US trade court orders sweeping tariff refunds for companies in fresh blow to Trump

In a significant defeat for US President Donald Trump, a federal judge in New York has ruled that companies that paid now-invalidated tariffs are entitled to refunds, setting in motion what could become one of the largest repayment exercises in recent US trade history.

Judge Richard Eaton of the United States Court of International Trade said Wednesday that “all importers of record” are “entitled to benefit” from last month’s ruling by the Supreme Court of the United States, which struck down sweeping double-digit import taxes imposed by Trump last year under the 1977 International Emergency Economic Powers Act (IEEPA).

The order makes clear that refunds are not limited to select plaintiffs but apply broadly to companies that paid duties under the emergency powers law. Eaton also specified that he alone “will hear cases pertaining to the refund of IEEPA duties,” centralising oversight of what is expected to be a complex and high-stakes process.

The federal government collected more than $130 billion in the now-defunct tariffs through mid-December, and total refunds could ultimately reach $175 billion, according to estimates by the Penn Wharton Budget Model. The scale of potential repayments underscores the financial implications of the Supreme Court’s February 20 decision, which invalidated the tariff regime but did not spell out how refunds should be handled.

Eaton was ruling in a case brought by Atmus Filtration, a Nashville, Tennessee-based manufacturer of filters and other filtration products, which argued it was entitled to recover tariffs it had paid.

The legal process accelerated earlier this week when the U.S. Court of Appeals for the Federal Circuit rejected the Trump administration’s bid to slow down the refund process and sent the matter back to the New York-based trade court to work out the details.
With the court’s order now in place, U.S. Customs and Border Protection must design and implement a mechanism to process the refunds. While the agency routinely returns duties in cases of clerical or classification errors, trade lawyers say its systems were not built for repayments on this scale.Ryan Majerus, a partner at King & Spalding and a former US trade official, said he expects the government to appeal or seek a stay to give Customs more time to comply. Alexis Early, a partner at Bryan Cave Leighton Paisner, cautioned that administering mass refunds could prove complicated. “The devil will be in the details of the administrative process,” she said.

The ruling provides long-awaited clarity for companies that have been in limbo since the Supreme Court struck down the tariffs, but it also opens a new legal and logistical chapter for the administration as it confronts the fiscal and political fallout of the invalidated trade policy.

(With inputs from AP)