Yes, judge orders Trump: you must refund all companies charged with illegal tariffs
In a setback for the Trump administration, a federal judge in New York ruled on Wednesday that companies which paid tariffs invalidated by the Supreme Court last month are owed refunds.
Judge Richard of the U.S. Court of International Trade stated that “all importers of record’’ were “eligible to gain’’ from the Supreme Court decision that overturned broad double-digit import taxes President Donald Trump imposed last year under the 1977 International Emergency Economic Powers Act (IEEPA).
The court found that tariffs Trump imposed under the emergency powers law were unconstitutional, including the broad “reciprocal” tariffs he imposed on nearly every other country.
In his decision, Eaton noted that he alone “will handle cases related to the refund of IEEPA duties.’’ The ruling provides some clarity on the tariff refund process, a matter the Supreme Court did not address in its Feb. 20 decision. Trade lawyer Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, stated he anticipates the government will appeal or “seek a stay to allow more time for U.S. Customs to comply.″
According to estimates from the Penn Wharton Budget Model, the federal government collected over $130 billion in the now-invalid tariffs through mid-December and could ultimately be responsible for refunds totaling $175 billion.
Eaton’s ruling specifically addressed a case filed by Atmus Filtration, a Nashville, Tennessee-based company that manufactures filters and other filtration products, which is asserting its right to a tariff refund.
All goods processed by U.S. Customs and Border Protection undergo a process known as “liquidation,” during which the agency issues its final determination of the amount owed. Once liquidated, importers have 180 days to formally challenge the duties. After this period ends, the liquidation becomes legally binding.
The judge instructed Customs to cease collecting the IEEPA tariffs invalidated by the Supreme Court last month on goods undergoing the liquidation process. For goods that have already passed this stage, the agency must recalculate their duties excluding the tariffs.
“This is a positive decision for importers and consumers who paid,” said Barry Appleton, a law professor and co-director of New York Law School’s Center for International Law. “It will keep customs brokers occupied. It should simplify matters for the courts — and initiate a process for importers who paid within the last 180 days.”
On Monday, another federal court denied the Trump administration’s effort to delay the refund process. The court initiated the next phase of the refund process by referring it to the New York trade court for resolution.
The U.S. Customs and Border Protection agency now needs to devise a method to process the refunds. While Customs typically refunds tariffs in cases of errors, its system “was not built for a large-scale refund,″ said trade lawyer Alexis Early, a partner at Bryan Cave Leighton Paisner. “The challenges will lie in the specifics of the administrative process.″
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Anderson reported from New York.
AP Writer Lindsay Whitehurst contributed to this report.