Supreme Court Tariff Ruling Leaves Billions in Limbo

(MENAFN) A seismic Supreme Court decision stripping President Donald Trump of broad tariff powers has sent shockwaves through global commerce — but for American businesses bracing for impact, the burning question is both urgent and deeply practical: when, and from whom, will they recover the billions already paid in duties?

Importers, manufacturers and retailers say the ruling has cracked open the door to sweeping reimbursement claims that could dramatically alter corporate cash flows and force Washington into an unprecedented, large-scale refund reckoning.

"It creates a large uncertainty that affects US importers and small businesses," said Max Gillman, a professor of economic history at the University of Missouri.

Writing on behalf of the majority, Chief Justice John Roberts asserted that the power to tax rests solely with Congress — a constitutional stance that directly challenges tariffs enacted through executive action and raises the prospect that duties collected under such measures may ultimately have to be repaid.

Businesses are now grappling with a trifecta of unknowns: the formula for calculating refunds, which companies qualify, and how long the reimbursement process might drag on.

Given that tariff repayments on this magnitude have virtually no historical parallel, the road ahead — laden with claims processing, legal wrangling and verification hurdles — could span years. Smaller firms in particular face an onerous paper trail, required to reconstruct records of past imports, duty payments and contractual obligations.

Gillman cautioned that any refund mechanism would likely take years to complete. He added that while refunds could ease financial pressure on businesses, they would not resolve broader trade policy uncertainty.

A Temporary Economic Lifeline
Charles Calomiris, an economist at Columbia Business School, acknowledged that refunds could deliver a short-lived economic jolt.

"A 0.5% refund would likely add to GDP growth in the short run, perhaps even more than that," he said.

Companies that absorbed tariff expenses internally — rather than transferring costs to consumers — stand to recover liquidity, strengthen balance sheets and renew investment appetite. Electronics, machinery and consumer goods importers are among those positioned to gain the most.

Yet Calomiris sounded a cautionary note, pointing to the administration's response as a fresh source of turbulence.

"The court ruling seemed to provide clarity and remove uncertainty, which could have had a very positive effect, but Trump's reaction has increased uncertainty," he said.

The White House swiftly invoked Section 122 of the Trade Act of 1974, slapping a temporary 15% blanket tariff on global imports for up to 150 days — a countermove economists say risks eroding much of the economic relief that refunds might have delivered.

The refund question is also straining diplomatic ties, with trading partners pressing Washington for answers on duty collections and potential repayments under bilateral arrangements.

Calomiris noted that future tariff actions may hinge on documented evidence of unfair trade conduct, potentially igniting a new round of negotiations.

"If you are a country with no unfair trade restrictions, you may be tempted to bargain anew," he said.

Gillman suggested renegotiations may be limited but possible in tentative agreements. "In the EU in particular, they will hold up the approval and possibly renegotiate," he said.

On China, he was blunt, expecting Beijing to tread carefully "since they have so blatantly violated the World Trade Organization rules ... through theft of intellectual property and subsidization by the Chinese state of production of goods on a massive scale."

The Road Ahead
Should courts mandate large-scale repayments, the fiscal consequences for Washington could be substantial. Billions in reimbursements would likely be financed through expanded Treasury borrowing — transferring the financial burden from importers to the broader taxpaying public.

Administratively, federal agencies must still define eligibility criteria, set timelines and construct dispute resolution frameworks, all under mounting political pressure from businesses demanding rapid action.

An additional ethical dimension looms for companies that passed tariff costs on to consumers: do refunds flow back to customers, or are they absorbed as corporate windfalls?

Businesses are left in limbo — compelled to operate under a fog of trade uncertainty while awaiting direction from courts, Congress and federal regulators.

Calomiris warned that the political calculus could grow more complicated as midterm elections approach and economic data weakens.

"It seems obvious that Trump should change course. Trump doesn't like losing elections but he has been very stubbornly and self-destructively wrong on this issue," he said.

For now, the Supreme Court's ruling has fundamentally redrawn the boundaries of American trade authority — but for importers and small businesses caught in the crossfire, the stakes are neither abstract nor geopolitical. They are financial, immediate, and unresolved.

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