U.S. Court Orders Refund Of Tariffs After Supreme Court Strikes Down Trump Tariffs

A federal judge in New York has ruled that companies that paid tariffs imposed by former U.S. President Donald Trump under emergency powers are entitled to refunds after the U.S. Supreme Court struck down the duties last month.

Judge Richard Eaton of the U.S. Court of International Trade said that “all importers of record” must benefit from the Supreme Court’s February 20 ruling, which invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA), according to court filings.

The Supreme Court had ruled that the tariffs, including broad reciprocal duties applied to multiple countries, were unconstitutional under the emergency powers law. The court stated that the authority to impose taxes and tariffs rests with the U.S. Congress and cannot be exercised unilaterally by the president.

Court Clarifies Tariff Refund Process

In the latest decision, Eaton stated that his court would handle cases related to refunds of the duties collected under IEEPA. The ruling provides procedural clarity after the Supreme Court decision did not specify how refunds should be handled.

The case before the court was filed by Atmus Filtration, a company based in Nashville, Tennessee, which manufactures filtration products and sought repayment of tariffs paid on imported goods.

Under U.S. customs procedures, goods entering the country go through a process known as liquidation. During liquidation, U.S. Customs and Border Protection issues a final accounting of duties owed on imported products. Importers have 180 days after liquidation to challenge the duty assessment. Once this period ends, the duty calculation becomes legally final, according to U.S. Customs guidelines.

Judge Eaton ordered U.S. Customs and Border Protection to stop collecting the tariffs that were invalidated by the Supreme Court for goods currently in the liquidation process. For goods that have already passed through that stage, the agency has been directed to recalculate duties without including the invalid tariffs.

The U.S. indices like the Dow Jones and the Nasdaq have not seen much impact from this move yet - with the U.S -Iran conflict dominating global headlines across the board.  

Potential Refund Liability

The federal government had collected more than $130 billion in tariffs imposed under the emergency powers law through mid-December, according to estimates from the Penn Wharton Budget Model. The total refund liability could reach about $175 billion if all eligible claims are processed.

Earlier in the week, the U.S. Court of Appeals for the Federal Circuit rejected a request by the Trump administration to delay the refund process. The appellate court also directed the matter to the U.S. Court of International Trade in New York to determine how refunds should be administered.

Following the ruling, U.S. Customs and Border Protection is expected to establish procedures to process claims from importers seeking repayment of duties that were collected under the now-invalid tariff policy.