Weeks after Trump’s tariffs were invalidated by the US Supreme Court, the administration has suffered another setback, with a New York federal judge ruling that the companies which paid the now-struck-down duties are entitled to refunds.
Judge Richard Eaton of the US Court of International Trade, on Wednesday (local time), announced that “all importers of record” are “entitled to benefit” from last month’s Supreme Court decision that struck down the double-digit import taxes imposed by President Donald Trump under the 1977 International Emergency Economic Powers Act (IEEPA).
Back in February, US Supreme Court had declared the tariffs unconstitutional, including the sweeping “reciprocal” duties applied to nearly every country.
The majority held that the US president does not have the authority to independently impose or alter tariffs, noting that taxation powers lie with Congress.
Providing direction on how refund disputes will be handled, Eaton said he alone “will hear cases pertaining to the refund of IEEPA duties.” The Supreme Court’s previous ruling had not addressed the mechanics of refunds, leaving uncertainty that the trade court order now seeks to resolve.
Data from the Penn Wharton Budget Model shows the federal government had collected more than $130 billion in the scrapped tariffs through mid-December and could ultimately face refund obligations of about $175 billion.
The latest order stems from a case brought by Atmus Filtration, a Nashville, Tennessee-based maker of filtration products, which argued it was entitled to recover the duties it had paid.
Under US Customs and Border Protection procedures, imported goods undergo a “liquidation” process, during which the agency issues its final calculation of duties owed. Importers then have 180 days to challenge those duties; after that, the assessment becomes legally final.
Eaton directed customs authorities to halt collection of the IEEPA tariffs on shipments still in the liquidation pipeline. For goods that have already passed that stage, the agency must recalculate the duties without including the invalid tariffs.
“This is a great decision for importers and consumers who paid,” said Barry Appleton, a law professor and co-director of New York Law School’s Center for International Law. “It will make customs brokers busy. It should make things easier for the courts, and get a process underway for those importers who paid within the last 180 days.”
The ruling follows another setback for the administration earlier this week, when a separate federal court refused its bid to slow the refund process. The US Court of Appeals for the Federal Circuit has since moved the matter forward by sending it to the New York trade court to work out the details.
Attention now turns to the US Customs and Border Protection agency, which must design a system capable of handling the payouts.
While the agency routinely issues refunds in cases of error, trade lawyer Alexis Early, a partner at Bryan Cave Leighton Paisner, noted that its framework was “not designed for a mass refund.” She added, “The devil will be in the details of the administrative process.”
