The Supreme Court invalidated President Trump's major tariffs, ruling he lacked the authority to impose them. This opens the door for importers to reclaim $133 billion, but the refund process is expected to be complex, lengthy, and lead to extensive litigation, primarily benefiting companies.
The Supreme Court, in a 6-3 decision, struck down President Donald Trump's significant tariffs, which were imposed last year by invoking the 1977 International Emergency Economic Powers Act (IEEPA). The court ruled that the IEEPA did not grant the president the authority to tax imports, a power reserved for Congress. This landmark decision leaves a critical question unanswered: how will the $133 billion in import taxes already collected by the U.S. customs agency be refunded? Trade lawyers anticipate that importers will eventually receive refunds, but the process is expected to be lengthy, complex, and contentious, potentially taking 12 to 18 months or even years of litigation. The refund mechanism will likely involve the U.S. Customs and Border Protection agency, the Court of International Trade, and other lower courts. Experts warn that the government may make the process challenging for importers, potentially forcing them into court to claim their money. While the Supreme Court's ruling decisively repudiated Trump's tariffs, Justice Brett Kavanaugh, in a dissenting opinion, criticized the majority for not addressing the refund issue, predicting a 'mess.' Trump himself expressed dismay over the decision, forecasting years of legal battles. Two of Trump's three judicial appointees sided with the majority in the ruling. The refunds, primarily benefiting companies and importers rather than individual consumers who bore higher prices, could provide a modest boost to the economy by easing inflationary pressures and stimulating spending. There is some precedent for courts establishing refund systems in trade cases, such as the unconstitutional harbor maintenance fee in the 1990s, but the scale of the current situation—thousands of importers and tens of billions of dollars—is unprecedented. Several companies, including Costco and Revlon, had already filed lawsuits seeking refunds preemptively. Further litigation is expected, including potential disputes between manufacturers and suppliers over refund shares. State officials, such as Illinois Governor JB Pritzker and Nevada Treasurer Zach Conine, are also demanding billions in refunds on behalf of their states. Consumers, however, are unlikely to see direct compensation for the higher prices paid.
