WASHINGTON — A federal judge ruled Wednesday that companies that paid tariffs struck down by the Supreme Court last month are entitled to refunds, handing the Trump administration a legal defeat in the continuing fallout from a ruling that invalidated the president’s sweeping import taxes.
Judge Richard Eaton of the U.S. Court of International Trade wrote that “all importers of record” were “entitled to benefit” from the Supreme Court’s Feb. 20 decision, which struck down double-digit import taxes President Donald Trump imposed under the 1977 International Emergency Economic Powers Act. The court found the president lacked authority to unilaterally set and change tariffs, ruling that taxation power belongs to Congress.
The ruling sets up a potentially massive government payout. The federal government collected more than $130 billion in the now-invalidated tariffs through mid-December, and could ultimately face total refunds worth $175 billion, according to calculations by the Penn Wharton Budget Model.
Sole jurisdiction and immediate orders
Eaton wrote that he alone “will hear cases pertaining to the refund of IEEPA duties,” consolidating the refund process in his New York court. The ruling came in a case brought by Atmus Filtration, a Nashville, Tennessee company that makes filters and other filtration products, which sought a refund on the duties it had paid.
The judge ordered U.S. Customs and Border Protection to stop collecting the struck-down tariffs on goods currently going through liquidation — the stage at which the agency issues its final accounting of what is owed. For goods already past that stage, Eaton ordered the agency to recalculate duties without the invalidated tariffs.
Importers have 180 days after liquidation to formally contest duties. Once that window closes, the liquidation is legally final.
Courts rebuff administration’s delay bid
Monday brought a related setback for the administration when the U.S. Court of Appeals for the Federal Circuit rejected its attempt to slow the refund process and sent the matter to Eaton’s court to resolve.
Trade lawyer Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, said he expects the government to appeal Wednesday’s ruling or “seek a stay to buy more time for U.S. Customs to comply.”
Processing challenge ahead
U.S. Customs and Border Protection must now build a process for what would be an unprecedented volume of refund claims. While the agency routinely refunds tariffs when errors occur, its existing system was “not designed for a mass refund,” said Alexis Early, a partner at Bryan Cave Leighton Paisner.
“The devil will be in the details of the administrative process,” Early said.
Barry Appleton, a law professor and co-director of New York Law School’s Center for International Law, said the ruling favored importers and consumers. “It will make customs brokers busy,” Appleton said. “It should make things easier for the courts — and get a process underway for those importers who paid within the last 180 days.”