Businesses of all sizes in the U.S. have begun receiving tariff refunds following a ruling by the U.S. Supreme Court, which stated that President Donald Trump did not possess the constitutional authority to impose increased import taxes on goods from numerous countries. However, this refund process may face delays after the Trump administration announced plans to appeal a federal judge's order that permits all companies that paid these invalidated tariffs to seek refunds, not just those who filed lawsuits.
Prior to the announcement of the appeal by the Justice Department, the refund system operated by U.S. Customs and Border Protection (CBP) was progressing smoothly. The first successful applicants started receiving refunds on May 12, roughly three weeks after importers and their customs brokers were authorized to submit claims. As of May 22, applications for refunds totaling an estimated $85 billion—over half of the $166 billion CBP estimated the government owes—had been processed, with the Treasury Department directed to issue $20.6 billion in refunds thus far.
The administration's plan to appeal surfaced while objecting to a demand from Judge Richard K. Eaton for CBP Commissioner Rodney Scott to appear in a hearing at the U.S. Court of International Trade on June 9. Judge Eaton aims to establish a timeline for repaying approximately 330,000 importers potentially qualified for refunds and to consider if the government should expedite this process. The Justice Department has asked the judge to allow Scott's deputies to represent him, arguing that as a high-ranking official, Scott cannot be compelled to testify. They further contended that Eaton overstepped his authority by ruling that all "importers of record" are entitled to refunds based on the Supreme Court's decision.
Judge Eaton asserted that the government has an obligation to refund the unlawfully collected duties. The CBP is currently processing refund claims in stages, prioritizing payments that were not finalized before the Supreme Court's ruling on February 20. According to the Justice Department's recent filing, the agency needs significant technological upgrades to its refund portal and "importer-specific orders" from each lawsuit before it can recalculate the final owed tariffs for older liquidated accounts. Over 1,000 companies have pursued legal action in the trade court to recover their tariff costs, although it remains unclear how many importers who paid tariffs did not file lawsuits and might miss out on refunds should the appeal succeed.
Industry experts indicate that an appeal would potentially impact only the older, liquidated entries of imported merchandise. Barry Appleton, a law professor and managing partner of a legal firm, remarked that such an appeal could hinder the refund process, even if the government already lost the broader case in the Supreme Court, as delays benefit the government by keeping funds in the Treasury longer.
Meanwhile, some national retail chains are planning to utilize their tariff refunds to lower prices for customers. Walmart's CFO John David Rainey mentioned that although the maximum refund might account for less than half of 1% of the company's annual U.S. sales, they intend to implement price cuts. Similarly, Costco will return tariff costs to its members, although the timing and method of distribution will depend on various factors, including the size of their refund and ongoing lawsuits regarding tariff compensation for customers.
In the logistics sector, shipping companies like FedEx, UPS, and DHL, which acted as customs brokers, are poised to refund customers who paid import taxes by transferring any refunds received back to them. The Supreme Court invalidated only the country-specific tariff rates established by the Trump administration, which cited the 1977 International Emergency Economic Powers Act as the basis for its ruling. Since the court's decision, Trump has sought to enact new tariffs.
Smaller enterprises, however, are using the received tariff refunds to address ongoing financial challenges and to cover the remaining or future tariffs. For instance, Jay Foreman, the CEO of toy company Basic Fun, noted that he received around $450,000 out of his total claim, looking forward to further receipts to support his business operations. Similarly, Men's grooming brand Manscaped indicated that they received about 30% of the $12 million in refunds they applied for, which they plan to utilize for stabilizing their financial standing after enduring high import costs.
Melkon Khosrovian, owner of Greenbar Distillery, is waiting for a $90,000 tariff refund and has thus far received only $18,000. He recounted how the tariffs imposed significant pain on his business, forcing him to choose between raising prices and losing customers or maintaining prices and suffering financial losses.
