then you'll have another hundred fifty days, where it goes right back in. And there's nothing that says you can't do that. You could do that in perpetuity. But it would only be a it would be a 15% maximum, and I I I have to double check, but I'm pretty sure that has to be imposed equally on everybody. And it's about it's because of a balance of trade. I have to go read the reread the statute now that one twenty Mhmm. Is the term of the day. But it's because of balance of trade that that act was put in by Congress.

Speaker 1: Very interesting.

Speaker 4: What what do business owners, executive teams do? How how like, any any kind of, like, new approach going forward with today's news, or is it still kind of steady state? Like, we don't know what's gonna happen.

Speaker 2: Well, on some of this stuff, you know, all we have right now is a news conference. So first off, when you see an executive order, which is expected to come out on Monday Mhmm. And you'll have a little bit more clarity there. We're advising customers in this situation to let's not clear customs today. Let's hold your entries until Monday when the rates are presumably lower. And so that would be the first step is make sure your customs at least you save one day worth. We we are I think you wanna get into again, I'll plug myself, go to the tariff calculator, see what you're owed Yeah. Get into a process to go start filing, whether it's protests or we're still waiting for clarity here, of course, but but you're gonna file a protest. You might have to file a lawsuit. I'm hoping not. File a protest against tariffs that you know, the government said this is illegal, so why how can they take my money, owe it back? Like, there's gonna be various ways to fight that. I think, hopefully, it's not a lawsuit.

Speaker 4: Would be would it really be a bunch of individual lawsuits, or would it be a class action?

Speaker 2: Assume there's a class action. Costco fired filed one. A lot of people have been filing them in preemptively in this, so it's already kinda working gonna work its way through the courts. That but, you know, the the CBP was very clear that there okay. So there there was this lawsuit by Costco, the retailer, that said and that, you know, said, hey. This is a illegal tariffs. If the government rules that the if the Supreme Court rules that these are illegal, you must give me the the money back. And the court declined to put in an injunction to force the government to stop charging tariffs, wait while they wait while we wait for the Supreme Court. And the reason that they didn't put in that injunction is that the CBP said we would if the tariffs are ruled illegal, we will issue refunds. Mhmm. Or at least they said there is oh, man. What was the legal term? It's sort of like these the it they are refundable or something, which is interesting because you're like, well, you know, I break my arm. It is fixable. Does it mean I'm gonna fix it? I could just leave it broken. I don't know. I'm not a lawyer, so I'm just trying to this all happened very quickly. I'm trying to learn this morning exactly how it's gonna play out.

Speaker 1: Yeah. Who are the biggest companies that are affected by tariffs? I I I I jumped to Nike, Apple. I imagine it's

Speaker 4: But didn't Apple get a full carve out?

Speaker 1: That's what I think. So, like, who who is actually, like, the biggest voice?

Speaker 2: Semiconductors and iPhones, I think, managed to get a card. They're probably Walmart is number one. Walmart. Okay. Yeah. They're like, Costco Walmart.

Speaker 4: Insane because our intern made an iPhone in America when the tariffs first came around. Pull it up, Tyler.

Speaker 1: Yeah.

Speaker 4: We put it we put he put it together in in a day. I don't know if you can see it.

Speaker 1: Yeah. Works flawlessly. Here. Does it turn on? Not yet.

Speaker 2: Oh, you got great interest over there.

Speaker 1: Fantastic. Yeah. We're gonna reshor the entire semiconductor supply chain soon. Anyway, anything else, Jordy?

Speaker 4: No. This is Thank thank you for jumping on.

Speaker 1: Thanks so much for jumping on. I really I

Speaker 4: really do hope for every Flexport customer and every business that is impacted by this so we can get some real clarity soon. I'm sure we will.

Speaker 2: I should should end with a reminder for all. If you do get a unplanned surprise gigantic refund check

Speaker 1: Mhmm.

Speaker 2: Just remember that most lottery winners end up bankrupt. So don't spend it.

Speaker 1: Yeah. It in

Speaker 2: bank. Yeah. No. To your shareholders, pay your employees less bonus. But if you guys if you go buy a bunch of inventory, of course, that'd be good for me. That's why you can trust this price because I would prefer you spend it on inventory and ship it, with us. But better for you to save your money. Don't waste it.

Speaker 4: Good call. Well, thank you for coming on along with the ferry building Yeah. Behind you. It's very

Speaker 2: great. Welcome back there. You could see it in the in the deep distance. That's

Speaker 4: great to have you both on.

Speaker 1: Thanks so much.

Speaker 4: Alright. We'll talk you soon. Talk soon, Ryan. Cheers.

Speaker 1: Bye. Me Let tell you about Okta. Okta helps you assign every AI agent a trusted identity so you get the power of AI without the risk. Secure every agent. Secure any agent. And I'm also gonna tell you about fin dot a I, the number one AI agent for customer service. If you want AI to handle your customer support, go to fin.ai. So this story is obviously still developing. Justice Brett Kavanaugh wrote in his dissent, The court's decision is likely to generate other serious practical consequences in the near term. One issue will be refunds.