If Trump Loses Tariff Lawsuit, U.S. Could Owe Businesses Over $200 Billion in Refunds
A major legal battle surrounding former President Donald Trump’s sweeping tariff policies threatens to upend years of trade enforcement and could force the U.S. government to refund businesses potentially over $200 billion. The case centers on whether Trump possessed the legal authority to unilaterally impose tariffs on goods from numerous countries under a national emergency law.
Background of the Tariff Dispute
In 2025, Trump imposed broad tariffs on imports from countries such as China, Canada, and Mexico, citing a national emergency related to trade imbalances and the fentanyl crisis. These tariffs, implemented under the International Emergency Economic Powers Act (IEEPA), set duties ranging from 10% to as high as 35%, impacting hundreds of billions of dollars in goods.
Businesses, states, and trade groups challenged the tariffs, arguing that Congress—not the president—holds exclusive authority to impose duties. A series of court decisions has questioned Trump's use of IEEPA to justify the tariffs without congressional approval.
Recent Federal Appeals Court Rulings
On August 29, 2025, a federal appeals court ruled 7-4 that the tariffs imposed under IEEPA were unlawful, upholding a previous decision from the Court of International Trade. Though the tariffs remain in effect temporarily, the ruling casts considerable doubt on their future.
The court criticized the administration’s expansive interpretation of presidential authority, noting that IEEPA does not explicitly authorize tariff imposition. The judges wrote that levying tariffs is fundamentally a congressional prerogative, and the president’s claim of unlimited tariff power is unsupported by the statute’s language and legislative history.
Potential Impact: Massive Refunds to Businesses
Should the courts ultimately side against Trump’s tariffs, the government may be legally compelled to refund the vast sums companies paid in duties. Customs and Border Protection would face the monumental task of processing refunds that could total over $200 billion, dwarfing previous government handling of tariff revenues.
Experts note that while importers—the businesses that pay tariffs upon entry—would be entitled to refunds, the logistics are complex. Many companies utilize third-party customs brokers, which could delay or complicate the flow of repayments. The refund process, currently limited by a 180-day protest window, would also require coordination across countless entities that paid the tariffs.
Economic and Political Ramifications
The legal uncertainty has caused consternation among U.S. trading partners and businesses alike. The tariffs, intended to protect American industries and address trade abuses, have instead driven up costs for companies and consumers. Much of the tariff burden ultimately falls on American buyers, contributing to inflationary pressures.
The appeals court ruling threatens to unravel the administration’s justification that tariffs bring in significant government revenue. Trump had touted tariffs as a new revenue stream to complement or replace taxes, but if refunded, the tariffs would instead be a costly misstep.
What’s Next in the Legal Battle?
The Trump administration has announced plans to appeal the ruling to the Supreme Court, which could issue a final decision in 2026. Until then, the tariffs remain in place, maintaining current trade tensions. The Supreme Court’s actions will determine whether presidential authority under IEEPA can extend to massive tariffs or whether Congress retains exclusive control over trade duties.
Analysts suggest that a Supreme Court reversal could restore tariff legality, while an affirmation would force a reconsideration of trade enforcement powers and potentially lead to widespread refunds. Either outcome will have lasting consequences for U.S. trade policy, business costs, and international relations.
In summary, this ongoing court case represents a key moment in U.S. trade history, questioning the balance of power between the executive branch and Congress in imposing economic sanctions and tariffs. If Trump’s tariffs are ruled unlawful, American businesses may receive unprecedented refunds, reshaping the tariff landscape and testing the limits of presidential authority in economic policy.
This complex lawsuit and impending Supreme Court ruling underline the challenges of navigating 21st-century trade conflicts within the framework of decades-old laws designed for emergencies far different than today’s economic environment.