In FY 2025 and FY 2026 to date, total U.S. tariff collections reached approximately $314 billion. Roughly 42% of that revenue, around $133 billion, was generated from tariffs (as reported by the U.S. Customs and Border Protection) imposed under the International Emergency Economic Powers Act (IEEPA). On February 20, 2026, the Supreme Court ruled the IEEPA does not provide legal authority for President Trump to impose the broad-based tariffs he claimed were in response to emergencies. This decision voids a set of baseline emergency tariffs of 10% on nearly all nations, as well as higher tariffs on certain specific countries. In response, President Trump has imposed a temporary 15% tariff for 150 days through other means, however this does not negate the current refund issue.
With roughly $133 billion in tariffs collected illegally, the next question will be how to deal with the issue of refunds. Many lawsuits have already been filed, and no doubt more will follow, as companies seek refunds from tariffs the government has collected illegally.
Tariffs are typically collected when a good subject to tariff arrives at a port of entry. The company importing the good – the importer of record – typically remits payment to the U.S. Treasury. At issue after the Supreme Court decision on Friday is how these tariffs might be refunded to the importer of record.
However, this raises a question of fairness. While the importers of record are the ones who remitted payment for the tariff, they are not necessarily the entity that suffered the most economic harm from the tariff. Many studies have found that importers pass along most of the tariff in higher prices to the ultimate purchaser of the tariffed product.
Studies of the Trump 2018 tariffs, and a recent study of the Trump 2025 tariffs by economists at the Federal Reserve Bank of New York – a study that raised the ire of the administration – report overall pass-through rates in the range of 80% to 95%. That is, whatever the importer of record paid for the tariff, over 80% was typically passed on to the ultimate purchasers of the good in the form of higher prices.
If importing firms initially paid the tariff but subsequently raised prices to preserve margins, then consumers and downstream firms absorbed most of the economic burden of the tariff. A refund of the full amount of the tariffs to the importers of record would overcompensate said firms for the economic harm of the tariff, and undercompensate the consumers and downstream firms who were harmed by the higher prices resulting from the tariff.
This creates a difficult problem to solve. Consumers bore much of the burden at the time prices increased, but importers may receive a financial windfall if they received full recovery of the tariffs they remitted to the government. Unfortunately, there is no statutory mechanism to reimburse consumers directly. Large multinational importers are likely to receive the most significant refunds due to their scale of import activity and legal capacity to pursue claims. Costco has already sued for refunds prior to the decision. So has Revlon, Bumble Bee Foods, Dole, Barnes & Noble, J Crew, Prada, and Stables. Automobile supplies – BorgWarner, Goodyear Tire & Rubber, Toyota, Yokohama Tire, Kawasaki, have also already filed lawsuits. So has Alcoa. There will be more.
The dollars paid in tariffs are not the only damage suffered by the economy. Higher prices led to lower quantities purchased, a loss shared by importers, producers, and by the ultimate purchasers. There were administrative costs borne by firms and likely by government, and costs of business disruptions from altered supply chains. Refunds of the tariffs collected, even if distributed somehow fairly across businesses and consumers, would still not compensate for all of the economic disruptions caused by these tariffs.