The Tax Times

Tuesday, February 24, 2026

The U.S. Supreme Court Just Killed Trump’s Tariffs. Now What About Refunds?

The U.S. Supreme Court has struck down President Donald Trump’s emergency tariffs as illegal, leaving a massive unanswered question: how will companies get back an estimated $175 billion in duties they paid at the border? The Court invalidated the tariffs but did not spell out any refund process, effectively tossing that problem back to the lower courts and the trade bar.

At a press conference, President Trump himself predicted, “we’ll end up being in court for the next five years,” which is probably not far off the mark for many importers.

How the Tariffs Worked in Practice

To understand the refund mess, you have to start with how tariffs are actually collected.

When goods subject to tariffs enter the United States, the importer typically:

· Posts a bond with U.S. Customs and Border Protection (CBP).

· Pays estimated tariffs at the time of entry to get the goods released.

Those entries are not final. CBP later conducts a process called “liquidation” — essentially a final duty calculation — which in normal times occurs roughly 314 days after entry. At liquidation:

· If the importer overpaid, CBP issues a refund.

· If the importer underpaid, CBP bills the shortfall.

Once liquidation occurs and becomes final, duty liability is usually locked in, which is why importers rushed to court while the Supreme Court was still considering the legality of the tariffs. Some tried to stop liquidation so their entries would remain open, but the Court of International Trade (CIT) denied that request.

What the Supreme Court Did — and Didn’t — Decide

The Supreme Court held that the tariffs imposed under an economic emergency statute were illegal. That is a huge substantive victory, but procedurally it was narrow: the Court did not address how, or even whether, the government must return the money that has already been collected.

Justice Brett Kavanaugh, in dissent, warned that the majority’s decision would have “serious practical consequences,” including the refund issue, noting it was conceded at oral argument that distributing refunds would likely be “a mess.” The Court essentially acknowledged the problem and then left it for the lower courts to solve.

The case now returns to the Court of International Trade, which will be ground zero for unwinding years of tariff collections.

What Refunds Might Look Like

Even before the ruling, more than 1,000 lawsuits had already been filed in the CIT by importers seeking refunds. That number will almost certainly skyrocket as more companies realize they may have refund rights.

A key development: in December, the CIT held that it has authority to reopen final tariff determinations (liquidations) and order the government to pay refunds with interest. The Trump administration told the court it would not challenge that authority. That removes one major legal roadblock and makes it far more realistic that refunds will ultimately be ordered, at least for companies that properly pursue their claims.

In other words, the door is open, but importers will likely need to walk through it one by one.

Will Companies Have to Sue to Get Paid?

For many importers, the answer is: yes.

Trade lawyers expect that:

· Each importer may have to file its own case in the CIT to secure a refund.

· It is unclear that a single, sweeping class action can cover the diverse universe of companies, products, and tariff lines involved.

Under U.S. trade law, importers generally have two years to sue for a refund. That limitations period will be crucial. Companies that sit on their rights may simply lose them.

This structure heavily favors large, well-funded players who can afford to hire counsel and litigate. Smaller importers, already hit harder by the tariffs in the first place, may find that paying thousands of dollars in legal and court fees to chase a claim is not worth the likely recovery. Some will simply walk away.

Lessons from Past Large-Scale Refunds

This is not the first time the CIT has had to manage a massive refund program flowing from an unconstitutional levy.

In 1986, Congress enacted a harbor maintenance tax, assessed on the value of cargo moving through U.S. ports. In 1998, the Supreme Court held that part of that tax was unconstitutional. That triggered a wave of refund claims — over 100,000 in total — which were managed under the supervision of Judge Jane Restani at the CIT.

That episode shows that, while complex, a court-administered refund process for a huge number of claimants is possible. It also suggests that the tariff refund saga will likely involve years of claims processing, test cases, and procedural rulings.

Does It Have to Be a Total Mess?

There are some reasons for cautious optimism.

Compared with the 1980s and 1990s, the government now has better systems for tracking tariff payments and entry data. Improved recordkeeping should, at least in theory, make calculating what each importer is owed more straightforward.

However, several thorny issues remain:

· Small businesses are already urging the administration to authorize automatic repayments rather than forcing everyone into court.

· There is concern that, instead of streamlining refunds, the government could respond with heightened scrutiny of entry documentation, slowing the process to a crawl.

Even if the mechanics of writing checks are manageable, the legal and administrative architecture around who qualifies, what evidence is required, and how disputes are resolved can easily stretch out over years.

Who Ultimately Gets the Money?

Even where the government does issue a refund, the answer to “who actually benefits?” is not always straightforward.

Key points:

· Only the “importer of record” – the party listed as responsible for the entry and payment of duties – is entitled to the refund from the government.

· Many operating companies are not the importer of record; instead, a broker, distributor, or other intermediary may sit in that seat.

Once a refund reaches the importer of record, contract law takes over. Private agreements between the importer and its customers or affiliates will determine who ultimately keeps the money. If contracts are silent or ambiguous on tariff risk allocation and pass-through, that sets the stage for a second wave of disputes — this time between businesses, not against the government.

Financial Markets Are Already Moving

Given the uncertainty and delay, some companies are treating potential tariff refunds like contingent litigation assets. Rather than wait years and shoulder legal costs, they are selling their potential claims to Wall Street investors and claims funds in exchange for immediate, but discounted, cash.

This securitization-like approach turns a messy legal claim into a financial product. Investors bet that, after legal expenses and time, the ultimate payout will exceed what they paid for the claim. For companies with strained cash flow post-tariffs, that trade-off can be attractive.

