A federal judge, Richard Eaton, ordered the U.S. government to begin refunding an estimated $130 billion in Trump-era tariffs after the Supreme Court's recent 6-3 ruling invalidated the use of the International Emergency Economic Powers Act (IEEPA) for imposing such tariffs [1]. The refund process will start with U.S. Customs and Border Protection calculating what importers would have paid without the now-invalid tariffs, and Judge Eaton clarified he has sole jurisdiction over these refunds, which more than 1,000 companies have sued for in the U.S. Court of International Trade [1]. The case was initiated by Atmus Filtration, Inc., a company affected by the tariffs imposed under IEEPA last year [1].
The Supreme Court majority held that IEEPA does not authorize tariffs, even after a national emergency declaration, as Congress did not clearly grant the executive branch that power [1]. All importers who paid these duties are entitled to benefit from the ruling, and CBP is instructed to calculate affected imports as if the tariffs had never applied, paving the way for refunds [1]. Justice Brett Kavanaugh, in his dissent, warned of "serious practical consequences," noting the refund process could be a "mess" due to billions potentially being refunded, even if costs were passed on to consumers [1]. Judge Eaton disputed this, stating there is "nothing particularly novel about the provision of refunds" and that it will not result in chaos [1].
Meanwhile, President Trump responded to the Supreme Court ruling by immediately invoking Section 122 of the Trade Act of 1974 to keep the 10% tariffs in place in the near term and announced plans to increase import duties from 10% to 15% for certain countries [2]. This move prompted a lawsuit filed by attorneys general from 24 states, including New York, Oregon, California, and Arizona, in the Court of International Trade, arguing that Trump lacks the authority to impose the tariffs under Section 122 and describing the effort as an attempt to "sidestep" the Supreme Court's ruling [2]. The state AGs characterized Trump's actions as "an exercise of completely unrestrained executive power" and warned of chaos to the global economy [2].
The next steps in the case are unclear, but the lawsuit is expected to face strong opposition from the White House and Justice Department [2]. Trump has continued to champion tariffs as a central economic policy, describing the issue as "life or death" for the U.S. economy [2]. Last April, Trump declared a national trade emergency to invoke IEEPA, aiming to address trade imbalances, reduce deficits, and boost domestic manufacturing [2]. Two federal courts previously blocked Trump's use of IEEPA for tariffs, leading to the Supreme Court's emergency review [2].
CONCLUSION
The Supreme Court's decision has triggered a massive refund process for $130 billion in Trump-era tariffs, while President Trump is attempting to maintain and expand tariffs using a different legal authority. The ongoing legal challenges and state-led lawsuit signal continued uncertainty and potential disruption for importers and the broader economy. Market participants should expect heightened volatility as the legal and policy landscape evolves.