Business executives, customs brokers, and trade attorneys are preparing for a Supreme Court decision regarding the legitimacy of President Donald Trump’s broad international tariffs.
Should he lose, there may be a battle to get the U.S. government to reimburse importers for duties already paid.
Following the November arguments in the case, when both conservative and liberal justices expressed doubts about whether the International Emergency Economic Powers Act of 1977 gave Trump the right to impose the tariffs, there was increased expectation that the court would overturn the tariffs.
The court is set to make findings on Friday but, as is typical, has not indicated what case or cases would be decided upon.
Some corporations believe that even if the court invalidates Trump’s tariffs, the Republican president will not make it simple for them to collect reimbursements.
“Giving money back is not ingrained in the government. Additionally, Jim Estill, CEO of Danby Appliances, a Canadian business that sells laundry machines, microwaves, and small refrigerators through big-box retailers like Home Depot, stated that Trump would not want to return money.
The goods are produced in China and other Asian nations that the Trump tariffs are aimed at.
Estill stated that he is also worried about Home Depot and its clients wanting a cut if Danby can recoup its $7 million.
Estill continued, “It’s just going to be a dog’s breakfast,” implying a disaster.
Trump is the first president to apply tariffs under the International Emergency Economic Powers Act (IEEPA).
In the past, this statute was used to freeze the assets of U.S. opponents or impose sanctions on them.
According to the most recent figures from U.S. Customs and Border Protection, or CBP, his IEEPA-related duties brought in an estimated $133.5 billion between February 4 and December 14.
If the average daily collection rates from late September through mid-December continue, the current sum is anticipated to reach close to $150 billion.
ELECTRONIC REFUND PROCEDURE
Hope for a smooth process is being raised by a technological update announced by CBP on January 2 that will move all tariff refunds to electronic distribution beginning February 6.
According to Angela Lewis, global head of customs at freight forwarding and logistics company Flexport, “it does kind of signal that Customs is fully prepared to move forward with refunds, if the Supreme Court does, in fact, rule that way,” even though the action falls short of importers’ expectations for a completely automated refund procedure.
When asked how the agency would respond to a verdict against Trump’s tariffs, a CBP official remained silent.
In a statement, the organization said that doing away with paper checks for refunds would expedite payments via its ACE electronic platform and lower fraud and error rates.
The U.S. Treasury is used to receiving hundreds of billions of dollars in tax refunds every year, even if the size of these possible returns is unprecedented for CBP.
Questions about possible tariff reimbursements were not answered by a U.S. Treasury official.
Scott Bessent, the U.S. Treasury Secretary, has expressed optimism that the Supreme Court will support Trump.
Treasury and CBP would have to resolve any refund rights, according to U.S. Trade Representative Jamieson Greer, who also expressed confidence that any lost revenue could be recreated with new duties imposed by Trump using other legal authorities.
Trump used two methods to impose tariffs connected to IEEPA.
In April of last year, he declared a national emergency over U.S. trade deficits and imposed “reciprocal” tariffs on goods imported from the majority of U.S. trading partners.
Citing the trafficking of illegal drugs and the opioid fentanyl as a national emergency, he imposed tariffs on China, Canada, and Mexico in February and March.
PREEMPTIVE ACTIONS
According to Joseph Spraragen, a New York customs attorney with the firm Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, any refund procedure would largely depend on whether the Supreme Court gives instructions on refunds or instead remands that matter to a lower court, most likely the Court of International Trade.
Before their goods are “liquidated” and reimbursements are not permitted, importers usually have 314 days to remedy them.
For goods from China that were subject to tariffs in February 2025, this deadline has passed.
To protect their rights to possible reimbursements, certain businesses, such as Costco, the operator of warehouse clubs, have filed preemptive lawsuits against the CBP.
In a legal document, Costco stated that the action was required because importers who have paid IEEPA-related taxes “are not guaranteed a refund for those unlawfully collected tariffs” without judicial remedy, even if the Supreme Court rules that the duties are illegal.
Similar lawsuits have been filed by Bumble Bee Foods, cosmetics manufacturer Revlon, Ray-Ban eyewear manufacturer EssilorLuxottica, Kawasaki Motors, and Yokohama Tyre.
RIGHTS TO REFUND
Instead of waiting, some smaller businesses are selling their claims to hedge funds in a rapidly growing secondary market for refund rights for pennies on the dollar.
Kids2, a toy manufacturer that imports goods from China, told reporters that it received 23 cents on the dollar for “reciprocal” duties but just 9 cents on the dollar for those associated with the trafficking of fentanyl.
The CEO of Basic Fun!, which offers K’Nex construction toys, Tonka trucks, and Care Bears, Jay Foreman, voiced doubt that the business will receive any of the $6 million in tariffs it paid prior to the Christmas sales frenzy.
TForeman stated that even if the Trump administration is mandated to make refund payments, he anticipates that they will “obfuscate or delay” them.
Foreman stated that although he hasn’t looked at selling the company’s refund claim, he would take a post-ruling sale into consideration if it would result in quicker settlement.
“The last thing the American public wants to know is a bunch of slick Wall Street or predatory-lender types will come and make a fortune off all this,” Foreman stated.
The Baker Tilly consulting firm’s trade advisory director, Pete Mento, stated that his best recommendation for businesses is to keep thorough records and act swiftly.
According to Mento, in order for businesses to receive a refund, they will have to demonstrate that they paid IEEPA-based rates.
“The people who get their claims in early and have them done correctly are the ones who are going to reap the benefits the fastest,” Mento stated. “And, knowing the way the processes work in Washington, it could be years before you see that money.”
