Court Decision: Companies Eligible for Refunds on Trump-Era Tariffs Revoked by Supreme Court

NEW YORK — In a significant setback for the Trump administration, a federal judge in New York has ruled that businesses which previously paid tariffs, recently overturned by the Supreme Court, are entitled to receive refunds.

Judge Richard Eaton of the U.S. Court of International Trade declared that “all importers of record” are entitled to benefit from the Supreme Court’s decision. This ruling invalidated the substantial import taxes that former President Donald Trump had implemented last year under the 1977 International Emergency Economic Powers Act (IEEPA).

The Supreme Court deemed those tariffs unconstitutional, noting that the emergency powers law did not allow for such extensive unilateral tariff impositions. The court’s majority opinion emphasized that the authority to set and adjust tariffs rests solely with Congress, not the president.

In his decision, Judge Eaton specified that he would oversee all cases related to the refund of these IEEPA duties. This ruling provides some direction on the refund process, an issue that the Supreme Court had not addressed in its February 20 decision. Trade attorney Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, anticipates that the government might appeal or request a stay to allow more time for U.S. Customs to comply.

The federal government had collected over $130 billion from these now-invalid tariffs by mid-December. According to estimates from the Penn Wharton Budget Model, the total refund liability could reach $175 billion.

Eaton was ruling specifically on a case brought by Atmus Filtration, a Nashville, Tennessee, company that makes filters and other filtration products, claiming a right to a tariff refund.

All goods that go through U.S. Customs and Border Protections enter a process called “liquidation,” when the agency issues its final accounting of what is owed. Once liquidated, importers have 180 days to formally contest the duties. After that window closes, the liquidation is legally final.

The judge ordered customs to stop collecting the IEEPA tariffs the Supreme Court struck down last month on goods going through the liquidation process. And if the goods were past that part of the process, the agency would have to recalculate them without the tariffs.

“This is a great decision for importers and consumers who paid,” said Barry Appleton, a law professor and co-director 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.”

On Monday, another federal court rejected the Trump administration’s attempt to slow the refund process. The U.S. Court of Appeals for the Federal Circuit started the next phase in the refund process by sending it to New York trade court to sort out.

Now the U.S. Customs and Border Protection agency must come up with a way to process the refunds. Customs routinely refunds tariffs when there’s been some kind of error, but its system was “not designed for a mass refund, said trade lawyer Alexis Early, a partner at Bryan Cave Leighton Paisner. “The devil will be in the details of the administrative process.

Anderson reported from New York.

AP Writer Lindsay Whitehurst contributed to this story.