The Supreme Court on Friday invalidated the legal basis for a series of tariffs imposed by the Trump administration, a decision that could trigger a wave of refund requests from American businesses totaling billions of dollars. The court ruled that the International Emergency Economic Powers Act (IEEPA) did not authorize the broad employ of tariffs enacted by former President Donald Trump, finding that the administration had illegally collected over $133 billion in taxes.
The ruling immediately prompted a response from Trump, who, at a White House press conference, called the decision “terrible” and “defective.” He predicted that resolving the issue of refunds would take “two years,” anticipating extensive litigation as companies seek to recover funds paid under the invalidated tariffs. More than 1,000 companies have already filed lawsuits seeking refunds, anticipating a potential reversal of the tariffs justified under IEEPA, according to reports.
The core of the dispute centered on tariffs imposed on goods imported from China and other countries, justified by the Trump administration as necessary to protect national security. The court’s decision throws into question the legality of those tariffs and opens the door for businesses to reclaim the duties they paid. Justice Brett Kavanaugh, in a dissenting opinion, acknowledged the potential for complications, predicting a “mess” as importers seek refunds, some of which have already been passed on to consumers.
The process for obtaining refunds is currently unclear. Typically, Customs and Border Protection (CBP) would handle such requests, but the Trump administration has not yet established a formal process for addressing the anticipated influx of claims, according to Rachel Brewster, a professor of international trade law at Duke University. Without a clear procedure, Brewster explained, claims will likely be litigated in the Court of International Trade, which will then order CBP to issue refunds on a case-by-case basis.
The Court of International Trade has previously handled similar refund orders, albeit on a smaller scale, following a 1998 Supreme Court decision that overturned a harbor maintenance tax, noted Daniel Mach, a commercial litigator at Bryan Cave. Mach suggested the court is likely to appoint an administrator or special master to manage the volume of claims, rather than addressing each lawsuit individually. Advocates for overturning the IEEPA tariffs have urged the Court of International Trade to establish a streamlined refund process, with the National Retail Federation stating that refunds would “serve as an economic boost and allow companies to reinvest in their operations, their employees and their customers.”
The refund process is expected to be lengthy, potentially taking up to two years to complete, Brewster estimated. Numerous large corporations, including Toyota and Costco, have already filed lawsuits seeking refunds, in addition to the smaller companies that initially brought the case before the Supreme Court. Although individuals who paid higher prices due to the tariffs may attempt to seek refunds for personal purchases, such claims are likely to be complicated and potentially cost-prohibitive, Brewster said. Distinguishing between tariffs imposed under IEEPA and those justified by other laws will be crucial, and the legal fees associated with individual lawsuits may outweigh any potential refund.
As of Friday afternoon, the White House had not responded to requests for comment regarding a plan to address the refund process. The Biden administration has not indicated whether it will appeal the Supreme Court’s decision or attempt to re-establish the tariffs under a different legal framework.
