U.S. firms scramble for refunds after Supreme Court rejects Trump’s blanket tariffs

U.S. businesses fought President Trump’s sweeping tariffs and won. Now, they want their money back.

The Supreme Court’s decision to strike down Mr. Trump’s use of the International Emergency Economic Powers Act is unleashing a scramble by firms to secure refunds for the money they paid to U.S. customs over the past year.

The footwear and apparel industry, which relies heavily on overseas production in Southeast Asia and elsewhere, said it expects the government to act fast.

“We are confident in Customs and Border Protection’s (CBP’s) ability to move quickly and provide clear guidance to American businesses on how to obtain refunds for tariffs that were unlawfully collected,” said Steve Lamar, president and CEO of the American Apparel & Footwear Association.

He said the CPB’s “recently modernized, fully electronic refund process should help to expedite this effort.”

Recent estimates from private and government sources place the amount of potential refunds in the $130 billion to $175 billion range.

The court did not specifically outline how refunds should be processed, though some justices acknowledged it might be a messy process.

“The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others,” Justice Brett Kavanaugh said in a dissenting opinion.

“Refunds of billions of dollars would have significant consequences for the U. S. Treasury,” the justice added. “The court says nothing today about whether, and if so how, the government should go about returning the billions of dollars that it has collected from importers.”

Tariffs are duties on foreign goods when they’re brought into the U.S., and must be paid by the importer of record — often an American entity.

Major companies such as Costco filed lawsuits ahead of the Supreme Court decision to bolster their legal claims in case the justices ruled against Mr. Trump.

“More than 2,000 lawsuits have already been brought seeking such refunds, but this is a small fraction of U.S. importers that may be entitled to such refunds,” said Dave Townsend, a partner at Dorsey & Whitney’s International Trade Group who has been tracking the case. “The United States has said in litigation that more than 300,000 U.S. importers have paid IEEPA tariffs.”

Mr. Trump, speaking at a White House briefing on Friday, predicted a lengthy court fight over refunds, pointing to the lack of direction from the court.

“Wouldn’t you think they would have put one sentence in there saying, ’Keep the money or don’t keep the money?’” Mr. Trump said at a White House briefing. “I guess it has to get litigated for the next two years.”

“They don’t even talk about it,” Mr. Trump said.

Economists say the situation is messy in part because it is so unusual.

“Refunds to the companies who paid these tariffs would be unprecedented in the sense that levying unauthorized taxes on the American people is unprecedented. However, since the administration had no authority to impose these tariffs, it follows that the businesses deserve a refund,” said Wayne Winegarden, a senior fellow in economics at the Pacific Research Institute.

The U.S. Chamber of Commerce hailed the ruling as especially helpful to smaller firms that have struggled under the tariff costs.

“Over the past year, the Chamber has been working with small and midsize businesses around the country that have seen significant cost increases and supply chain disruptions as a result of these tariffs. Swift refunds of the impermissible tariffs will be meaningful for the more than 200,000 small business importers in this country and will help support stronger economic growth this year.”

The National Retail Federation also called for a “seamless” process of refunds.

“The refunds will serve as an economic boost and allow companies to reinvest in their operations, their employees and their customers,” said David French, NRF’s executive vice president of government relations.

U.S. stocks surged after the ruling, a sign that investors saw Mr. Trump’s sweeping tariffs as a drag on businesses. Some of Mr. Trump’s GOP allies in Congress want to maintain the levies by codifying them into law.

Sen. Bernie Moreno, Ohio Republican, said Republicans should pass the tariffs into law with a budget-reconciliation bill that would get around a Democratic filibuster.

Select Republicans and Democrats, however, have opposed Mr. Trump’s sweeping tariffs as a blunt instrument that raised costs on Americans.

They want the administration to return the money that’s been paid.

“Trump bet his economic agenda on an illegal power grab and lost,” Sen. Ed Markey, Massachusetts Democrat, said. “It is a moral obligation for this administration to return every last cent taken from small businesses by this illegal tax.”