US importers braced for $192 billion tariff refund fight if Trump loses at Supreme Court

WASHINGTON – Company executives, Customs brokers and trade lawyers are bracing themselves for a Supreme Court ruling on the legality of US President Donald Trump’s sweeping global tariffs – and a potential fight over obtaining perhaps US$150 billion (S$193 billion) in refunds from the US government for duties already paid by importers if he loses.

Anticipation that the court will strike down the tariffs Mr Trump imposed under the International Emergency Economic Powers Act of 1977 rose after the November arguments in the case, when conservative and liberal justices alike voiced scepticism about whether that law gave him the authority to levy the duties.

The court is expected to issue rulings on Jan 9 but, as is customary, has not said what case or cases will be acted upon.

Some companies anticipate that even if the court invalidates Mr Trump’s tariffs, the Republican President will not make it easy for them to get refunds.

“It’s not in the government’s DNA to give back money. And Mr Trump would not want to give back money,” said Mr Jim Estill, CEO of Danby Appliances, a Canadian company that sells small refrigerators, microwaves and laundry equipment through big-box stores including Home Depot.

The products are made in China and other Asian countries targeted by the Trump tariffs. If Danby can get its US$7 million back, Mr Estill said he is also concerned Home Depot and its customers will want a cut.

“It’s just going to be a dog’s breakfast,” Mr Estill added, meaning a mess.

Mr Trump is the first US president to invoke the International Emergency Economic Powers Act, or IEEPA, to impose tariffs. This law historically had been used for imposing sanctions on US adversaries or freezing their assets.

His IEEPA-related tariffs generated US$133.5 billion in estimated collections between Feb 4 and Dec 14, 2025, the date of the most recent data from US Customs and Border Protection, or CBP.

The current total is estimated to be approaching US$150 billion based on continuation of the average daily collection rates from late September to mid-December in 2025, as calculated by Reuters.

Electronic refund move

A technical change disclosed by CBP on Jan 2 that will shift all tariff refunds to electronic distribution with effect from Feb 6 is raising hopes for an orderly process.

While the move stops short of hopes by importers for a fully automatic refund process, “it does kind of signal that Customs is fully prepared to move forward with refunds if the Supreme Court does, in fact, rule that way,” said Ms Angela Lewis, global head of Customs at freight forwarder and logistics firm Flexport.

A CBP spokesperson did not respond to questions regarding how the agency would handle a ruling against Mr Trump’s tariffs. The agency said in a statement that eliminating the use of paper cheques for refunds would speed payments through its ACE electronic portal and reduce errors and fraud.

While the scale of these potential refunds is unprecedented for CBP, the US Treasury is accustomed to quick distribution of hundreds of billions of dollars in tax refunds annually. A US Treasury spokesperson did not respond to questions regarding potential tariff refunds.

US Treasury Secretary Scott Bessent, speaking in Minneapolis, said the court’s decision may be somewhat clouded, but if it goes against Mr Trump’s tariffs, the administration could replace any lost revenues by switching to other tariff authorities.

Mr Bessent said that a negative ruling would mean “the President loses flexibility to use tariffs, both for national security, for negotiating leverage”.

Mr Trump imposed IEEPA-related tariffs in two ways. In April 2025, he announced “reciprocal” tariffs on goods imported from most US trading partners based on a national emergency he declared concerning US trade deficits. In February and March, he imposed tariffs on China, Canada and Mexico, citing trafficking of the painkiller fentanyl and illicit drugs as a national emergency.

Pre-emptive actions

Any refund process would heavily depend upon whether the Supreme Court provides instructions on refunds or instead remands that matter to a lower court, likely the Court of International Trade, according to Mr Joseph Spraragen, a New York Customs lawyer with the firm Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt.

Importers typically have 314 days to make corrections to their imports before they are “liquidated” and no refunds are allowed. This deadline has passed for imports from China hit with tariffs in February 2025.

Some companies, including warehouse-club operator Costco, have filed pre-emptive lawsuits against the CBP to preserve their rights to potential refunds. Costco in a legal filing called the action necessary because even if the Supreme Court finds the duties unlawful, importers that have paid IEEPA-related duties “are not guaranteed a refund for those unlawfully collected tariffs” without judicial relief.

Tuna canner Bumble Bee Foods, cosmetics maker Revlon, Ray-Ban spectacles maker EssilorLuxottica, Kawasaki Motors and Yokohama Tire have filed similar suits.

Refund rights

Some smaller firms are not waiting, opting instead to sell their claims to hedge funds for pennies on the dollar in a quickly developing secondary market for refund rights. Toy company Kids2, which imports its products from China, told Reuters it got 23 cents on the dollar for the “reciprocal” tariffs, but only nine cents on the dollar for those related to fentanyl trafficking.

Mr Jay Foreman, CEO of Basic Fun!, which sells Tonka trucks, Care Bears and K’Nex construction toys, expressed scepticism that the company will see any of the US$6 million in tariffs it had paid before the Christmas selling rush. He said he expects the Trump administration to “obfuscate or delay” refund payments even if ordered to make them.

Mr Foreman said he has not explored selling the company’s refund claim, but would consider a post-ruling sale if it means faster repayment.

“The last thing the American public wants to know is a bunch of slick Wall Street or predatory-lender types will come and make a fortune off all this,” he said.

Mr Pete Mento, a trade advisory director at the Baker Tilly consulting firm, said his best advice is for companies to maintain meticulous records and move quickly. He said he anticipates that companies will need to prove that they paid IEEPA-based tariffs before they can get a refund.

“The people who get their claims in early and have them done correctly are the ones who are going to reap the benefits the fastest,” Mr Mento said. “And, knowing the way the processes work in Washington, it could be years before you see that money.” REUTERS