The U.S. Supreme Court ruled against Trump's tariffs. Will companies get their money back?
The U.S. Supreme Court ruled on Friday in a 6-3 decision that President Donald Trump ’s tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were beyond his purview and lacked historical precedent.
The IEEPA is a 1977 law that gives sitting U.S. presidents the power to declare a national emergency related to security, foreign policy or the economy and impose economic sanctions on other countries.
Trump first invoked IEEPA in February to justify levying tariffs on Canada and Mexico, claiming the countries weren’t doing enough to stem the cross-border flow of fentanyl and illegal immigrants. He later expanded the order to include dozens of other U.S. trading partners as part of his April 2 “Liberation Day” announcement.
What did the Supreme Court say?
Writing for the majority, Chief Justice John Roberts said that the Trump administration “reads IEEPA to give the President power to unilaterally impose unbounded tariffs and change them at will. That view would represent a transformative expansion of the President’s authority over tariff policy.”
Roberts added that it was telling that “in IEEPA’s half century of existence, no President has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope.”
The lack of precedent, “coupled with the breadth of authority that the President now claims, suggests that the tariffs extend beyond Trump’s authority,” he said.
Justices Clarence Thomas, Brett Kavanaugh and Samuel Alito dissented, with Thomas writing that there was no basis in the statutory text or the Constitution to rule against the president. “The Court has long conveyed to Congress that it may vest the president with large discretion in matters … relating to trade and commerce with other nations.”
How did President Trump respond?
Speaking to state governors at the White House this morning, Trump reportedly called the Supreme Court’s decision “a disgrace.” No one expects his administration to give up on tariffs.
Tim Brightbill, an international trade lawyer and partner at Wiley Rein LLP in Washington, D.C., said in an interview before the ruling that there are other tools Trump can use to quickly reimpose tariffs — and two are already in the president’s arsenal.
The first is Section 301 of the Trade Act of 1974, which allows the U.S. Trade Representative (USTR) to investigate and act against “unjustifiable, unreasonable, or discriminatory” economic practices by foreign countries that burden American commerce.
During Trump’s first term, his administration used Section 301 to investigate and impose tariffs on China for its practices related to technology transfer, intellectual property and innovation.
Brightbill said the USTR publishes an annual list of foreign trade barriers and could use some of those reports as a basis for moving forward under Section 301 to impose country-specific tariffs.
Another option is Section 232 of the Trade Expansion Act of 1962, which gives the president broad powers to investigate and impose tariffs on specific imports deemed to be a national security threat.
Trump used Section 232 during his first term to place tariffs on foreign steel and aluminum. Brightbill said Section 232 has been Trump’s “tool of choice” in his second term for levying product-specific tariffs on goods from Canada, including steel, aluminum and softwood lumber.
Does the president have any other options?
Trump has two other options. Section 122 of the Trade Act of 1974 was created as a short-term measure to address major balance-of-payments issues, such as trade deficits or depreciation of the U.S. dollar in foreign exchange markets.
“There’s been some thought that if the IEEPA tariffs are struck down, the president could use Section 122 to take temporary action almost immediately and impose up to 15 per cent tariffs for up to 150 days,” said Brightbill, which would buy the administration time to pursue other avenues.
Brightbill said a “wildcard” option would be Section 338 of the Tariff Act of 1930, which lets the president temporarily levy tariffs or set restrictions if the U.S. International Trade Commission determines a sudden surge in imports is harming a specific American industry.
“It’s never been used, so it’s a little unclear how it would be applied, whether it’s on a country-specific basis or something broader,” said Brightbill.
How do companies get their money back?
The court didn’t provide instructions on issuing refunds, but the U.S. Court of International Trade (CIT) oversees legal challenges related to import duties and tariffs. Thousands of companies, including high-profile ones like Costco Wholesale Corp., preemptively filed lawsuits with the CIT to stake a claim on refunds. “The courts have not said it’s necessary, but the companies wanted to get in line nonetheless,” said Brightbill.
In his dissent, Justice Brett Kavanaugh said issuing refunds would have “significant consequences” for the U.S. Treasury.
“The court says nothing today about whether, and if so how, the government should go about returning the billions of dollars that it has collected from importers,” he said. “But that process is likely to be a ‘mess,’ as was acknowledged at oral argument.”
The scale of refunds could be massive. According to U.S. Customs and Border Protection (CBP) data, the U.S. raked in roughly US$133.5 billion in IEEPA-related tariffs between March 2025, when they were first imposed, and Dec. 14, 2025, the day of CBP’s most recent update. It estimates IEEPA duties paid on Canadian goods at US$2.42 billion for that period.
Jesse Mitchell, director of business development for customs brokerage Strader-Ferris International, said many people might be surprised to learn that Canadian companies often foot the bill for customs and duties on U.S.-bound shipments to incentivize American customers to buy their products.
“Canadian companies end up acting as the importer of record on a significant percentage of imports into the United States, so they’re the ones that are paying the tariffs,” Mitchell said in an interview in January.
In general, CBP handles everything related to assessing, collecting, adjusting and refunding duties and taxes on goods entering the U.S.
What happens next?
Mitchell said the customs brokerage industry was waiting to see what impact the Supreme Court decision might have on refunds. Now it will look to the CBP or CIT (or both) to come up with the mechanisms by which refunds can be distributed and whether they differentiate between unliquidated and liquidated customs entries.
Duties are considered “unliquidated” (or estimated) for a period of up to 314 days after entering the U.S. During that time, CBP can review the entry and charge additional duties or issue a refund for overpayment. When the entry is confirmed and finalized, it is considered “liquidated.”
“After that point, it’s going to be more difficult for customs brokers and importers to reclaim money,” said Mitchell, adding that more entries will become liquidated as time goes on.
Mitchell said the customs industry has already been “bogged down” by constantly changing trade policies over the last year. If the Supreme Court orders retroactive refunds, Mitchell said it will create a rush of extra work for brokerages like Strader Ferris.
“We have to parse out the individual tariff on that product that will be refunded, and that’s why this process is going to end up taking us a long time,” said Mitchell.
The Penn Wharton Business Model projects the U.S. government may need to issue US$175 billion in refunds, and that unless IEEPA-related tariffs are replaced by another source, future tariff revenues will decrease by half.
The refund process may turn out to be logistically complex, but it could involve less physical paperwork — CBP announced last month that it was switching to an electronic refund process.
• Email: jswitzer@postmedia.com