Supreme Court Ruling on Tariffs: Businesses May Get Billions Back, But How?

Businesses could get billions of dollars back after a Supreme Court ruling on tariffs, but the path to getting that money is not yet clear.
By Newsroom | Business, Law |

The U.S. Supreme Court has rejected certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA), creating a path for businesses to potentially reclaim billions of dollars. However, the exact process and timeline for these refunds remain unclear, leaving companies in a state of anticipation and facing numerous challenges in recovering their paid tariff costs. The decision has opened the door for claims, but legal experts and economists suggest the path forward will likely involve lengthy legal proceedings.

How will companies get refunds now that the US Supreme Court has rejected Trump's tariffs? - 1

Key Points

  • The Supreme Court ruled certain IEEPA tariffs illegal.

  • Businesses that paid these tariffs may be eligible for refunds.

  • The process for obtaining refunds is currently unclear and is expected to be complex.

  • Legal battles over refunds could extend for years.

  • Insurers may delay refunds as they assess their own exposure.

Context of the Ruling and Refund Potential

The Supreme Court's decision impacts tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA). These tariffs, previously the subject of legal challenges, have now been invalidated by the nation's highest court. This ruling opens a window for companies that paid these specific tariffs to seek reimbursement. The total value of potential refunds is estimated to be in the hundreds of billions of dollars, according to trade attorneys.

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How will companies get refunds now that the US Supreme Court has rejected Trump's tariffs? - 2

  • Tariff Eligibility: Refunds are specifically for tariffs applied under the IEEPA. Businesses that did not directly pay these tariffs are not eligible.

  • Legal Basis: The Supreme Court's decision effectively removes a significant legal barrier that prevented claims for refunds on these tariffs.

  • Timeline for Claims: Under U.S. trade law, importers have a two-year window to file lawsuits for refunds.

Challenges in Securing Refunds

Despite the Supreme Court's ruling, obtaining these refunds presents considerable obstacles for businesses. The lack of a clear procedural roadmap from the court means that companies must navigate a complex legal and administrative landscape.

How will companies get refunds now that the US Supreme Court has rejected Trump's tariffs? - 3

  • Court Processes: The Court of International Trade is the usual venue for such refund claims. However, both the court and the U.S. government will need time to establish procedures for managing a potentially massive volume of refund requests.

  • Insurer Involvement: Companies often paid tariffs through bonds or collateral managed by insurers. These insurers may be hesitant to issue refunds quickly, as they need to ensure they are not liable for the tariff payments themselves. This could lead to delays in recovering funds paid as collateral.

  • Legal Fees: For smaller importers, the cost of legal and court fees associated with pursuing a refund claim could outweigh the potential amount recovered. This may lead some to abandon their claims, even if eligible.

The Supreme Court's decision did not provide explicit instructions on how refunds should be processed. This has led to considerable ambiguity.

How will companies get refunds now that the US Supreme Court has rejected Trump's tariffs? - 4

  • Dissenting Opinions: While the majority opinion focused on the legality of the tariffs, Justice Brett Kavanaugh noted in his dissenting opinion the lack of clear next steps for refunds, highlighting the uncertainty.

  • Ongoing Litigation: Importers had previously filed suits at the U.S. Court of International Trade to pause the final tariff payment determination while the Supreme Court case was pending. The denial of these requests suggests that a significant period of litigation may still lie ahead.

  • Expert Estimates: Trade attorneys and economists predict that the process of resolving these refund claims could take as long as five years, underscoring the protracted nature of the recovery effort.

The Role of Customs Brokers

For many small businesses engaged in international trade, customs brokers are expected to play a crucial role in the refund process. These intermediaries are often the first point of contact for businesses and will likely be at the forefront of assisting them in identifying eligible tariffs and navigating the refund application procedures.

Expert Perspectives

Trade attorneys and economists offer varying insights into the potential outcomes for companies seeking refunds. While some acknowledge the opportunity for recovery, others emphasize the significant hurdles that remain.

Read More: US Supreme Court Strikes Down Some Trump Tariffs, But Trade Uncertainty Stays

"We’ll end up being in court for the next five years." - Economists cited by NBC News

"The Court of International Trade is typically in charge of refund processes." - CNBC Report

Conclusion and Next Steps

The Supreme Court's decision to invalidate certain Trump-era tariffs under IEEPA is a significant development that offers a potential avenue for companies to recover substantial tariff payments. However, the immediate aftermath is characterized by significant uncertainty regarding the practicalities of the refund process. Companies seeking refunds must prepare for a potentially lengthy and legally complex journey.

  • Immediate Actions: Businesses should consult with trade attorneys and customs brokers to determine their eligibility and understand the initial steps for filing claims.

  • Monitoring Developments: Closely following rulings and guidance from the Court of International Trade and U.S. Customs and Border Protection will be critical.

  • Long-Term Strategy: Companies may need to allocate resources for legal representation and prepare for protracted legal proceedings, given the scale of potential claims and the likely complexities involved.

Sources

Frequently Asked Questions

Q: Why did the Supreme Court make a decision about tariffs?
The Supreme Court ruled that some tariffs put in place by the Trump administration under a law called IEEPA were not legal. This means companies that paid these tariffs might be able to get their money back.
Q: Can companies get their money back for tariffs paid?
Yes, companies that paid the specific tariffs that the Supreme Court ruled illegal may be able to get refunds. This could be billions of dollars in total.
Q: How will companies get their tariff refunds?
The way companies will get their money back is not clear yet. The Supreme Court did not say how the refunds should be handled. It will likely involve a long legal process in the Court of International Trade.
Q: How long will it take to get tariff refunds?
Experts think it could take as long as five years for companies to get their refunds. Insurers who helped with payments might also delay giving money back while they check their own risks.
Q: What should businesses do now about potential tariff refunds?
Businesses should talk to trade lawyers and customs brokers to see if they can get a refund and what steps to take. They need to watch for new rules and be ready for a long legal fight.