What will happen to the tariff refunds if the Supreme Court rules against Trump?

The possibility that the Supreme Court will overturn the broad global tariffs implemented under the International Emergency Economic Powers Act of 1977 (IEEPA) has sparked a wave of preparations among importers, trade attorneys, and customs authorities. At stake is an estimated figure close to $150 billion in potential refunds for duties already paid.

Skepticism About Refunds

Executives in the sector question whether the U.S. government will actually return the money even if ordered to do so. Jim Estill, CEO of Danby Appliances, a Canadian company that imports small appliances from Asia, warns that recovering the $7 million in tariffs paid will be a complex battle. His concern goes further: if he manages to recover his funds, he will also face claims from distributors like Home Depot and their end customers wanting a piece of the pie.

“It’s not in the government’s DNA to return money. And Trump wouldn’t want to return money,” Estill notes. This position reflects the broader anxiety in the importing community about whether a favorable ruling will truly translate into effective refunds.

Record Collections via IEEPA

Tariffs related to IEEPA have generated $133.5 billion in collections between February and December of last year, according to data from the U.S. Customs and Border Protection (CBP). With the continuation of the average daily collection rates since late September, experts like those from the Silverman trade analysis scale project that the total will approach $150 billion.

Trump has employed this law in two main ways: first with “reciprocal” tariffs on imports from most trading partners in April, based on a declared trade deficit as a national emergency. Then, in February and March, he imposed additional duties against China, Canada, and Mexico citing fentanyl trafficking as justification.

Customs System Preparations

A technical change announced by CBP on January 2 offers a sign that the administration might be ready to process refunds on a large scale. The migration to electronic distribution of all refunds starting February 6 represents a shift toward a more agile system, although it remains manual in many aspects.

Angela Lewis, Global Customs Director at Flexport, sees this as indicative that “Customs is fully prepared to proceed with refunds if the Supreme Court, in fact, rules that way.” The agency argues that eliminating paper checks will speed up payments and reduce errors and fraud through its ACE portal.

However, a CBP spokesperson did not respond to specific questions about how the agency would handle an adverse ruling against Trump’s tariffs.

Divergent Business Strategies

Responses from companies vary greatly. Some major players like Costco have filed preventive lawsuits against CBP to legally preserve their rights to refunds. This action is considered necessary because, in theory, a ruling of unconstitutionality does not automatically guarantee a refund without further judicial resolution.

Cosmetic manufacturers like Revlon, lens producers like EssilorLuxottica, and others have followed similar legal protection strategies.

Other smaller companies have opted for a different route: selling their refund claims to hedge funds in an emerging secondary market. Kids2, a toy importer from China, received only 23 cents per dollar in reciprocal tariffs and just 9 cents for those related to fentanyl.

Jay Foreman, CEO of Basic Fun! (maker of Tonka and K’Nex toys), expresses deep skepticism about recovering the $6 million in tariffs paid pre-Christmas, anticipating that the Trump administration could “hinder or delay” payments even under a court order.

Race Against the Legal Clock

A critical challenge is the 314-day deadline that importers have to make corrections before their imports are “liquidated” permanently without the option for a refund. This period has already expired for many Chinese imports affected by February 2025 tariffs.

The Supreme Court’s decision will likely refer refund issues to the Court of International Trade if it does not provide direct instructions. Joseph Spraragen, a New York customs lawyer, emphasizes that this will further complicate the process.

Pete Mento of Baker Tilly advises keeping meticulous records and acting quickly. “People who file their claims early and correctly will reap the benefits faster. And, knowing how processes work in Washington, it could be years before they see that money.”