The potential for businesses to receive tariff refunds has significantly increased after the Supreme Court expressed skepticism towards the Trump administration's efforts to maintain most of its tariffs. This development raises important questions about how the refund process would operate if the court rules against the administration.
As of September 23, US Customs and Border Protection reported that the federal government has collected nearly $90 billion in revenue from the tariffs currently under legal scrutiny. This figure is expected to grow until a verdict is reached, which could take several months.
One of the pressing issues raised during the Supreme Court hearings was eligibility for tariff refunds. Justice Amy Coney Barrett, appointed by President Trump, questioned Neal Katyal, the former acting solicitor general who represents small- and medium-sized businesses challenging the tariffs. “If you win, tell me how the reimbursement process would work. Would it be a complete mess?” Barrett asked. Katyal affirmed that the five businesses he represents should receive a refund if the court rules in their favor but noted that for other businesses, the refund process could be quite complex.
Thomas Beline, a trade attorney at Cassidy Levy Kent, explained that businesses not represented by Katyal may need to file separate appeals in lower courts to pursue refunds. “What I’d be looking at as an importer would be my importations over the last several months and when the entries will liquidate,” he said, emphasizing the complicated nature of the tariff code and the process involved.
Katyal highlighted the administrative complexities involved in securing tariff refunds. He referenced a 1998 Supreme Court decision concerning harbor maintenance fees, which led to significant tariff refunds. However, that case took two years for $730 million in refunds to be processed, a relatively small sum compared to the potential billions at stake in the current case.
Ashley Akers, senior counsel at Holland & Knight, suggested that given the high volume of expected refunds, the Customs and Border Protection (CBP) may implement a streamlined or automated refund process. “Importers possibly needing to update payment details via a CBP form,” she noted, although she cautioned that automatic blanket refunds are unlikely without specific claims.
Amidst the uncertainty, investment banks such as Oppenheimer and Jefferies have been approaching importers to broker deals for potential tariff refunds. These institutions are offering to buy a stake in the expected refunds at a discount in exchange for immediate cash. If the Supreme Court rules against the Trump administration, these banks would benefit from a percentage of the total refunds.
Marketing materials from Oppenheimer indicated that businesses could receive upfront payments ranging from 20% to 30% of their tariff payments. This approach allows businesses to mitigate risk and secure guaranteed payments while avoiding the need for public legal filings that might attract scrutiny from the Trump administration.
Kyle Peacock, a principal at Peacock Tariff Consulting, reported that businesses looking to sell their refund stakes have been aggressive in their outreach. Many of his clients, over 100 of whom have sold their claims, are feeling a sense of “seller’s remorse” after the oral arguments on Wednesday. Those who have not sold their claims are feeling “more cautiously optimistic,” he noted.
Peacock described the environment as increasingly concerning, with some businesses pressuring importers to take low offers on their potential refunds. These offers often range from 5% to 7% of the anticipated refund, especially when new tariff threats emerge from the Trump administration.
In conclusion, the potential for tariff refunds is becoming a focal point in the ongoing legal challenges against the Trump administration’s tariff policies. As the Supreme Court deliberates, businesses and investment banks are navigating a complex landscape of possible outcomes and financial strategies.
