A US trade court has ruled that companies that paid tariffs imposed by President Donald Trump under emergency powers must be refunded, marking another legal setback for the administration after the tariffs were already ruled illegal by the US Supreme Court.
Judge Richard Eaton of the US Court of International Trade in New York ruled on Wednesday, 4th March, that “all importers of record” are entitled to benefit from the earlier Supreme Court decision that found the tariffs imposed under the 1977 International Emergency Economic Powers Act (IEEPA) illegal. This allows companies that paid the taxes on imports to now claim a refund from the government.
Earlier, the US Supreme Court ruled that the tariffs, including the “reciprocal” tariffs on imports from almost every country in the world, were illegal.
The majority said that the US president does not have the authority to independently impose or change tariffs, because the power to levy taxes lies with Congress.
Judge Eaton also clarified how refund disputes will be handled. He said he will handle cases related to the return of the tariffs imposed under IEEPA. The earlier ruling by the Supreme Court did not clarify how refunds should be processed, and this is what the trade court ruling now clarifies.
The case that led to this ruling involved a company named Atmus Filtration, a filtration products manufacturer based in Nashville, Tennessee. The company claimed that it should be reimbursed for the imposed duties it has already paid.
Under normal US Customs and Border Protection procedures, imported goods go through a “liquidation” process where the agency makes its final calculation of duties owed.
Importers have 180 days to challenge those duties. Judge Eaton has ordered customs authorities to stop collecting these imposed IEEPA tariffs on products that are still in this procedure. For goods that have already completed the process, they will be recalculated and will not include these imposed duties.
According to data from the Penn Wharton Budget Model, the US government collected more than $130 billion from the now-invalid tariffs through mid-December. Refund obligations could eventually reach about $175 billion US dollars.
Trade lawyer Ryan Majerus, who is a partner at King & Spalding and a former US trade official, stated that “the administration may challenge the decision, or they can seek a stay to give US Customs more time to comply.
Experts say the ruling could create a large administrative challenge. While US Customs regularly processes refunds in individual cases, the system was not designed for refunds on such a massive scale. Attention is now turning to the agency to create a system capable of managing the payments.
Barry Appleton, a law professor and co-director of the Centre for International Law at New York Law School, said the decision will help importers and consumers who paid the tariffs, and it will also start a process for those who filed within the 180-day window.
An earlier court ruling that declared trump tariffs illegal
In another case, the US Court of Appeals for the Federal Circuit previously handed the Trump administration a significant blow after it determined that the majority of the tariffs that had been enacted during the emergency period were illegal.
The case focused on the use of the 1977 International Emergency Economic Powers Act (IEEPA), which the Trump administration used to justify imposing sweeping tariffs on goods from nearly every country. The court examined whether the law actually gave the president the authority to impose such taxes.
In a 7-4 ruling, the court said Trump exceeded his powers by using a national emergency declaration to introduce tariffs. The judges noted that while the president has broad authority during emergencies, the law does not clearly allow the president to impose tariffs or taxes.
“The statute gives the President significant authority during a national emergency, but it does not specifically grant the power to impose tariffs, duties, or similar taxes,” the judges said.
The court also noted that IEEPA was designed to allow the president to regulate international commerce during foreign threats, mainly through actions like sanctions and freezing assets, not through broad tariff measures.
After the ruling, Donald Trump said removing the tariffs would be a disaster. The court did not immediately revoke the tariffs and gave the administration time to appeal the decision to the US Supreme Court.
