On February 20, 2026, the United States Supreme Court delivered a seismic blow to President Donald Trump’s trade agenda, ruling 6–3 that the administration had exceeded its constitutional authority by imposing sweeping tariffs under the International Emergency Economic Powers Act (IEEPA). Writing for the majority, Chief Justice John Roberts delivered an emphatic verdict: “We hold that IEEPA does not authorize the President to impose tariffs.” The 1977 law, which grants the president emergency powers to regulate economic transactions during a national crisis, had been famously deployed by Trump to justify a 10 per cent baseline tariff on virtually all imported goods, with far higher rates targeting specific trading partners and strategic goods. The Court found that IEEPA’s language empowering the president to “regulate” importation could not be stretched to include taxation, noting that the Constitution explicitly vests the power to “lay and collect Taxes, Duties, Imposts and Excises” in Congress. Two of the president’s own appointees, Justices Neil Gorsuch and Amy Coney Barrett, joined the majority in the landmark 6–3 ruling. Writing in dissent, Justice Brett Kavanaugh conceded that the United States “may be required to refund billions of dollars to importers who paid the IEEPA tariffs” and warned that the process was “likely to be a mess.” That warning would prove prophetic.
The sheer scale of the refunds beggars belief. According to filings from US Customs and Border Protection (CBP), more than 330,000 importers made payments on over 53 million separate shipments, collectively handing the federal government approximately $166 billion in duties that were, as the Supreme Court now confirmed, illegally collected. In addition to the principal amount, the government is liable for interest payments, adding roughly $650 million per month to the total refund bill. CBP estimates that processing all claims will take up to 4.43 million hours of labour. The authority to issue refunds falls to the Court of International Trade, which ordered the Trump administration to stop charging the tariffs and to establish a formal refund system. In March, a federal appeals court rejected the administration’s request to delay the start of the refund process, dismissing a three-month postponement as unjustified.
On April 20, exactly two months after the Supreme Court ruling, CBP launched CAPE, the Consolidated Administration and Processing of Entries, an online portal designed to process refunds in a phased, streamlined manner. In its first iteration, the system was designed to handle approximately 63 per cent of affected import entries, prioritising shipments where entries were either unliquidated or had been liquidated within the preceding 80 days. “Our clients have all been able to submit their CAPE Declarations without incident,” reported Andrew Caridas, a partner at the international law firm Perkins Coie. He noted that entries meeting the Phase 1 criteria had already been “reprocessed and scheduled for liquidation or reliquidation.”
Yet even in these early stages, a clear pattern emerged. Large corporations with dedicated compliance teams and extensive legal resources were best positioned to file early and accurately. More than 3,000 companies had already filed lawsuits before the Supreme Court even issued its ruling, demonstrating both the confidence of the business community in the legal merits of their case and their determination to secure refunds ahead of the crowd. Among the most high-profile plaintiffs were Skechers, Revlon, Toyota, Nintendo of America, FedEx and Costco. FedEx has publicly committed to passing any refunds back to its customers, the shippers who ultimately bore the cost of the tariffs. Costco, meanwhile, has suggested that it could lower prices if it receives refunds, though some shoppers have already sued the retailer, demanding direct compensation. As one trade analyst observed, “Big firms have already lawyered up and filed early claims. Smaller businesses are still trying to figure out how the system works.”
For small businesses, the refund process has proven to be a Kafkaesque ordeal. According to CBP, approximately 330,000 importers are eligible for refunds, of which nearly 56,500 have applied, representing claims worth about $127 billion. But small businesses, which operate on notoriously thin margins were hit disproportionately hard by the initial tariffs. A Federal Reserve survey published in March found that 42 per cent of small firms cited rising costs from tariffs as a primary financial concern. A report from the Center for American Progress found that small businesses paid an average of $306,000 in tariffs last year. Yet, unlike their larger counterparts, small firms lack trade compliance departments, in-house customs brokers and the administrative capacity to navigate a complex, multi‑phase refund process.
“Our entrepreneurs, many of whom were angry that they had to pay tariffs in the first place, and were frustrated by the back-and-forth over the last year, opened up the portal this morning only to see that it had crashed. It just feels like the uncertainty just keeps popping up,” Richard Trent, executive director of the Main Street Alliance, told a news outlet. “This is progress, but it’s not yet justice. Small business owners should not have to jump through hoops to get back money they never should have had to pay. We need a refund system that is automatic, not a bureaucratic maze.”
The Trump administration’s approach to the refund process has been characterised by foot-dragging and outright obstruction. Following the Supreme Court’s ruling, the administration asked the Federal Circuit to delay issuing its mandate for 90 days, a request that was roundly rejected. “Nothing about the refund issue warrants any delay in issuing this Court’s mandate, let alone a staggering three months’ delay,” a court filing stated. Subsequently, the administration signalled that it might appeal the Court of International Trade’s order for full refunds to the Federal Circuit, though as of late March no appeal had been filed.
White House National Economic Council Director Kevin Hassett hinted that the administration might attempt to reduce the size of the refunds by invoking “alternative authorities.” “There’s alternative authorities that perhaps could reduce that number quite a bit,” Hassett said in a Fox News interview, leaving importers to wonder whether they would receive the full sums to which they are legally entitled. On the same day that the CAPE portal went live, President Trump used an interview with CNBC to deliver a warning. When asked whether he would “remember” companies that decided not to apply for refunds, presumably as a gesture of political loyalty, the president replied: “Brilliant if they don’t do that. Actually, if they don’t do that, they’ve got to know me very well. If they don’t do that, I’ll remember them.”
For ordinary Americans who paid higher prices on everything from electronics to clothing and toys, the $166 billion refund is an abstraction. Only importers of record, the businesses that directly paid Customs and Border Protection are eligible for reimbursement. There is no mechanism for consumers to file claims, no guarantee that businesses will pass refunds along, and little transparency regarding how windfall gains will be used. FedEx has promised to return refunds to its customers. Costco has floated the idea of lowering prices. But absent binding legal obligations, many importers may simply pocket the money. As one consumer advocate put it: “The tariffs were an illegal tax on American families. It is unconscionable that the government is now handing that money back to corporations while shoppers are left with nothing.”
Justice Kavanaugh’s prediction that the refund process would be a “mess” has proven accurate. CBP expects to issue refunds within 60 to 90 days of approval, but external observers warn that the complexity and volume of claims could push timelines to 12 to 18 months. The first phase of CAPE does not cover all affected entries, and there is no clear timeline for subsequent phases. International trade lawyers caution that administrative errors, system glitches and legal challenges could delay payments indefinitely. Meanwhile, the administration’s resistance and its continued threats to impose new tariffs under other statutory authorities, including Sections 122, 232 and 301 have left importers wary of investing their refunds in expansion or new hiring. “There’s a sense that even if the money comes back, it’s too late to reverse what’s already happened,” said a representative of a small business advocacy group involved in litigation against the tariffs. “The damage to supply chains, the price increases that were passed on to consumers, the layoffs, none of that can be undone by a refund cheque.”
As the Trump administration manoeuvres to contain the political fallout, it is already laying the groundwork for new rounds of tariffs under different legal authorities. The United States Trade Representative has signalled that investigations under Sections 122, 232 and 301 could lead to fresh duties on everything from steel and aluminium to automobiles and semiconductors. That lingering unpredictability is likely to dampen the broader economic impact of the refunds: rather than investing or expanding, many firms are expected to hold onto the cash as a buffer against future policy shifts. For the 330,000 importers still waiting for their money, the message from the administration is clear: you will get your refunds eventually, but do not expect the uncertainty to end anytime soon.