On Friday, the U.S. Supreme Court delivered a significant blow to former President Donald Trump’s trade policy by striking down his largest and most controversial tariffs. These tariffs, which had imposed steep import taxes on goods from nearly every country worldwide, were declared unlawful because Trump had used an emergency powers statute that the Court said did not grant him authority to impose such tariffs. While the ruling was clear in invalidating the tariffs, it left unresolved a crucial issue: what will happen to the $133 billion in import taxes the government has already collected under these tariffs?
The tariffs in question were enacted under the 1977 International Emergency Economic Powers Act (IEEPA). Trump had leveraged this law to impose double-digit tariffs on imports starting last year, aiming to protect American industries and reduce trade deficits. However, in a 6-3 decision, the Supreme Court concluded that the IEEPA does not authorize the president to impose taxes on imports—a power constitutionally reserved to Congress. Notably, two of the three justices appointed by Trump joined the majority in striking down the tariffs, signaling a strong bipartisan consensus on the limits of presidential authority in trade matters.
While the ruling invalidates the tariffs moving forward, the Court did not address what should happen to the massive sum already collected—approximately $133 billion as of mid-December. This omission has sparked confusion and concern among companies that paid the tariffs and are now seeking refunds. Trade lawyers predict that importers will eventually receive refunds, but the process is expected to be complicated and lengthy.
Joyce Adetutu, a trade lawyer and partner at Vinson & Elkins, described the refund process as a “bumpy ride.” She explained that the resolution will likely involve a complex interplay between U.S. Customs and Border Protection (CBP), the specialized Court of International Trade in New York, and various lower courts. The sheer volume of money involved and the number of importers affected mean that both the courts and companies will face significant challenges. Adetutu stressed that despite these difficulties, it will be almost impossible for the government to avoid offering some form of refund, given the Supreme Court’s decisive rejection of the tariffs.
The uncertainty over refunds was highlighted in a dissenting opinion by Justice Brett Kavanaugh, who criticized the majority for not addressing how the government should return the funds collected. Borrowing a term used by Justice Amy Coney Barrett, who sided with the majority, Kavanaugh warned that the refund process would likely be a “mess” and anticipated years of litigation as the issue is sorted out. Echoing this sentiment, former President Trump expressed frustration at the ruling and predicted prolonged court battles over the refunds, saying at a press conference that he was “absolutely ashamed” of some justices and expected litigation could last five years.
From an economic perspective, the end of the IEEPA tariffs could provide some relief by easing inflationary pressures. The potential refunds to importers might stimulate spending and economic growth, similar to how tax refunds can boost consumer activity. However, experts caution that these effects will likely be modest. Many countries still face high tariffs imposed by the U.S. on specific sectors outside the scope of the IEEPA tariffs, and Trump has indicated plans to replace the invalidated tariffs using other legal mechanisms.
The timeline for refund distribution is expected to be protracted. TD Securities estimates that it could take between 12 and 18 months for refunds to begin rolling out. U.S. Customs already has procedures for refunding duties when importers can prove errors in tariff collection, and this existing system might be adapted to handle the Trump tariff refunds. Trade lawyer Dave Townsend of Dorsey & Whitney noted that this could provide a framework, but acknowledged that the volume and scale of this case are unprecedented.
Historically, courts and the Customs agency have dealt with refund cases before. For example, in the 1990s, courts invalidated a harbor maintenance fee on exports and established a refund mechanism for affected exporters. However, the current situation dwarfs previous cases, involving thousands of importers and tens of billions of dollars simultaneously.
Legal experts emphasize that the government cannot simply keep fees collected unlawfully. Alexis Early, a partner at Bryan Cave Leighton Paisner, stated that the difficulty of administering the refund process does not justify withholding the funds from importers. Yet, she warned that the refund system could be fraught with legal and administrative challenges.
Ryan Majerus, a former U.S. trade official and partner at