This court filing document appears to have been posted on Scribd to serve as a reference for an article by Nicole Carpenter on Aftermath which provides context for Nintendo's case:
Certain companies are well-known for their legal teams. Qualcomm is one (often described as a legal company that employs some engineers). Nintendo is the other.
As a result, Nintendo's legal team is far more likely to ensure they get refunded, and quickly. They could provide a template for others to follow.
Can someone ELI5 how this would work? Is it possible to accurately calculate the amount, with the tariff percentages changing on a weekly basis? If companies do get refunds, do they just keep it? After all, it was the end user who paid/pays, isn’t it?
Also, do/will these companies drop prices if/when tariffs are reversed?
The company that paid the tax gets their money back. Whether they decide to make any refunds to their customers is up to them. A few companies have said they would.
This is no different from any other cost. Their cost of goods is lower in retrospect than they thought it was, so it will show up as a gain on their income statement.
What's the economic effect, though? One way to model a tariff that's later refunded is that it's sort of like if a cartel colluded to temporarily keep prices higher. Competition between firms often keeps prices close to costs, but this wouldn't be true for a monopoly or a cartel.
In this case because Nintendo has an American branch (Nintendo of America) that imports their goods, Nintendo of America is who paid the tariffs and would get a refund. Consumers only paid indirectly via potential price increases, so no they don't get any potential money back.
The way that tariffs work is, some specific person (often a corporate person) performs the act of importation into the United States, and that person is charged an amount which they need to pay before they're allowed to take their goods from the warehouse. In this case Nintendo is that person, and both they and the government presumably have records of what they paid.
Whether some downstream consumer of those imported goods paid a price that would have been lower if not for the tariff is a commercial question between them and whoever they paid. Maybe they would have, maybe they wouldn't have. There isn't any objective way to calculate what the price of suchandsuch Nintendo product would have been in the counterfactual.
Any large company puts all their records in an accounting system so they can figure this out. It make take some time to run the right query, but they have the records. Of course this assumes they put the full breakdown in the system, if it is just the total cost of goods including shipping as a single line item they can't do this - but commonly they will have the break down in some system. (at the very least the shippers/importer will - and they have incentive to run this for you and give you the results - it is fairly cheap and generates goodwill)
The smartest comment I've seen was a proposal to use a negative tariff until the refunds are offset. At least in that case there is some bit of chance that the consumer gets their money back since the supply curve should shift up lowering apparent prices until the negative tax fades off. I'm sure many will point out all the flaws with that and the fact some of it will be captured as profit anyway, but it seems better than dumping 100% of it to profit which is what happens if you just refund to the importer of record.
I don't think that would be a good idea for two reasons:
1. Trump could decide what to apply the negative tariff to (e.g. Trump merchandise or his buddies)
2. If there's a fixed amount of money to dole out and suppliers know it, approximately zero dollars will be given back to consumers because it will be easy to capture the money on the importer side.
I'm assuming the importer which paid the tariff would be the one trying to get the money back, is that the case here for Nintendo are they the importer here?
Readit News
Take my upvote.
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https://aftermath.site/nintendo-tariffs-sue/
As a result, Nintendo's legal team is far more likely to ensure they get refunded, and quickly. They could provide a template for others to follow.
(EDIT: I just mean as a litigious company, well-known for its legal team.)
Say, they get pissed off too much… they could run campaigns just days before the election if they wanted.
Here's the Courtlistener docket: https://www.courtlistener.com/docket/72373888/nintendo-of-am...
Also, do/will these companies drop prices if/when tariffs are reversed?
This is no different from any other cost. Their cost of goods is lower in retrospect than they thought it was, so it will show up as a gain on their income statement.
What's the economic effect, though? One way to model a tariff that's later refunded is that it's sort of like if a cartel colluded to temporarily keep prices higher. Competition between firms often keeps prices close to costs, but this wouldn't be true for a monopoly or a cartel.
Whether some downstream consumer of those imported goods paid a price that would have been lower if not for the tariff is a commercial question between them and whoever they paid. Maybe they would have, maybe they wouldn't have. There isn't any objective way to calculate what the price of suchandsuch Nintendo product would have been in the counterfactual.
Every shipment from overseas would essentially have a line item for tariffs due. Just add them up.
1. Trump could decide what to apply the negative tariff to (e.g. Trump merchandise or his buddies)
2. If there's a fixed amount of money to dole out and suppliers know it, approximately zero dollars will be given back to consumers because it will be easy to capture the money on the importer side.
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