The U.S. Court of International Trade ruled on Wednesday that U.S. Customs and Border Protection must refund tariffs previously collected under the International Emergency Economic Powers Act (IEEPA). The case was initiated by automotive parts manufacturer Atmus Filtration Technologies (ATMU). This ruling is expected to accelerate the refund process for companies that paid these tariffs over the past year, potentially benefiting entities ranging from large retailers like Costco (COST) and logistics giant FedEx (FDX) to numerous small businesses strained by increased import costs.
The decision follows a prior ruling by the U.S. Supreme Court, which found that most tariffs imposed by the Trump administration under IEEPA were unlawful. The Supreme Court had referred the issue of refunds to the Court of International Trade, which holds exclusive jurisdiction. The Trump administration had expressed dissatisfaction with that ruling and sought new legal avenues to continue imposing tariffs on imports. The government had previously stated that refunding collected tariffs would be "extremely complex" to implement.
Judge Richard Eaton, who issued the latest ruling, indicated that cases related to IEEPA tariff refunds would be handled solely by him. Scott Lincicome, Vice President of Economic Policy at the Cato Institute, described the judge's directive as "surprisingly simple," requiring refunds to all importers as quickly as possible. He noted that the ruling is "the equivalent of a bombshell" for the market.
International trade attorney Doug Jacobson stated that the order implies all IEEPA tariffs paid since late April of last year should be refunded. According to estimates from the University of Pennsylvania's Wharton Budget Model, U.S. Customs had collected approximately $175 billion through IEEPA tariffs, which must now be refunded to importers along with interest.
Rick Woldenberg, CEO of educational products company Learning Resources, which was involved in the Supreme Court case, welcomed the ruling. He described the decision as "swift, clear, and decisive," reaffirming the rule of law and providing clear guidance for businesses burdened by unlawful tariffs.
Under standard procedure, importers prepay tariffs when goods enter the U.S., and Customs typically has 314 days to finalize the amount through a process called "liquidation." Jacobson noted that the court's order applies to tariff entries that have not yet completed liquidation, thus covering the majority of duties collected after the Trump administration imposed global import tariffs under IEEPA last April. While the scope of the order leaves some room for interpretation, legal experts widely believe that even tariffs liquidated before late April may be subject to refund.
Additionally, the ruling means importers can receive refunds without having to file individual lawsuits. Companies including Costco, FedEx, and Toyota (TM) had previously filed legal challenges over the tariffs. Jacobson suggested that the more than 2,000 related cases currently backlogged in the Court of International Trade are likely to be resolved uniformly as a result of this decision. Lincicome called it "a victory" for many small businesses lacking the resources to litigate.
Ideally, U.S. Customs and Border Protection could use its digitized entry processing system to automatically refund tariffs to businesses. Industry observers believe that if the government acts swiftly, companies could receive refunds within months. However, some legal experts anticipate the government may attempt to delay implementation. Ryan Majerus, a former U.S. Trade Representative official and current partner at King & Spalding, suggested the government might seek a stay or an extension of the implementation deadline. Lincicome also noted that the government could delay refunds through appeals or increased scrutiny of customs declarations.
In a separate court filing, the U.S. government confirmed it would pay interest on the refunds. A Cato Institute report estimated this week that each month of delay could add approximately $700 million in interest costs. The White House has not yet commented on the ruling. Administration officials have previously stated plans to reestablish similar tariff mechanisms through other legal channels. Currently, the U.S. imposes a 10% tariff on global imports under Section 122 of the Trade Act of 1974, which allows such tariffs to remain in effect for up to 150 days. White House officials this week also indicated that the administration is considering raising this rate to 15%.
Given the uncertainty surrounding the refund timeline, market analysts caution investors against prematurely incorporating potential tariff refunds into financial forecasts. For example, American apparel brand Abercrombie & Fitch (ANF) did not include any possible tariff refunds in its fiscal 2026 guidance released on Wednesday.
Furthermore, some companies may not retain the full refund as profit but may instead pass it on to consumers who bore the additional costs, potentially to avoid class-action lawsuits. International trade attorney Laura Siegel Rabinowitz pointed out that FedEx was sued last week in federal court by customers seeking refunds of related fees, and the court's expedited refund ruling could encourage more such lawsuits.
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