Businesses big and small have started receiving tariff refunds after the U.S. Supreme Court ruled that President Donald Trump lacked the constitutional authority to impose higher import taxes on goods from nearly every other country.
The process could grind to a halt, however, after the Trump administration said Friday that it intended to appeal a federal judge’s order to allow all companies that paid the invalidated duties to seek refunds, not just the ones that filed lawsuits.
Until the Department of Justice informed the judge of its planned appeal, the refund system overseen by U.S. Customs and Border Protection had worked fairly smoothly. Refunds reached the bank accounts of the first successful applicants on May 12, about three weeks after importers and their customs brokers could start submitting claims, according to CBP.
Applications for refunds totaling $85 billion — more than half of the $166 billion the agency estimated the government owes to companies that paid the tariffs on imported goods — were accepted for processing as of May 22, CBP reported in a legal filing earlier in the week. It said it had so far directed the Treasury Department to issue $20.6 billion in refunds.
The administration revealed its appeal preparations while objecting to a demand by Judge Richard K. Eaton for CBP Commissioner Rodney Scott to appear in the U.S. Court of International Trade on June 9. The judge said he wants to know how long it would take to repay all 330,000 importers that might be eligible for refunds and whether he should require the government to speed up the process.
Justice Department lawyers asked Eaton to allow Scott’s deputies to appear in his place, arguing that as a high-ranking presidential appointee, the CBP chief could not be compelled to testify. They also argued that Eaton exceeded his authority when he determined that the Supreme Court’s ruling entitled “all importers of record’’ to refunds.
“For that reason, defendants intend to appeal the court’s universal injunction,” the lawyers wrote, adding that CBP would continue to move “as quicky as it can to process refunds in a phased approach” for businesses that filed legal complaints asserting their rights to refunds.
Eaton responded that he needed to hear directly from Scott whether the government would return all of the money it collected between April 2025, when Trump put what he called “reciprocal” tariffs on most countries, the Supreme Court’s decision in late February.
“It is undisputed that the remedy for this unlawful collection is for the United States government to refund the unlawfully collected duties,” the judge wrote.
Refunds coming in phases
Customs and Border Protection is handling refund claims in phases, focusing first on payments that weren’t finalized before the Supreme Court handed down its 6-3 decision. CBP officials said those later, estimated payments were simpler to process because they remained open in its system.
In Friday’s filing, the Justice Department said the agency required technological upgrades to its refund portal and “importer-specific orders” in each lawsuit that businesses filed before it could recalculate the final tax bills for older “liquidated” accounts.
More than 1,000 companies filed lawsuits in the trade court to recoup their tariff costs. It was not immediately clear how many importers that paid the tariffs did not sue and might not receive refunds if an appeal of Eaton’s blanket order succeeds.
Ryan Majerus, a partner on the international trade team at law firm King & Spaulding, said he thinks “it’s definitely a fraction of the total in terms of folks who paid” the defunct duties. An appeal would likely affect only imported merchandise that was in the U.S. for 314 days, a time when CPB issues its official determination of the duties owed, he said.
“This doesn’t cover everybody, only those really old entries,” Majerus said about a potential appeal.
But filing an appeal could slow the refund process even if the government “already lost the war” before the Supreme Court, according to Barry Appleton, a professor at New York Law School and managing partner of Appleton & Associates International Lawyers.
“If the government can freeze the refund machinery while it litigates, it buys months, and every month of delay is a month the Treasury keeps the money,” Appleton said.
Price cuts promised
Some national retail chains said they planned to use their tariff refunds to lower customer prices on some items. Walmart Chief Financial Officer John David Rainey told analysts last week that the company would implement price cuts even though the maximum refund it might be eligible for represented less than half of 1% of Walmart’s annual U.S. sales.
Costco intends to return the tariff costs that it passed on to members, CEO Ron Vachris said. How much of its refund the big-box retail chain redistributes, when and in what form, depends on factors such as the size of the refund, when it arrives, and developments in a lawsuit seeking tariff compensation for Costco customers, Vachris told investors Thursday.
Consumers may see refunds first from shipping companies such as FedEx, UPS and DHL, which acted as customs brokers when they delivered products ordered from overseas.
The companies charged either the sellers that shipped the packages or the buyers who received them and submitted the collected tariffs to CBP. All three promised to transmit any refunds they get to the customers that paid the import taxes.
Putting refunds back into the business
The Supreme Court invalidated only the country-by-country tariff rates Trump set by citing the 1977 International Emergency Economic Powers Act. The president also has moved to introduce new tariffs since the court’s Feb. 20 ruling.
Some smaller companies told The Associated Press that the tariff refunds they’ve received so far would go toward paying remaining or future tariffs or getting back on solid financial footing after more than a year of uncertainty and additional costs.
Jay Foreman, CEO of toy company Basic Fun, said he received about $450,000, or 7% of his total claim, over two consecutive days. He took the repayment as a positive sign but that the pace since then seemed like a “total slow roll.”
“It’s time to release the funds back into the economy, especially given how much we and others need these funds to support our businesses,” Foreman said.
Men’s grooming brand Manscaped has received about 30% of the $12 million in refunds it applied for, President Kevin Datoo said. The San Diego company deferred investments and took on debt to pay tariffs on imports from Indonesia, China and elsewhere in Asia, he said.
“We need to shore up the balance sheet because there’s still a whole second chapter here,” Datoo said.
Melkon Khosrovian, who owns Greenbar Distillery in Los Angeles, said he applied for a tariff refund of about $90,000 for 17 different shipments of herbs, spices and packaging that are hard to find domestically. To date, he said he received $18,000.
Khosrovian invested in automating his bottling system last year to reduce personnel costs while his import expenses grew. He recalled how the White House had argued the tariffs would create more U.S. manufacturing jobs.
The tariffs were “painful,” he said. “Our choices were bad and worse: raise prices and lose customers, or keep prices the same and not make any money.”
