The US International Trade Court ordered the Trump administration to refund importers such as Costco (COST.US) and thousands of other importers under the IEEPA tariffs.

The U.S. International Trade Court ruled on Wednesday that U.S. Customs and Border Patrol must refund tariffs imposed under the International Emergency Economic Powers Act (IEEPA) by automotive parts manufacturer Atmus Filtration Technologies (ATMU.US). This decision is expected to expedite the process of refunding tariffs paid over the past year by companies like Costco, FedEx Corporation, and many small businesses facing import cost pressures. This ruling comes after the U.S. Supreme Court previously ruled that most of the tariffs imposed by the Trump administration under the IEEPA were unlawful. The Supreme Court then delegated the issue of refunds to the U.S. International Trade Court. The Trump administration had expressed dissatisfaction with the ruling and was seeking new legal avenues to continue imposing tariffs on imported goods. The government stated that the process of refunding already imposed tariffs would be "extremely complex." Judge Richard Eaton, who made the ruling, stated that he would handle cases related to IEEPA tariff refunds. Scott Lincicome, Vice President of Economic Policy at the Cato Institute, described the judge's directive as "surprisingly simple," requiring refunds to all importers and to be completed promptly. He noted that this ruling was a "heavy blow" to the market. International trade lawyer Doug Jacobson stated that the order meant that tariffs paid under the IEEPA since the end of April last year should be refunded. According to estimates by the Wharton School Budget Model at the University of Pennsylvania, U.S. Customs had collected approximately $175 billion through IEEPA tariffs, and now these funds, along with interest, need to be refunded to importers. Rick Woldenberg, CEO of Learning Resources, a company involved in the Supreme Court case, welcomed the ruling. He stated that the decision was "quick, clear, and decisive," reaffirming the rule of law and providing clear guidance to businesses facing illegal tariff costs. Typically, importers in the U.S. have to prepay tariffs when goods enter the country, and Customs usually has 314 days to finalize the amount through a process called "liquidation." Jacobson pointed out that the court's order applied to tariff items that had not completed liquidation, covering most of the tariffs levied by the Trump administration under the IEEPA on global imports after April of last year. Although there is still some room for interpretation regarding the scope of the order, legal experts believe that even tariffs that were finalized before the end of April may be subject to refund. Additionally, the ruling means that importers do not have to individually file lawsuits to receive refunds. Companies like Costco, FedEx Corporation, and Toyota Motor Corp. have previously taken legal action regarding tariffs. Jacobson stated that the over 2,000 pending cases at the International Trade Court are expected to be resolved uniformly due to this ruling. Lincicome described it as a "victory" for many small businesses that lack the resources to litigate. Ideally, U.S. Customs and Border Patrol should be able to automatically refund tariffs to companies through their digitized customs system. If the government chooses to expedite the process, businesses may receive their refunds within a few months. However, some legal experts anticipate that the government may try to delay implementation. Ryan Majerus, a former official at the U.S. Trade Representative's Office and current partner at King & Spalding, stated that the government may seek a stay of execution or an extension of the implementation period. Lincicome also believes that the government may delay the refund process through appeals or increased customs reviews. In another document submitted to the court, the U.S. government has confirmed that interest will be paid on refunds. A report released by the Cato Institute this week estimates that if the government delays refunds, the cost of interest could increase by about $700 million for each month of delay. The White House has not commented on the ruling yet. Government officials had previously indicated plans to establish a similar tariff mechanism through other legal channels. Currently, the U.S. has imposed a 10% tariff on global imports under Section 122 of the 1974 Trade Act, which allows tariffs to be in place for up to 150 days. White House officials revealed this week that the government is considering increasing this rate to 15%. Due to the uncertainty surrounding the timeline for refunds, market participants caution investors against prematurely including potential refund income in financial forecasts. For example, the U.S. clothing brand Abercrombie & Fitch did not factor in any potential tariff refunds in its 2026 fiscal year guidance released on Wednesday. Furthermore, even if businesses receive refunds, they may not keep all the funds for themselves and may return them to consumers who previously paid extra charges to avoid potential class action lawsuits. International trade lawyer Laura Siegel Rabinowitz noted that FedEx Corporation was recently sued by customers in federal court seeking refunds of related fees, and the court's order to expedite refunds may further prompt similar lawsuits.