If the U.S. Supreme Court decides that President Donald Trump's IIEPA tariffs are illegal, companies large and small may be eligible for refund payments that in total could reach hundreds of billions of dollars. But trade attorneys warn that tariff refunds could be delayed, depending on how U.S. courts and U.S. Customs go about issuing the payments.
President Trump wrote in a social media post on Jan. 12 that "it would take many years to figure out what number we are talking about and even, who, when, and where, to pay." He added: "It would be a complete mess, and almost impossible for our Country to pay."
But importers and customs experts have been pushing back on Trump's claims, saying rather than being a "messy" process, because the tariffs being paid are itemized the process for refunding the money should be straightforward.
The Court's latest batch of decisions issued Tuesday morning did not include the tariffs case.
There are several scenarios that could impact the timing of refunds, according to Michael Lowell, partner and chair of the global regulatory enforcement group at Reed Smith.
"There is no set timeline on when refunds will be given back," said Lowell.
For starters, the Court of International Trade and litigants who files cases against the tariffs, in coordination with the U.S. government, would need some time to figure out how to manage the refund process, he said.
The first scenario Lowell explained would be if the Supreme Court ruled the tariffs unlawful and remanded the question of refunds back to the CIT.
"The issue would then presumably be briefed and argued over several months and then presumably appealed back up to the Supreme Court," he said.
The second scenario is a SCOTUS ruling of the tariffs being unlawful and a mandate by the Supreme Court to the CIT to start the refunds. Lowell noted the Department of Justice and the litigants in teh S is asking the CIT to appoint a steering committee to manage the over 1,000 refund-related cases filed to date. "That committee would then be engaged with the CIT and the DOJ in advocating for a refund process that benefits the importers who have filed refund-related cases," he said.
Keeler said it's common for a steering committee to be established to manage the tariff repaying process.
The third scenario introduces an additional layer of complexity. Importers protesting entries or filing Post Summary Corrections (PSC) to seek refunds.
"Customs can take up to two years to process a protest," said Lowell. "PSCs are typically done in 30-45 days."
The Trump administration is expecting to win the case. Treasury Secretary Scott Bessent on Sunday said it's "very unlikely" that the Supreme Court will overturn President Donald Trump's use of emergency powers to impose tariffs, with a potential decision from the court looming as early as this week. Even if the administration loses, Trump officials have said that new tariffs will go into effect immediately, and President Trump is now threatening a new round of tariffs on European partners over the issue of U.S. control of Greenland.
For importers betting on a cash infusion from tariff refunds, they should be aware there's no set timeline and any rush for refunds could overwhelm the system and likely lead to long delays. As an initial step, "importers need to contact their brokers now if they haven't, so they can receive their itemized tariff information to set up a process for any claims they file," said Tim Keeler, partner, co-leader of international trade at Mayer Brown, and former chief of staff for U.S. Trade Representative Susan Schwab. "If everybody asks their broker for itemization at the same time, the brokers may be the ones who are the initial delay for their clients, because they're inundated," he said.
Recently, U.S. Customs rolled out a new tariff refund system which gives importers until Feb. 6 to set up their accounts for electronic payments to avoid any lapse in potential refunds. Beyond the effective date of Feb. 6, Customs would no longer issue physical checks as the agency has in the past.
Keeler told CNBC repaying the tariffs is doable, but it is fair to assume importers will need to work with their brokers to have tariff itemization and either file in court with CIT or Customs to set up a process to set up their claims.
"The Trump administration might just want to move on to the new tariffs and it may be in their interest to figure out a smooth process, to process refunds, as opposed to fighting for a year or two," Keeler said. "Now, it's a lot of money, and so having a year or longer process to play out from the government borrowing standpoint, may be in the government's interests. So there isn't a funding crunch," he added.
The Trump administration has said a replacement tariff plan is ready to go in the event the IIEPA tariffs were ruled illegal.
Keeler has advised clients on the possibility of additional tariffs being levied.
The USTR could "very quickly" impose tariffs under Section 122 of the Trade Act of 1974. "The president would declare a balance of payments problem, and that could get 15% tariffs across the board very, very soon," Keeler said. "These tariffs would last for five months. Then I think it's likely the launch of investigations under Section 301, on a country-by-country basis."
Section 301 of the Trade Act of 1974 allows the USTR to investigate and retaliate against unfair foreign trade practices.
In a TD Cowen note to clients on Tuesday, it explained if IEEPA is struck down, the administration is expected to quickly replace the tariffs within 24 hours. The report noted in addition to Section 122 and Section 301, the administration could also use Section 338 of the Tariff Act of 1930 â authorizing tariffs of up to 50% in response to discriminatory foreign practices.Â
Whatever comes next, there are as many questions as answers. "We don't anticipate anything immediate and we try to communicate that to clients as best we can, urging patience with clients," said Lori Mullins, director of operations at Rogers & Brown Custom Brokers. "We are treading new territory here, so we have to be careful in communicating the complexities of the refund process if there is one to be had," she said.
Supply chain strategists have told CNBC relief for consumers will also be delayed.
"Retailers haven't passed on the full cost of tariffs to consumers over the past year, instead they've seen their margins squeezed. Josh Ketter, CEO of Spreetail. "Their first priority for tariff refunds will be to make themselves financially whole again, so consumers expecting immediate price cuts are going to be disappointed."Â