WASHINGTON (AP) 鈥� In a defeat for the Trump administration, a federal judge in New York ruled Wednesday that companies that paid tariffs struck down last month by Supreme Court are due refunds.
Judge Richard Eaton of the U.S. Court of International Trade wrote that 鈥渁ll importers of record鈥欌�� were 鈥渆ntitled to benefit鈥欌�� from the sweeping double-digit import taxes President Donald Trump imposed last year under the 1977 International Emergency Economic Powers Act (IEEPA).
The Supreme Court found to be unconstitutional under the emergency powers law, including the sweeping 鈥渞eciprocal鈥� 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 鈥渨ill hear cases pertaining to the refund of IEEPA duties.鈥欌�� 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 鈥渟eek a stay to buy more time for U.S. Customs to comply.鈥�
The federal government collected more than $130 billion in the now-defunct tariffs through mid-December and could ultimately be on the hook for refunds worth $175 billion, according to calculations by the Penn Wharton Budget Model.
Eaton was ruling specifically on a case brought by Atmus Filtration, a Nashville, Tennessee, company that makes filters and other filtration products, claiming a right to a tariff refund.
All goods that go through U.S. Customs and Border Protections enter a process called 鈥渓iquidation,鈥� when the agency issues its final accounting of what is owed. Once liquidated, importers have 180 days to formally contest the duties. After that window closes, the liquidation is legally final.
The judge ordered customs to stop collecting the IEEPA tariffs the Supreme Court struck down last month on goods going through the liquidation process. And if the goods were past that part of the process, the agency would have to recalculate them without the tariffs.
鈥淭his is a great decision for importers and consumers who paid,鈥� said Barry Appleton, a law professor and co-director New York Law School鈥檚 Center for International Law. 鈥淚t will make customs brokers busy. It should make things easier for the courts 鈥� and get a process underway for those importers who paid within the last 180 days.鈥�
On Monday, another federal court rejected the Trump administration鈥檚 attempt to slow the refund process. The started the next phase in the refund process by sending it to New York trade court to sort out.
Now the U.S. Customs and Border Protection agency must come up with a way to process the refunds. Customs routinely refunds tariffs when there鈥檚 been some kind of error, but its system was 鈥渘ot designed for a mass refund,鈥� said trade lawyer Alexis Early, a partner at Bryan Cave Leighton Paisner. 鈥淭he devil will be in the details of the administrative process.鈥�
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Anderson reported from New York.
AP Writer Lindsay Whitehurst contributed to this story.
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