The Trump administration is signaling it doesn’t want to write a single refund check despite last week’s Supreme Court ruling against its tariffs – but it could face an uphill battle given the leanings of a little known federal court that will be hearing the cases, On The Money has learned.
It was the US Court of International Trade that initially threw into question President Trump’s sweeping tariff mandates against trading partners, imposed through executive fiat instead of congressional approval. And it is this court – skeptical of Trump’s power grab over trade – that’s slated to handle most if not all of the refund cases, On The Money has learned.
Recall how the whole mess started. Trump said the US trade imbalance was a “national emergency” that allowed him to invoke the International Emergency Economic Powers Act, or IEEPA, to impose those stiff “Liberation Day” tariffs on our trading partners. Markets imploded, causing the administration to back off some of the most onerous levies.
That said, tariffs are now higher than at any point in recent history. They’re also legally dubious. The country’s trade deficit isn’t great, but it’s hardly a national emergency meriting a congressional workaround that IEEPA presents. That’s what the Supreme Court ruled in a 6-3 decision last Friday – but only after the trade court, known by its acronym CIT, ruled last May that the president had overstepped his authority.
The ruling came from a three-judge panel: a Trump appointee, an Obama appointee and a third appointed by Ronald Reagan back in 1983. The court’s anti-MAGA bias isn’t immediately apparent but the Reagan appointee is seen as both free market and strict on preserving congressional authority to impose tariffs. The Trump appointee, oddly, served in the Obama administration.
“It’s unclear exactly what will happen,” said a Washington-based lawyer who litigates trade disputes. “There are around 3,000 refund lawsuits already pending and they are assigned to the same three judges who dinged Trump originally and are not fans.”
Legal experts expect White House lawyers to look for potential loopholes in the ruling to prevent any immediate refunds on the $175 billion in tariffs paid by companies on imported goods.
They might seek to litigate on a case-by-case basis, imposing what’s known as the “Final and Unappealable,” a legal standard that says the government can’t write a check until the entire case can be heard. Companies might just say it’s not worth their time. Trump, meanwhile, is seeking to reimpose his tariffs through other means.
Companies that brave the legal system – and Trump’s ire inside and outside court – will have to unravel exactly what is owed to them. That could mean showing exactly what part of a tariff they ate as opposed to passed along to consumers. Treasury Secretary Scott Bessent has already upped the rhetoric, likening tariff refunds to the “ultimate corporate welfare.” Also look for the administration to try and have the cases taken out of the CIT to more friendly venues.
As my trade lawyer source put it: “You still have layers of appeal depending on whether they try to consolidate all the cases, force the claimants to argue them one by one or spread them out among the various judges on the CIT.”
In other words, companies trying to figure out if they should seek a refund might first consult not just a lawyer but also an accountant, who can walk them through what’s known as the “time value of money.”
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