Trump appeals order expanding $166 billion in tariff refunds

The Trump administration appealed a court order extending tariff refunds to all US importers, threatening to stall a $166 billion repayment process that has already returned $20.6 billion to businesses.

"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," said Barry Appleton, a professor at New York Law School and managing partner of Appleton & Associates International Lawyers.

Applications totaling $85 billion — more than half of the $166 billion the government owes — had been accepted for processing as of May 22, according to a CBP legal filing. The agency directed the Treasury to issue $20.6 billion in refunds before the Justice Department notified Judge Richard K. Eaton of the U.S. Court of International Trade of its planned appeal. Eaton had ordered CBP Commissioner Rodney Scott to appear June 9 to explain why the government should not be compelled to accelerate repayments to all 330,000 potentially eligible importers.

The appeal challenges Eaton's March ruling that the Supreme Court's 6-3 decision striking down Trump's use of the 1977 International Emergency Economic Powers Act entitles "all importers of record" to refunds, not just the more than 1,000 companies that filed lawsuits. If the appeal succeeds, importers that did not sue could lose access to refunds on goods that entered the US before the court's Feb. 20 ruling, while the Treasury retains billions in unlawfully collected duties.

Refund Process Faces Legal Uncertainty

The Justice Department argued that Eaton exceeded his authority with the universal injunction and that Scott, as a high-ranking presidential appointee, could not be compelled to testify. The agency said it would continue processing refunds "as quickly as it can" for businesses that filed legal complaints — roughly 485 pending cases in the trade court.

Ryan Majerus, a partner on the international trade team at King & Spaulding, said the appeal would likely affect only merchandise that had been in the US for 314 days, the point at which CBP issues its final duty determination. "This doesn't cover everybody, only those really old entries," Majerus said.

Companies Count on Refunds for Survival

Retail giants and small businesses alike have begun receiving partial repayments. Walmart CFO John David Rainey told analysts the company would cut prices even though its maximum refund represents less than 0.5 percent of its $483 billion in annual US sales. Costco CEO Ron Vachris said the chain intends to return tariff costs passed on to members, though the timing and form depend on refund size and pending litigation.

Smaller firms report a slower pace. Jay Foreman, CEO of toy company Basic Fun, received about $450,000 — 7 percent of his total claim — over two consecutive days, but said the process since then has been a "total slow roll." Men's grooming brand Manscaped has received about 30 percent of the $12 million it applied for, President Kevin Datoo said, adding that the company deferred investments and took on debt to pay tariffs on imports from Indonesia, China and elsewhere in Asia.

Melkon Khosrovian, who owns Greenbar Distillery in Los Angeles, received $18,000 of the $90,000 he claimed on 17 shipments of herbs, spices and packaging. He invested in automating his bottling system to offset rising import costs. "Our choices were bad and worse: raise prices and lose customers, or keep prices the same and not make any money," Khosrovian said.

The Supreme Court invalidated only the country-by-country tariff rates Trump set under IEEPA. The president has since moved to introduce new tariffs under other legal authorities, leaving importers facing continued uncertainty even as they await repayment of the unlawfully collected duties.

This article is for informational purposes only and does not constitute investment advice.