Trump Administration Moves to Block Tariff Refunds Despite Supreme Court Ruling, Leaving Businesses in Limbo
The Trump administration announced Friday it will appeal a federal court order requiring the government to refund $166 billion in tariffs collected under an import tax scheme the U.S. Supreme Court declared unconstitutional — a move that could freeze repayments to hundreds of thousands of businesses already struggling from more than a year of inflated import costs.
Businesses large and small had begun receiving refunds after the Supreme Court ruled 6-3 in late February that Trump lacked the constitutional authority to impose sweeping “reciprocal” tariffs on goods from nearly every country, citing an improper use of the 1977 International Emergency Economic Powers Act. The first refunds reached bank accounts on May 12, roughly three weeks after U.S. Customs and Border Protection opened an online claims portal.
That process is now at risk of grinding to a halt.
What the Administration Is Challenging
The appeal targets an order by Judge Richard K. Eaton of the U.S. Court of International Trade, who determined in March that the Supreme Court’s ruling entitled “all importers of record” — not just those who filed lawsuits — to receive refunds. The Justice Department argues Eaton exceeded his authority by issuing what it called a “universal injunction.”
More than 1,000 companies filed lawsuits in the trade court to recoup tariff costs. An unknown but potentially significant number of importers paid the tariffs without suing and could be cut off from refunds if the appeal succeeds.
In a terse Friday reply, Eaton made clear he views the stakes as non-negotiable. “This case involves $166 billion,” he wrote. “It is undisputed that the remedy for this unlawful collection is for the United States government to refund the unlawfully collected duties.”
A Delay Strategy That Benefits the Treasury
Legal experts say the appeal may be less about winning on the merits and more about buying time. Barry Appleton, a professor at New York Law School and managing partner of Appleton & Associates International Lawyers, was blunt about the administration’s likely motive.
“If the government can freeze the refund machinery while it litigates, it buys months, and every month of delay is a month the Treasury keeps the money,” Appleton said, adding that the government had “already lost the war” before the Supreme Court.
Ryan Majerus, a partner on the international trade team at King & Spaulding, said the appeal’s practical impact would likely be limited to older, finalized import entries — those in the U.S. for 314 days or more — when CBP issues its official duty determination. “This doesn’t cover everybody, only those really old entries,” he said.
Real Businesses, Real Consequences
For the companies caught in the middle, the stakes are not abstract. Jay Foreman, CEO of toy company Basic Fun, said he received about $450,000 — just 7% of his total claim — over two consecutive days this month, followed by less than $10,000 since. He described the process as a “total slow roll.”
“It’s time to release the funds back into the economy, especially given how much we and others need these funds to support our businesses and fund our operations,” Foreman said.
Melkon Khosrovian, who owns Greenbar Distillery in Los Angeles, applied for a refund of about $90,000 across 17 shipments and has received $18,000 so far. He imports herbs, spices and packaging that are difficult to source domestically. Facing an impossible choice under the tariff regime, he invested in automation and cut three of his 13 employees — the opposite of what the White House promised.
“Our choices were bad and worse: raise prices and lose customers, or keep prices the same and not make any money,” Khosrovian said.
Bigger Players, Smaller Stakes — Relatively Speaking
For retail giants, the refunds matter less in proportional terms but still carry symbolic weight. Walmart CFO John David Rainey told analysts last week the company planned to use its refund to cut prices on some items — even though the maximum refund it might receive represents less than half of 1% of Walmart’s $483 billion in annual U.S. sales.
FedEx said it was “working to swiftly process refunds and return them to the shippers and consumers who originally bore those charges.”
What Remains in Force
The Supreme Court’s February ruling invalidated only the country-by-country tariff rates Trump imposed under the emergency powers law. Tariffs imposed under other legal rationales remain in effect, and Trump has moved to introduce additional tariffs since the ruling — meaning the underlying trade conflict is far from resolved.
CBP is currently processing refund claims in phases, prioritizing payments that were not finalized before the court’s decision, which officials say are simpler to process. The Justice Department said older, finalized accounts require technological upgrades and case-by-case legal orders before recalculation can begin.
Judge Eaton has demanded that CBP Commissioner Rodney Scott appear before the court on June 9 to explain how long full repayment would take. The Justice Department has asked that Scott’s deputies appear instead, arguing a senior presidential appointee cannot be compelled to testify — a claim Eaton has so far rejected.