(Yahoo! Finance) - A federal judge ruled that the US government must begin paying out more than $130 billion in tariff refunds to US businesses in another setback for the Trump administration after the Supreme Court struck down the president's wide-reaching "reciprocal" tariffs.
More than 2,000 companies, including well-known names like Costco (COST) and FedEx (FDX), have filed lawsuits seeking refunds for the illegal tariffs they paid. The ruling from Judge Richard Eaton offered some clarity on the murky process to recoup tariff costs, which could take years to play out.
While the refund proceedings get ironed out, President Trump has moved forward with imposing new 10% tariffs that could rise to 15% as soon as "sometime this week," according to Treasury Secretary Scott Bessent.
The president's fresh 10% tariffs under Section 122 of the Trade Act of 1974 allow the president to impose tariffs of up to 15% for up to 150 days to address trade deficits. However, a group of states is seeking to challenge these duties in court, arguing that Trump lacks the power to reinstate tariffs under Section 122.
The administration is exploring other laws to implement levies, with Bessent saying that he expects tariff rates to "be back to their old rate within five months." Trump's top trade adviser said US duties could exceed 15% for certain countries "where appropriate."
Trade policy has been marked by uncertainty since the Supreme Court's decision to invalidate Trump's most sweeping global tariffs and the president's new 10% blanket tariff went into effect. The European Union halted the ratification of its trade deal with the US, saying it needs "full clarity" on Trump's next steps before proceeding.
In recent weeks, Trump has also made plans to roll back some tariffs on metals as he and his administration seek to battle an affordability crisis ahead of the midterm elections.
Grace O'Donnell
Judge rules companies are entitled to refunds for Trump tariffs overturned by the Supreme Court
The Trump administration will be required to pay more than $130 billion in tariff refunds, a federal judge in New York ruled Wednesday, marking another defeat for President Trump after the Supreme Court struck down his most widespread tariffs last month.
Over 2,000 companies have filed lawsuits seeking to recoup costs from the illegal tariffs that were invalidated by the court. The judge's orders suggested that all importers subjected to tariffs would be entitled refunds, including those that haven't filed lawsuits yet.
The Associated Press reports:
Judge Richard Eaton of the U.S. Court of International Trade wrote that “all importers of record’’ were “entitled to benefit’’ from the Supreme Court ruling that struck down sweeping double-digit import taxes President Donald Trump imposed last year under the 1977 International Emergency Economic Powers Act (IEEPA).
The Supreme Court found those tariffs to be unconstitutional under the emergency powers law, including the sweeping “reciprocal” tariffs he levied on nearly every other country. The majority ruled that the president could not unilaterally set and change tariffs because taxation power clearly belongs to Congress.
In his ruling, Eaton wrote that he alone “will hear cases pertaining to the refund of IEEPA duties.’’ The ruling offers some clarity about the tariff refund process, something the Supreme Court did not even mention in its Feb. 20 decision. Trade lawyer Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, said he expects the government to appeal or “seek a stay to buy more time for U.S. Customs to comply.″
By Grace O'donnell
