Federal Judge Orders Refunds for Tariffs Overturned by Supreme Court
A federal judge in New York has ruled that businesses affected by last month’s Supreme Court decision are eligible for tariff refunds, marking a setback for the Trump administration’s trade policies.
Judge Richard Eaton of the U.S. Court of International Trade declared that all registered importers have the right to refunds following the Supreme Court’s decision. The high court had deemed the tariffs, imposed by former President Donald Trump under the 1977 International Emergency Economic Powers Act (IEEPA), unconstitutional. These tariffs included broad “reciprocal” duties applied to numerous countries.
Eaton’s ruling specifies that he will preside over cases involving the reimbursement of IEEPA duties. This provides directions for the refund process, which the Supreme Court did not address in its February 20 ruling. Trade lawyer Ryan Majerus anticipates that the government might challenge the decision or request a delay to allow U.S. Customs more time to adjust.
The tariffs in question generated over $130 billion in revenue for the federal government by mid-December, with potential refunds estimated at $175 billion, according to the Penn Wharton Budget Model.
The case was initiated by Atmus Filtration, a company based in Nashville, Tennessee, specializing in filters and filtration products, which sought a refund for the tariffs paid.
Goods entering the U.S. Customs and Border Protection system undergo a “liquidation” process, which finalizes the accounting of duties owed. Importers have 180 days post-liquidation to dispute these duties. Eaton’s order requires customs to cease collecting tariffs deemed unconstitutional by the Supreme Court on goods in the liquidation stage. If goods have passed this stage, customs must recalculate without the tariffs.
Barry Appleton, a law professor and co-director at New York Law School’s Center for International Law, commented, “This is a great decision for importers and consumers who paid. 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.”
Earlier this week, another federal court dismissed efforts by the Trump administration to delay the refund process. The U.S. Court of Appeals for the Federal Circuit moved the next phase of the refund process to the New York trade court for resolution.
The U.S. Customs and Border Protection agency now faces the challenge of developing a system for processing the refunds. While the agency routinely issues refunds for errors, the current system is not equipped for large-scale reimbursements, explained trade lawyer Alexis Early. She noted, “The devil will be in the details of the administrative process.”
