A federal court rejected the Trump administration’s attempt to slow the process of refunding billions of dollars in tariffs that the Supreme Court ruled illegal last month, setting up further proceedings in the specialized courts that handle trade cases.
On Monday, the U.S. Court of Appeals for the Federal Circuit denied the Justice Department’s effort to seek a pause while the refund system is worked out, according to a report by The Associated Press. The appeals court instead moved the case to the next phase by sending it to a lower court to determine how refunds should proceed.
The administration had asked the Federal Circuit to move cautiously and to hold the proceedings for 90 days, according to the AP report. The judges rejected that request.
The dispute traces to the Supreme Court’s Feb. 20 ruling that the Trump administration’s sweeping tariffs on most countries in the world were illegal, clearing the way for importers who paid the duties to seek refunds. The Supreme Court’s decision, however, offered no guidance on how refunds should be handled, and did not even mention refunds.
After the Supreme Court ruling, the refund questions landed in the U.S. Court of International Trade in New York, which the AP report said will decide how the complicated refund process should move forward. The Federal Circuit’s action means the lower court will address the mechanics of the claims and the timeline for administering them.
The AP report said the government had collected more than $130 billion from the tariffs by mid-December and could ultimately face refund requests worth $175 billion, citing calculations by the Penn Wharton Budget Model. It also noted that the Supreme Court decision did not specify any refund procedure, leaving that work to the courts and the government’s compliance planning.
Trade lawyer Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, said he expected the Court of International Trade to take an active role, including issuing an order requesting a status update from the government on its refund plans. Majerus also said he expected the court to ask the government to justify how it intends to comply with the Supreme Court’s ruling.
Siddartha Rao, a partner at law firm Hoguet Newman Regal & Kenney, said he has been fielding questions from clients who are navigating the refund process. Rao said, “We are somewhat in uncharted territory,” according to the AP report.
Rao also pointed to a practical issue for refunds: the government will need to figure out how to pay, he said. He told AP, “Everyone is sort of cognizant of the fact that it’s not like there’s over a hundred billion dollars sitting in, you know, in a room somewhere to just cut checks,” adding that the matter could become “a Treasury problem.” He said the administration might reimpose tariffs to replace the ones struck down or could raise revenue to cover refunds.
As the lower court prepares to set the next steps, the tariff-refund timeline remains tied to how quickly the government can comply with the Supreme Court’s ruling and how the specialized court manages the claims process in the absence of direction from the high court.