THE US Supreme Court (SCOTUS) has yet to rule on the legality of emergency tariffs, but a framework is now in place for refunds if these levies are stricken down.
Refunds could boost US imports in the 2026 peak season even if US President Donald Trump uses other powers to replace his tariffs under the International Emergency Economic Powers Act of 1997 (IEEPA).
The refund payout to US importers would be enormous.
US Customs & Border Protection had collected $129bn in IEEPA tariffs through December 10, according to a CBP court filing. Over a month later, the sum is likely to top $140bn.
Electronic refunds and CIT rulings
The refund process, if required, would be facilitated by a CBP electronic refund system upgrade announced on January 6. All CBP refunds will be done electronically, via the Automated Commercial Environment data portal, starting on February 6.
“Enhancing ACE enables secure electronic refunds, faster payments, fewer errors and a simplified process for importers, brokers and refund recipients,” said CBP.
Even if it’s as easy as pressing the “refund” button, US importers are worried about other constraints.
Would a SCOTUS ruling only apply to IEEPA tariffs paid by plaintiffs in the case being argued, or would it also apply to other emergency levies, such as the additional 40% tariff on goods from Brazil and 25% tariff on Indian goods?
Could importers recoup tariffs that have already been “liquidated” by CBP? Liquidation, or the finalisation of charges, occurs 314 days after a customs entry.
Last year, concerns over post-liquidation refunds compelled some importers, including retail giant Costco, to file suit in the US Court of International Trade. Costco and dozens of others plaintiffs have come together to press their claims in AGS Company Automotive Solutions and Consolidated Plaintiffs v. CBP.
The CIT panel has issued several important orders in this case.
On December 15, it ruled that “liquidation will not affect the availability of refunds after a final decision [and] the government would be judicially estopped from assuming a contrary position in the future”.
In other words, US importers do not have to fear losing out on future refunds due to the liquidation timetable.
On Wednesday, the CIT panel ruled that refunds, if warranted by a SCOTUS decision, would apply to “all current and future similarly situated plaintiffs” and to all types of IEEPA tariffs — including, for example, those on Brazilian and Indian goods.
Pete Mento, director of global trade advisory services at Baker Tilly, said in an online post, “On January 14, the Court of International Trade did something refreshingly clear: it confirmed that the government’s IEEPA refund promise applies to everyone who’s similarly situated, not just the lucky few who filed first.
“The US has now formally said the quiet part out loud. If the Supreme Court ultimately rules that these IEEPA tariffs were unlawfully collected, Customs will refund them. Full stop.
“Refunds aren’t available yet but the legal runway is now clearly paved,” wrote Mento. “We now we wait on the Supreme Court clock.”
No ruling in first two SCOTUS ‘decision days’
SCOTUS issued the first decision of its current term on January 9, followed by three rulings on Wednesday — but not the IEEPA decision. It has not announced when its next “decision day” will be.
Most legal commentators believe SCOTUS will rule against Trump, given the line of questioning during oral arguments on November 5.
The Polymarket odds that SCOTUS will allow IEEPA tariffs fell to a low of 22% in early January. After the two non-decision days, the odds rose to 33% on Thursday, the highest level since before the oral arguments.
“The Supreme Court follows its own timeline,” said Sarah Bianchi, policy and politics analyst at Evercore ISI, in a client note. She still expects Trump to lose the case, and noted that SCOTUS has sessions scheduled for next week, followed by a lull until February 20.
“If we get into the late-February period or beyond, then it becomes less likely that the court will rule against the administration, given the timeliness and fiscal impact of this issue,” she wrote.
US importers would get the one-time benefit from refunds if IEEPA tariffs are invalidated but would still face high levies going forward. Around half of US tariff revenue is from non-IEEPA measures, and the administration has a plan to replace IEEPA tariffs if necessary.
Trump could theoretically use Section 122 of the Trade Act of 1974 to enact 15% blanket tariffs for 150 days, which could be used as a bridge to higher tariffs under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.
However, these measures are much less flexible than IEEPA tariffs. Trump would not be able to enact tariffs immediately in any situation he deems an emergency.
Case in point: Trump wrote on Truth Social on Monday that “effectively immediately, any country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America. This order is final and conclusive.”
It’s actually not final or conclusive until there’s an executive order, and no such order has been issued.
Also, this would be an IEEPA tariff, so if the US collected it, and SCOTUS ruled against IEEPA levies, US importers would get refunds under the CIT decision, in the same way importers of Brazilian and Indian goods would.
If SCOTUS rules against Trump, his days of threatening instant tariffs via Truth Social are over — or rather, they would become empty threats. Section 301 and 232 tariffs require an administrative process.
The loss of IEEPA usage would diminish America’s ability to conduct what its National Security Strategy calls “commercial diplomacy using tariffs” and what some critics dub “shakedowns”.
Trump is aware of the stakes. The SCOTUS ruling on IEEPA tariffs will be “their most important Decision (ever!)”, he wrote.
“If the Supreme Court rules against the United States of America on this National Security bonanza, WE’RE SCREWED!”
