The Trump administration plans to appeal a federal judge’s order that allows all businesses that paid invalidated import tariffs to seek refunds, not just those that filed lawsuits. This decision could significantly disrupt the refund process, which has begun to disburse billions of dollars but is overseen by U.S. Customs and Border Protection.
Businesses, including major retailers like Walmart and Costco, have been anticipating these refunds, with some pledging to pass savings onto consumers. However, the legal challenge introduces uncertainty and potential delays in the disbursement of the estimated $166 billion owed to companies.
Businesses nationwide are beginning to see tariff refunds following a landmark U.S. Supreme Court decision that declared President Donald Trump lacked the constitutional authority to impose elevated import taxes on goods from most countries. However, this crucial refund process faces potential disruption as the Trump administration announced its intention to appeal a federal judge's order that broadens eligibility for these refunds.
The appeal targets a recent ruling that permits all companies which paid the now-invalidated duties to seek reimbursement, not exclusively those that initiated lawsuits. This move by the Department of Justice could significantly slow down or halt the flow of anticipated refunds, which have already started reaching some businesses.
Prior to the Department of Justice's announcement of its appeal plans, the refund mechanism managed by U.S. Customs and Border Protection (CBP) had been operating with relative efficiency. Initial refund deposits began appearing in the bank accounts of the first successful claimants around May 12, approximately three weeks after importers and their customs brokers were able to submit their claims, according to CBP data.
As of May 22, applications for refunds totaling an estimated $85 billion—more than half of the $166 billion the agency calculates the government owes to businesses—were accepted for processing. CBP reported in a recent legal filing that it had directed the Treasury Department to disburse $20.6 billion in refunds thus far.
The administration's decision to appeal came as it contested U.S. Court of International Trade Judge Richard K. Eaton's directive for CBP Commissioner Rodney Scott to appear in court on June 9. Judge Eaton aims to ascertain the timeline for repaying all 330,000 potentially eligible importers and whether the government should be compelled to expedite the process.
Justice Department lawyers have requested that Scott's deputies represent him, asserting that as a high-level presidential appointee, the CBP chief cannot be subpoenaed. They also contend that Judge Eaton overstepped his authority by ruling that the Supreme Court's decision grants refunds to "all importers of record."
"For that reason, defendants intend to appeal the court's universal injunction," the lawyers stated in their filing. They added that CBP would continue processing refunds in a "phased approach" for businesses that had filed legal complaints to assert their refund rights.
Judge Eaton countered that he requires direct testimony from Scott regarding the government's commitment to returning all duties unlawfully collected between April 2025 and the Supreme Court's late February ruling. "It is undisputed that the remedy for this unlawful collection is for the United States government to refund the unlawfully collected duties," the judge stated.
Refunds Arriving in Stages
CBP is processing refund claims in distinct phases, prioritizing payments that were not finalized before the Supreme Court's 6-3 decision. CBP officials noted that these later, estimated payments are simpler to process as they remain open within the system.
In its Friday filing, the Justice Department indicated that the agency needs technological upgrades to its refund portal and "importer-specific orders" for each lawsuit before it can recalculate final tax bills for older, "liquidated" accounts.
Over a thousand companies initiated lawsuits in the trade court to recover their tariff expenses. It remains unclear how many importers who paid the tariffs did not file suit and might be excluded from receiving refunds should Judge Eaton's broad order be overturned on appeal.
Ryan Majerus, a partner at law firm King & Spaulding specializing in international trade, believes that "it's definitely a fraction of the total in terms of folks who paid" the now-defunct duties. He suggests that an appeal might only affect imported merchandise that was held in the U.S. for 314 days, the period during which CBP issues its official duty determination.
"This doesn't cover everybody, only those really old entries," Majerus commented on the potential implications of an appeal.
However, Barry Appleton, a professor at New York Law School and managing partner at Appleton & Associates International Lawyers, warns that pursuing an appeal could significantly delay the refund process, even if the government "already lost the war" at the Supreme Court. "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," Appleton explained.
Retailers Pledge Price Reductions
Several major national retailers have announced plans to use their tariff refunds to lower prices for consumers on select products. John David Rainey, Chief Financial Officer at Walmart, informed analysts last week that the company intends to implement price cuts, even though the maximum potential refund represents less than half a percent of Walmart's annual U.S. sales.
Ron Vachris, CEO of Costco, stated that the company plans to pass on the tariff costs it had previously charged its members. The extent to which Costco redistributes its refund, and the timing and form of these price adjustments, will depend on factors such as the refund amount, its arrival date, and developments in a lawsuit seeking tariff compensation for Costco customers, Vachris told investors.
Consumers might see refunds first from shipping giants such as FedEx, UPS, and DHL. These companies acted as customs brokers for deliveries of imported goods.
The companies collected tariffs either from the sellers or the buyers and remitted them to CBP. All three shipping firms have committed to passing any received refunds directly to the customers who originally paid the import taxes.
Reinvesting Refunds into Business Operations
The Supreme Court's decision specifically invalidated the country-specific tariff rates established by President Trump under the 1977 International Emergency Economic Powers Act. Notably, the president has also pursued new tariff implementations since the court's February 20 ruling.
Some smaller businesses shared with The Associated Press that the tariff refunds they have received so far are earmarked for paying outstanding or future tariffs, or for stabilizing their financial positions after over a year of economic uncertainty and increased costs.
Jay Foreman, CEO of toy company Basic Fun, reported receiving approximately $450,000, constituting about 7% of his total claim, over two consecutive days. While he views this initial repayment positively, he described the subsequent pace as a "total slow roll."
"It's time to release the funds back into the economy, especially given how much we and others need these funds to support our businesses," Foreman urged.
Kevin Datoo, President of men's grooming brand Manscaped, stated that the company has received about 30% of the $12 million in refunds it applied for. The San Diego-based company had deferred investments and incurred debt to cover tariffs on imports from various Asian countries, he explained.
"We need to shore up the balance sheet because there's still a whole second chapter here," Datoo added, highlighting the ongoing financial pressures.
Melkon Khosrovian, owner of Greenbar Distillery in Los Angeles, has received $18,000 of his approximately $90,000 refund request for 17 shipments of herbs, spices, and packaging that are difficult to source domestically.
Khosrovian had invested in automating his bottling system last year to mitigate rising personnel costs amidst escalating import expenses. He recalled the White House's argument that these tariffs would stimulate domestic manufacturing job growth.
He described the tariffs as "painful," stating, "Our choices were bad and worse: raise prices and lose customers, or keep prices the same and not make any money."
