A major question following the Supreme Court decision to strike down the Trump administration’s “Liberation Day” tariffs is whether the government will have to refund hundreds of billions of dollars in revenue it has already collected.
The court ruled Friday morning that President Donald Trump’s use of the International Emergency Economic Powers Act to impose tariffs was unconstitutional, but it did not grapple with the issue of repayments.
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“The Supreme Court declined to lay out any kind of process through which American businesses who have been charged can recoup their losses,” David McGarry, research director at the Taxpayers Protection Alliance, told the Washington Examiner.
That leaves a big question mark for businesses that have had to pay the government since the sweeping tariffs were imposed nearly a year ago.
Dissenters in the 6-3 ruling were Justices Clarence Thomas, Samuel Alito, and Brett Kavanaugh — all conservatives. While the opinion of the court did not mention repayment at all, Kavanaugh touched on that complication in his dissent.
“The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others,” Kavanagh wrote. “As was acknowledged at oral argument, the refund process is likely to be a ‘mess.’”
And many expect that the businesses affected by the now-unconstitutional Trump tariffs will end up going to the courts and demanding refunds, which could be costly for the U.S.
Stephen Kates, a financial analyst at Bankrate, said he expects this decision to ignite new court fights over repayments.
“I think that’s going to be aggressively litigated by companies in lower courts,” he told the Washington Examiner. “That’s going to play out over weeks and months. There’s still a lot of uncertainty around exactly how this is going to go, but there’s blood in the water. Now, this ruling certainly puts businesses on the front foot to fight back for those refunds.”
The Trump administration also seems to be coalescing around fighting refunds in the courts.
“We’ll end up being in court for the next five years,” Trump said in a press conference at the White House, in response to a question about honoring tariff refunds.
Similarly, Treasury Secretary Scott Bessent said Friday that the matter of refunding tariffs is “in dispute” and noted that the Supreme Court declined to weigh in.
“They pushed it back down to the International … Trade Court, and my sense is that could be dragged out for weeks, months, years,” Bessent said.
Desmond Lachman, a senior fellow at the American Enterprise Institute, said he expects a “huge battle” in the courts over the matter.
“Trump is probably going to resist it, which could make it messy, take time, but it’s really going to be a big mess — I can’t see companies not wanting to be compensated for what they were charged, the amounts are big,” Lachman told the Washington Examiner.
The Penn Wharton Budget Model estimated that the refund cost could be as high as $175 billion. And while that represents a small percentage of total federal revenues, Kates said it is “not insubstantial.”
“We don’t necessarily have that cash just hanging around under the mattress to hand back to businesses,” he said. “We’ve already run a budget deficit, we have been running budget deficits for years, and we still do today. So, there is no surplus of money ready to go.”
Still, despite the Supreme Court ruling, the Trump administration is confident it will be able to reimpose many of the tariffs through a patchwork of other trade laws, a task that is more challenging than just imposing them under the blanket of the IEEPA.
“What is likely to happen is that … the administration will act and impose tariffs again” under other statutes, said Milos Ivkovic, an international trade expert and professor at the Washington University School of Law.
Refunds aside, the loss of government tariff revenue further imperils the government’s fiscal position.
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Maya MacGuineas, president of the Committee for a Responsible Federal Budget, called the lost stream of revenue “very bad news” and implored Congress to work to fill the hole.
“With today’s Supreme Court ruling affirming the illegality of President Trump’s emergency tariffs, the country will now be about $2 trillion deeper in the hole,” she said.