What Companies Should Be Doing Now

For importers and their advisors, this is not a “wait and see” moment. Steps to consider include:

· Identifying which entries were subject to the now-illegal tariffs and who was the importer of record.

· Reviewing customs records and internal contracts to understand who bore tariff costs and who has refund rights.

· Tracking the evolving CIT litigation strategy and deadlines, including the two-year window for filing claims.

· Evaluating whether to litigate directly, join coordinated efforts, or consider monetizing claims through third-party investors.

The bottom line: the Supreme Court’s ruling ended one chapter — the legality of Trump’s emergency tariffs — but opened an even more complex sequel about getting the money back. For many companies, the real work of recovery is only beginning.

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Sources:

1. https://www.reuters.com/sustainability/boards-policy-regulation/how-will-companies-get-refunds-now-that-us-supreme-court-has-rejected-trumps-2026-02-20/

2. https://www.justice.gov/osg/brief/united-states-v-swisher-intl-inc-petition

3. https://www.investing.com/equities/costco-wholesale-drc-neo

4. https://www.wilmerhale.com/en/insights/client-alerts/20260220-supreme-court-strikes-down-ieepa-tariffs-what-now

5. https://lawreview.law.ucdavis.edu/sites/g/files/dgvnsk15026/files/2024-04/57-online-Restani.pdf

6. https://theedgemalaysia.com/flash-categories/Trade War

7. https://www.bbc.com/news/articles/c8r1e327z46o

8. https://www.linkedin.com/posts/activity-7430694771515404290-yKcQ

9. https://www.aol.com/articles/scotus-rules-against-trump-tariffs-120113878.html

10. https://www.instagram.com/reel/DU_VRUaDwPI/

11. https://dnainfo.blog/2026/02/22114551.html

12. https://budgetmodel.wharton.upenn.edu/issues/2026/2/20/supreme-court-tariff-ruling-ieepa-revenue-and-potential-refunds

13. https://www.cit.uscourts.gov/sites/cit/files/HMT – A Tax, or Not a Tax.pdf

14. https://www.reuters.com/authors/tom-hals/

15. https://www.honigman.com/alert-3240

Saturday, February 21, 2026

Supreme Court Kills Emergency Tariffs: What Importers Must Do Now

On February 20, 2026 the Supreme Court struck down President Trump's right to issue tariffs in Learning Resources, Inc. v. Trump, 607 U.S. ___ (2026).

The Court held that IEEPA does not give the president authority to impose tariffs. The decision emphasized several reasons:

1. Congressional intent and structure:
When Congress delegates tariff authority, it does so explicitly and with constraints. IEEPA contains no such language or safeguards.

2. Nature of tariffs:
Tariffs are distinct from regulatory tools like “compel” or “prohibit.” They function as taxes raising revenue for the Treasury and therefore fall outside the spectrum of regulatory powers granted by IEEPA.

3. Predecessor statutes and prior cases:
The Court rejected reliance on the Trading with the Enemy Act and the Yoshida International decision, noting these do not establish a binding or consistent meaning transferable to IEEPA.

4. Historical wartime precedents:
Wartime authorities involving tariffs do not apply in peacetime and cannot justify extending IEEPA’s scope.

5. Other Supreme Court precedents:
Prior cases such as Algonquin and Dames & Moore involved different statutory frameworks and did not address tariffs, making them inapplicable here.

Finally, Justice Kagan, joined by Justices Sotomayor and Jackson, agreed that IEEPA does not authorize tariffs but wrote separately to say the Court could resolve the case without invoking the major-questions doctrine.

The decision sharply curtails tariff authority under IEEPA, unwinds a large tranche of existing “emergency” tariffs, and pushes any new tariffs back into more traditional (and constrained) trade statutes.^[1]^[2]^[3]

What tariffs are directly affected

· All tariffs whose sole statutory basis was IEEPA are invalid going forward; agencies must stop assessing and collecting them once the ruling takes effect.

· Lower courts had already struck down billions of IEEPA‑based duties, a figure the Supreme Court’s ruling now effectively confirms nationwide.

· Emergency‑style “global” tariffs (broad country and product coverage, imposed by presidential proclamation after an emergency declaration) are no longer available under IEEPA at all.

Practical impact on importers and prior payments

· Importers that paid IEEPA‑based duties may be able to seek refunds where they preserved rights (e.g., protests, protective refund claims, or participation in the test cases), with exposure measured in the tens of billions.

· Commentary anticipates significant refund litigation and administrative processes, but relief will not be automatic for parties that did not timely file claims or protests.

· For businesses, landed costs on affected products should fall once the tariffs are removed, easing some input‑price pressure and improving margins or consumer pricing, depending on pass‑through.

Impact on future presidential tariff power

· The ruling confirms that tariffs are treated as an exercise of the taxing power, so the president needs clear, specific delegation; IEEPA’s “regulate importation” language is insufficient.Him him

· “Emergency tariff risk” is materially reduced: a president cannot declare a national emergency and then use IEEPA as a blank check for broad, open‑ended tariffs.

· Future tariff actions must rely on traditional authorities like Section 201 (safeguards), Section 232 (national security), Section 301 (unfair trade), or Section 122 of the Trade Act of 1974, all of which contain scope, rate, duration, and procedural limits.

Strategic and policy implications

· Congress regains leverage over large‑scale tariff programs; any future across‑the‑board tariff schemes will likely require new legislation or substantial modification of existing statutes.

· For trade planning, companies can place less weight on IEEPA‑based “emergency” tariff scenarios and more on targeted, process‑heavy actions under Sections 201/232/301, which are easier to monitor through investigations and notices.

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