Businesses Start Receiving Tax Refunds Following Supreme Court Ruling

Businesses of all sizes are beginning to see tax refunds after a decision by the U.S. Supreme Court stated that President Trump doesn’t have the constitutional power to enforce high import taxes on goods from most countries.

However, this refund process may hit a snag now that the Trump administration has announced plans to appeal a federal judge’s ruling that allowed for refunds to all companies that paid the invalid tariffs, not just those that took legal action.

Initially, the refund process managed by U.S. Customs and Border Protection (CBP) was running fairly smoothly. According to CBP, the first successful applicants received refunds on May 12, just three weeks after they and their customs brokers submitted their applications. But complications arose once the Justice Department declared its intention to appeal.

CBP had indicated in a legal document that, by May 22, it had received refund applications totaling $85 billion—over half of the estimated $166 billion the government owed to companies that paid these duties. Up to now, the Treasury Department has been directed to refund $20.6 billion.

While outlining its appeal plans on June 9, the administration voiced objections to Judge Richard K. Eaton’s request for CBP Director Rodney Scott to appear in front of the U.S. Court of International Trade. The judge was interested in understanding how long it would take to process refunds for the 330,000 importers who might qualify, and whether he should push for a quicker process.

Lawyers from the Justice Department requested that only Scott’s attorney appear in court, arguing that Scott, being a senior presidential appointee, shouldn’t be compelled to testify. They also contended the judge exceeded his authority by suggesting that the Supreme Court’s decision warranted refunds for “all importers of record.”

“Consequently, the defendants plan to appeal the court’s overarching injunction,” the attorneys stated, adding that CBP is committed to processing refunds for companies that lodged formal complaints as quickly as it can.

The Supreme Court had ruled in late February that Judge Eaton needed to hear from Scott directly about whether the government would return all funds collected by April 2025, as part of the reciprocal tariffs the President imposed on numerous countries.

“There is no dispute that the remedy for this illegal collection is for the U.S. government to refund the illegally collected duties,” the judge noted.

Refunds Will Occur in Phases

CBP is handling refund requests in phases, initially focusing on payments that were not finalized before the Supreme Court’s decision. CBP officials indicated that payments that still appear open within the system are easier to process.

In its recent filing, the Justice Department mentioned it is seeking upgrades to the refund portal along with “importer-specific instructions” for each case before recalculating the final tax amounts on older accounts.

Over 1,000 companies have filed lawsuits in the Trade Court to reclaim tariff costs. It’s not clear how many companies that paid duties chose not to sue, or whether they’ll be eligible for refunds despite successful appeals.

Ryan Majerus, a partner with King & Spalding’s international trade team, commented that the repealed tariffs are just a part of the broader picture regarding those who paid them. He noted that appeals may only involve goods that have been in the U.S. for 314 days, which is when CBP issues a formal determination regarding unpaid duties.

“This isn’t applicable to everyone; it’s mainly for very old entries,” Majerus explained.

However, even with the Supreme Court ruling as it did, Barry Appleton, a professor at New York Law School and managing partner at Appleton & Associates International Lawyers, suggested that the appeal could hinder the refund process.

“If the government can stop the refund process during litigation, then it essentially buys time—each month of delay is a month of money held by the Treasury,” he stated.

Retail Chains Planning Price Reductions

Some major retail chains have indicated plans to pass on the tax refunds to customers through reduced prices. Walmart’s Chief Financial Officer, John David Rainey, shared last week that the company would lower prices, even though its potential refund would be less than 1% of its annual U.S. sales.

Costco is also looking to refund the tariff costs passed onto its members, although CEO Ron Vacris mentioned that the specifics would depend on several factors, including the timing of refunds and ongoing lawsuits related to tariff compensation.

Consumers might first see refunds from shipping companies like FedEx, UPS, or DHL, which served as customs brokers for items imported from overseas. These companies had either billed the seller or the buyer for the collected duties, and they’ve pledged to refund those who paid import taxes.

Returning Money to Businesses

The Supreme Court, referencing the International Emergency Economic Powers Act of 1977, invalidated only the national tariff rates imposed by President Trump. The administration has also pushed for new tariffs since the ruling was made on February 20.

Various small and medium-sized businesses have shared with the Associated Press that the refunds they’ve received thus far will help cover ongoing or future duties or stabilize their finances after a period of uncertainty and inflated costs.

Jay Foreman, CEO of toy manufacturer Basic Fun, mentioned that he received around $450,000—representing 7% of his total bill—again for the second consecutive day. He viewed the repayments positively but noted that the pace of refunds seemed “totally slow.”

“It’s time to reinvest in the economy, particularly considering how much we and others need these funds for our business operations,” Foreman stressed.

Kevin Datu, CEO of men’s grooming brand Manscaped, reported that his company received about 30% of the $12 million refund applied for. He noted that Manscaped delayed investments and took on debt to manage duties from imports coming from places like Indonesia and China.

“We’re still at the beginning stages, so we really need to bolster our balance sheet,” Datu remarked.

Melkon Khosrovian, who runs Greenbar Distillery in Los Angeles, applied for roughly $90,000 in duty refunds for shipments of various hard-to-source herbs and spices. So far, he has only received $18,000.

Last year, Khosrovian invested in automating his bottling system to reduce labor costs, even as import costs rose. He recalled that the White House suggested the tariffs would generate more U.S. manufacturing jobs.

He described the tariffs as “painful,” saying, “We faced a difficult choice: raise prices and lose customers, or maintain prices and not turn a profit.”