The largest tariffs imposed by President Donald Trump were invalidated by the U.S. Supreme Court on Friday, raising questions about the fate of the $133 billion in import taxes already collected by the government. Companies are seeking refunds, but the process ahead may be chaotic.
Trade lawyers anticipate that importers will eventually receive refunds, but the journey is expected to be turbulent. The refund procedure is likely to involve collaboration between the U.S. Customs and Border Protection agency, the specialized Court of International Trade in New York, and other lower courts.
Given the substantial amount of money involved, the courts are anticipated to face challenges in handling the refund process. Despite the complexities, a refund option is expected to be available for importers following the Supreme Court’s clear rejection of Trump’s tariffs.
In a 6-3 decision, the court ruled that Trump’s use of emergency powers to implement the tariffs under the 1977 International Emergency Economic Powers Act was unauthorized. The Supreme Court determined that Congress, not the president, holds the authority to impose import taxes.
The U.S. customs agency has already collected $133 billion in IEEPA tariffs by mid-December. However, consumers seeking refunds for the increased prices they paid as a result of the tariffs are unlikely to be compensated, with refunds more likely to benefit companies.
Justice Brett Kavanaugh, in a dissenting opinion, raised concerns about the impending refund process, calling it a potential “mess.” Trump expressed disappointment with the court’s decision and predicted extended litigation over the issue.
The termination of IEEPA tariffs could alleviate inflationary pressures and potentially stimulate spending and growth through the refunds. However, the impact is expected to be moderate, as the U.S. still maintains high tariffs on specific sectors and plans to replace the IEEPA levies with alternative measures.
Refunding the tariffs is estimated to take 12 to 18 months, with the U.S. customs agency potentially leveraging its existing refund system. Past court precedents have established mechanisms for refunding fees in trade cases, indicating a possible framework for handling the current situation.
Companies such as Costco, Revlon, and Bumble Bee Foods have already filed lawsuits seeking refunds, anticipating the Supreme Court’s ruling. Further legal disputes are expected, particularly regarding the distribution of refunds among suppliers and manufacturers.
While consumers may not benefit significantly from the refunds, the potential for ongoing litigation and challenges in the refund process remains. Importers may encounter obstacles in reclaiming their funds, with the government likely to impose stringent requirements for refunds.