After court junks Trump’s tariffs, what happens to USD 133 bn collected so far?

The US Supreme Court’s significant decision to scrap many of the sweeping tariffs that President Donald Trump imposed in the first year of his second term in office is set to result in significant consequences.

While it could reshape the current US administration’s course of economic and foreign policies since it relied heavily on tariffs as a leverage in those areas, the American apex court’s decision (backed by a 6-3 majority) raises a more immediate question: What happens to the $133 billion that the government has already accumulated in import taxes that have now been held unlawful?

Also read: Explainer: India-US tariffs after Supreme Court verdict

According to reports, companies have already been making a beeline seeking refunds after the ruling came. But the way would not be simple, since it will be punctuated by legal hassles.

What legal experts say

Associated Press cited Joyce Adetutu, trade lawyer and a partner at the Texas-based Vinson & Elkins law firm, as saying that “it is going to be a bumpy ride for a while”.

The report also added that the procedure for refunds is expected to be determined through collaboration among the US Customs and Border Protection agency, the specialised Court of International Trade located in New York, and various lower courts, as indicated in a communication to clients from attorneys at Clark Hill, a law firm in Michigan.

“The amount of money is substantial,” Adetutu was quoted as saying by the report. While stressing both the courts and the importers will face a tough time on this matter, she said that it would be “really difficult not to have some sort of refund option” after the Supreme Court’s decisive ruling.

Also read: Why SC Court order is not the end of Trump's tariffs push? Expert decodes

Ryan Majerus from Atlanta’s King & Spalding, who is also an ex-US trade official, said it is challenging to predict how the government will address the huge demand for refunds. The government may attempt to simplify the process, potentially by establishing a dedicated website for importers to submit their refund claims, the AP report added.

According to Adetutu, however, the government can make things challenging for importers. “I can see a world where they push as much responsibility as possible onto the importer,” she was quoted as saying. The general speculation is that Trump may now make the court act on the problem of refunds.

Democrats target Trump, seek refunds

The opposition has also entered the fray to corner the president, who came back to avenge his defeat in the 2020 elections in 2024. JB Pritzker, the governor of Illinois and a leading Trump critic, sent the latter an invoice demanding more than $8.6 billion in tariff refunds for families in his state.

In a letter to Trump, the picture of which he also posted on X, along with that of the invoice, Pritzker wrote, “Your tariff taxes wreaked havoc on farmers, enraged our allies, and sent grocery prices through the roof.” The governor, who sought a refund of $1,700 for each household in his state, also threatened to take further action if the president did not comply with the demand.

Gavin Newsom, the Democratic governor of California, also slammed Trump in the wake of the Supreme Court's decision, saying the money that Trump's steep tariffs had raised came from the American voters' pockets and backed refunding.

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In a press release that his office issued, Newsom said, “Time to pay the piper, Donald. These tariffs were nothing more than an illegal cash grab that drove up prices and hurt working families, so you could wreck longstanding alliances and extort them. Every dollar unlawfully taken must be refunded immediately - with interest. Cough up!”

Both Pritzker and Newsom are seen as potential Democratic presidential candidates for the 2028 elections.

No clarity on refund process

Following the Supreme Court’s decision, many consumers who are seeking a refund for the increased prices they incurred as companies transferred the cost of tariffs to them may find that this is unlikely to occur.

The Trump administration has promised refunds of duties accumulated, both formally and informally. But neither the administration nor the Supreme Court specified at the moment how it would work out.

In fact, to borrow a word that Justice Amy Coney Barrett, who was backed by Trump to become a Supreme Court judge in his first term and sided with the court’s majority decision, used during a November hearing on the case, Justice Brett Kavanaugh, associate justice on the apex court, warned that the refund process was likely to be a “mess”, the AP report added.

The potential scale of repayments is enormous. The prominent Penn-Wharton Budget Model has projected that refunds could reach $175 billion, although it remains uncertain who would ultimately benefit from these funds.

However, it is more probable that the funds will be allocated to the companies themselves, as US Treasury Secretary Scott Bessent has voiced doubts regarding the likelihood of ordinary Americans receiving direct compensation.

Also read: Struck down but not out: Furious Trump vows new 10 pc tariffs

Trump himself recognised that the refund process could extend over several years. “I guess it has to get litigated for the next two years,” he told reporters at a press conference on Friday.

“We’ll end up being in court for the next five years.”

This represents a significant change for individuals who might have anticipated receiving a tariff "dividend", after the Republican leader’s repeated assertions last year that millions of Americans would receive “a little rebate” due to the substantial revenue influx.

As of mid-December last year, the US customs agency has amassed $133 billion in IEEPA (International Emergency Economic Powers Act of 1977) tariffs. The apex court ruled that the law did not empower the president to tax imports, an authority that belongs to Congress.

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The agency has a procedure for refunding duties indeed when importers can demonstrate that an error has occurred. According to trade lawyer Dave Townsend, a partner at the law firm Dorsey & Whitney, Minnesota, the agency may seek to enhance the current system to facilitate refunds for Trump's IEEPA tariffs.

Firms initiated law process even before ruling came

Meanwhile, numerous companies, such as Costco, Revlon, and the canned seafood and chicken manufacturer Bumble Bee Foods, initiated lawsuits requesting refunds , even prior to the Supreme Court's ruling, effectively aiming to position themselves at the forefront should the tariffs be annulled.

It is probable that additional legal disputes will arise in the future. For instance, manufacturers may initiate lawsuits to claim a portion of any refunds provided to suppliers that inflated the prices of raw materials to offset the tariffs.

(With agency inputs)