U.S. Court Takes First Steps Toward Ordering Tariff Refunds

The Trump administration is likely to appeal the move, as it ramps up its attempt to slow or potentially block the repayment of billions in past duties.

A federal judge on Wednesday ordered the Trump administration to take the first steps toward issuing more than $100 billion in potential tariff refunds, ratcheting up a legal battle over a roster of sky-high duties that the Supreme Court deemed illegal.

The order, issued by Judge Richard K. Eaton of the United States Court of International Trade, amounted to an early victory for the thousands of businesses that have already sued to recover the taxes they paid, plus interest, now that President Trump’s global tariffs have been struck down. Last month, the Supreme Court ruled that Mr. Trump could not use the International Emergency Economic Powers Act, or IEEPA, to impose tariffs on U.S. trading partners.

Many trade lawyers said they were still deciphering the scope of the judge’s three-page directive. But they generally agreed that its mandate could prove short lived, with the Trump administration expected to quickly challenge it. Judge Eaton has scheduled a hearing in the case for Friday.

In the initial round of lawsuits over its tariffs, the Trump administration had indicated that it would issue refunds in the event that the president’s tariffs were invalidated. But Mr. Trump and his aides have shifted to a more defiant tone since the Supreme Court dealt a decisive blow to one of the most potent, flexible weapons in the president’s trade war. The administration has signaled that it intends to delay or contest repayment of the money, arguing at times that refunds could create a fiscal crisis for the United States.

“This is a victory for small businesses who have paid billions in unlawful tariffs and deserve their money back,” Dan Anthony, the executive director of We Pay the Tariffs, a coalition that represents businesses that have opposed the president’s past duties, said in a statement.

“The court acted swiftly and correctly,” he added. “Now the ball is in the government’s court, and small businesses are concerned they will drag this out further.”

A spokeswoman for U.S. Customs and Border Protection, which oversees the day-to-day implementation of tariffs, did not immediately respond to a request for comment. The White House did not respond to a request for comment.

Much remained unclear from the court ruling, including how the government might issue refunds and when. The uncertainty underscored the complexity that awaits the Trump administration at a moment when the president is taking steps to revive his tariffs by other means.

Generally, tariffs are due when a product enters the United States. But the exact amount that an importer owes is finalized over a roughly yearlong process known as liquidation. Purchasers may file formal protests with the federal government if they dispute what the government says they owe.

For many importers, the liquidation process is still underway for millions of goods that were brought ashore during Mr. Trump’s first year back in office. As a result, the final tally on the tariffs they owed was not completed by the time the Supreme Court ruled against the president in late February. That prompted companies, including FedEx and Costco, to flood the legal system with lawsuits seeking to protect their refund rights.

Judge Eaton appeared to deliver an early warning shot to the Trump administration in one of the lesser-noticed cases. His short order essentially opened with a declaration that “all importers of record” that paid taxes under Mr. Trump’s emergency tariffs were “entitled to the benefit” of the Supreme Court’s decision that those duties were illegal.

“This is everybody,” said Scott Lincicome, the vice president of general economics at the Cato Institute, a libertarian group. He added that it was clear many importers were owed a refund. “It’s about the best news importers could have hoped for,” he said.

Judge Eaton also ordered the Trump administration to stop calculating importers’ tariff bills based on the emergency duties that have been declared illegal. The government by its own admission has continued to do so as part of the final closeout process for goods brought into the United States over the past year.

Judge Eaton further appeared to apply the same requirement to certain imports that already had their tariff bills finalized in the process known as liquidation, though lawyers disagreed on the scope of what the court had mandated.

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