EXEC: The Trump Tariff Refund Process Just Got A Lot More Interesting | SGB Media Online

Just when the market thought that the Trump Tariff story couldn’t get any more interesting, the White House, and any company that paid higher tariffs under the President’s Tariff Tiff last year, could face even bigger problems. This new twist is happening as companies seek refunds for the higher tariffs they paid to the Customs and Border Protection (CBP) service, which resulted from the Trump Administration invoking the International Emergency Economic Powers Act (IEEPA) to increase tariffs on most U.S. trading partners last year. Those tariffs were ruled illegal and struck down by the U.S. Supreme Court (SCOTUS) in a February ruling. President Trump subsequently issued an Executive Order terminating the IEEPA tariffs.

Now, the process for distributing refunds for the tariffs paid falls to the U.S. Court of International Trade (CIT) for a ruling on who gets what and when. Retailers and vendors that import directly from manufacturers outside the U.S. are already attempting to calculate what they have coming from the estimated $135 billion to over $200 billion total impact of the tariffs, plus interest and penalties, one would assume.

But not so fast. There’s a fly in the ointment, and everything is not as it seems.

This past week, a consumer who lives in the Midwest filed suit in the Federal Court for the Northern District of Illinois against Costco Wholesale Corporation, seeking to recover the higher prices he paid, allegedly due to the IEEPA tariffs. In court documents obtained by SGB Executive, it appears the plaintiff, Illinois resident Matthew Stockov, has proposed nationwide class-action status for the suit seeking U.S. customer refunds for higher prices charged by Costco before the U.S. Supreme Court struck down the IEEPA tariffs.

The class-action certification still needs to be ruled on by the Illinois court; however, the suit amounts to a major headache for any retailer, brand, vendor, distributor, or other importer seeking and receiving refunds. To make matters worse, the plaintiff is demanding a jury trial.

Be careful what you wish, or sue for, because this can of worms has no bottom.

Paying attention yet?

The good news? CIT Judge Richard K. Eaton issued a sweeping order last week that could affect every importer in the country. Reuters said the ruling covers approximately 330,000 importers, and it does not require each company to have filed an individual lawsuit to qualify for repayment.

Some key points from the CIT’s March 4 ruling:

• Ordered refunds of IEEPA tariff duties following the SCOTUS ruling in Learning Resources, Inc. v. Trump.
• Ordered U.S. Customs and Border Protection to finalize unliquidated entries without applying IEEPA tariffs, resulting in automatic duty refunds for importers.
• Shipments liquidated within the last 90 days must be re-liquidated by CBP without IEEPA duties. Importers with entries liquidated more than 90 days ago must file formal protests with CBP within 180 days of liquidation to preserve refund rights.
• Government appeal of the order is expected; procedural delays are likely before refund disbursements.

Costco is among the more than 2,000 companies suing the Trump Administration before the CIT to recover duties they paid prior to the SCOTUS ruling. Reuters is reporting that FedEx is facing a similar consumer class action filed in a Florida federal court last month.

Is your company or brand one of those plaintiffs? Are you a retailer that had to buck up and pay higher prices for goods so your vendors could recoup some, if not all, of the increased tariff fees to maintain margins? As a retailer, did you then raise prices for your customers to recoup some, if not all, of the lost margin on those goods? What is the consumer’s next step?

Now think about the brands and retailers that have been reporting their Q4 and 2025 financials and telling analysts they have had “permission” from customers to increase prices based on the premium status of the brands or models, which may or may not have been affected by the IEEPA tariffs.

How does a brand find the time to review each retailer’s orders to determine whether a price increase was due to IEEPA tariffs? Will they need to refund money to each retailer, or just to those who requested a refund? What if the brand increased prices on models that were not affected by the IEEPA tariffs, but the retailer was told those models were affected?

For retailers, how are you going to determine who and how much you will need to refund for purchases marked up due to tariffs? What if prices were raised to levels not commensurate with the tariff hit?

Suggesting that it can all be fixed with AI is probably not the right answer.

