Supreme Court Ruling on Trump Tariffs Could Trigger $175B in Business Refunds

The U.S. Supreme Court declared Trump-era tariffs illegal on Friday, potentially requiring $175 billion in refunds to businesses. However, the court provided no guidance on how companies should recover their money, setting up what one justice called a potential "mess."

WILMINGTON, Delaware – A Friday decision by the U.S. Supreme Court declaring former President Donald Trump’s tariffs unconstitutional has left businesses facing an uncertain path to recover an estimated $175 billion in payments, with no clear roadmap from the high court on how refunds should be processed.

The justices ruled that tariffs implemented under emergency economic powers violated federal law, but offered no direction on the refund mechanism for the massive sum collected from importers nationwide.

UNDERSTANDING THE TARIFF COLLECTION SYSTEM

When importing goods subject to tariffs, businesses typically secure a bond through Customs and Border Protection and pay estimated duties to bring merchandise into the country. The government then finalizes actual tariff amounts through a process called liquidation, typically occurring 314 days after goods enter the U.S. Companies receive refunds for overpayments or must cover any shortfall. Importers attempted to halt this finalization process at the U.S. Court of International Trade while awaiting the Supreme Court’s decision, but were unsuccessful.

SUPREME COURT SILENT ON REFUND PROCESS

The high court’s ruling contained no instructions for handling repayments. Justice Brett Kavanaugh, writing in dissent, warned the decision would likely create “serious practical consequences in the near term, including refunds.” He referenced oral arguments where attorneys acknowledged the refund distribution process would likely be “a mess.” The matter now returns to the Court of International Trade for resolution.

POTENTIAL REFUND MECHANISMS

Over 1,000 lawsuits from importers seeking refunds are already pending in the trade court, with legal experts anticipating a surge of additional cases. In December, the court established its authority to reopen final tariff decisions and mandate government refunds with interest – power the Trump administration indicated it would not contest. Trade law specialists say this ruling eliminated potential legal obstacles to the refund process.

REQUIREMENTS FOR BUSINESSES SEEKING REFUNDS

Individual importers may need to file separate lawsuits in the Court of International Trade to obtain refunds, as legal experts question whether class-action suits could encompass the diverse range of affected companies. Federal trade law allows importers two years to pursue refund claims through litigation. This process may disproportionately impact smaller enterprises, which already faced greater tariff burdens than well-funded corporations like Costco. Attorney representatives for importers indicate some smaller businesses might forgo potential refunds rather than spend thousands on legal and court expenses.

HISTORICAL PRECEDENT FOR LARGE REFUNDS

The Court of International Trade has previously managed extensive refund operations. Following Congress’s 1986 harbor maintenance tax on cargo values at U.S. ports, the Supreme Court declared portions unconstitutional in 1998. The trade court subsequently supervised refunds to more than 100,000 claimants under Judge Jane Restani, who continues serving on the court.

AVOIDING COMPLICATIONS

Trade specialists note that government tracking systems for tariff payments and enhanced record-keeping should facilitate refund calculations. Small business advocates have urged the Trump administration to provide automatic repayments and expressed concerns about potential government delays through excessive paperwork review. However, some companies seeking refunds may not receive payments if they weren’t the designated “importer of record” – the entity legally responsible for regulatory compliance and duty payments. Contractual agreements between tariff-paying companies and importers of record will determine ultimate refund recipients, potentially creating additional legal disputes. Industry groups warn the entire process could span several years.