Beware the Educated Consumer

Costco CEO Ron Vachris told analysts recently that the wholesale warehouse retailer plans to pass on savings from tariff refunds to shoppers through lower prices if it manages to land a windfall.

“As we’ve done in the past, when legal challenges have recovered charges passed on in some form to our members, our commitment will be to find the best way to return this value to our members through lower prices and better values,” Vachris said on the call held March 5. “We’ll be transparent in how we plan to do this if and when we receive any refunds.”

Vachris cautioned that it’s “not yet clear what the process will be, what refunds, if any, will be received, and when this will happen.” He added that Costco has absorbed some of the tariff impact. Vachris said, “Throughout the past year, we have taken action to reduce the impact of tariffs; in many cases, we did not pass the full cost on to our members.”

It appears the plaintiff was prepared for those remarks, indicating in the suit that “That hypothetical action would not make the Class whole. Returning value “through lower prices” to an indeterminate group of future shoppers is not restitution to the identified individuals who paid inflated prices during the Class Period. It is a commitment to benefit future purchasers at the expense of past ones, and it is not a legally cognizable substitute for the relief sought herein.”

If your company is going down this road, caution should be observed.

The C-Suite Talks

A KPMG survey of 300 U.S.-based C-suite and business leaders at organizations across sectors with annual revenues above $1 billion explored how organizations planned to handle refunds.

Of the respondents, only 18 percent would fully reverse price hikes resulting from Trump’s tariffs. Another 34 percent would implement a partial rollback of price increases, and 30 percent would use temporary promotional pricing.

If refunds arrive, the survey showed companies would most likely reinvest in supply chain diversification (14 percent), followed by working capital and inventory (13 percent), R&D/product innovation (12 percent), and capital expenditures (12 percent). Shareholder returns and customer credits/rebates ranked the lowest — at 5 percent and 4 percent, respectively.

The KPMG survey was taken between February 9 to 24, while the U.S. Supreme Court’s ruling that many of Trump’s tariffs — those invoking the International Emergency Economic Powers Act (IEEPA) — were unconstitutional arrived on February 20.

U.S. Active Lifestyle Market Reaction

In an interview with SGB Executive as the Supreme Court’s ruling arrived, Matt Priest, president and CEO, Footwear Distributors and Retailers of America (FDRA), said he suspects some companies may use potential refunds to lower pricing in price-sensitive channels such as mass — but others may choose to make investments in new hires, technology, or facilities they’ve been putting off due to cost pressures from tariffs. He also noted there’s been “some dumbing down of product” to lower the FOB (freight on board) cost of imports, and that any tariff recovery could shift toward quality upgrades.

The Current Process

The Fox Rothschild law firm published a how-to or FAQ page on its website outlining the refund process. They, of course, are offering companies (and consumers?) to pursue their claims. There will be many more if this case gets to class-action status.

From Fox Rothschild:

What Importers Need to Do Now

For shipments that were finalized more than 90 days ago, the order does not automatically require CBP to issue refunds. This is the category that requires the most urgent attention. Importers in this situation must file a formal “protest” with CBP requesting a return of the duties.

The deadline to file a protest is 180 days from the date the shipment was finalized, and there are no exceptions to this deadline — it continues to run even while appeals are pending. Importers should contact their customs brokers immediately to obtain a list of all finalized shipments, so they can identify which entries require a protest filing.

What to Expect Going Forward

CBP is almost certainly going to appeal Judge Eaton’s order, and the government has been working to slow the process down. As a result, importers likely face a significant wait before they will see a refund in their hands.

However, Judge Eaton appears to be moving quickly. He summoned government attorneys to his courtroom for a closed status conference on March 6. In the meantime, importers continue to file new lawsuits at the Court of International Trade.

What’s Next?

With all this coming down the pike, what will companies decide about the refund process? Will they pursue it? Set aside a portion of the refund for long-term refunds? Invest in their business and hope for the best? Or just say to hell with it, it isn’t worth the time and energy.

And then we all do this over again with Trump’s new Section 221 tariff idea that is already being challenged.

So much for celebrating a return to more certainty in the market!

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