A federal judge in New York ruled Wednesday that companies that paid tariffs imposed under the International Emergency Economic Powers Act are entitled to refunds, following the Supreme Court's decision last month that struck down those tariffs as unconstitutional. Judge Richard Eaton of the U.S. Court of International Trade ordered U.S. Customs and Border Protection to stop collecting the IEEPA tariffs on goods currently moving through the liquidation process and to recalculate duties on goods already past that stage.
The ruling could put the federal government on the hook for refunds worth $175 billion. Through mid-December alone, the government had collected more than $130 billion under the now-defunct tariffs.
That is not a rounding error. That is a seismic financial event for the federal treasury and for every importer who paid those levies.
According to Newsmax, Judge Eaton wrote that "all importers of record" were "entitled to benefit" from the Supreme Court's Feb. 20 ruling, which found that the president could not unilaterally set and change tariffs because the taxation power clearly belongs to Congress. The judge also declared that he alone "will hear cases pertaining to the refund of IEEPA duties," consolidating the process under one courtroom rather than scattering it across the federal judiciary.
The order creates two tracks. For goods still in the liquidation pipeline, Customs must simply stop applying the IEEPA tariffs. For goods that have already cleared that stage, the agency must go back and recalculate without them. Either way, importers who paid are supposed to get their money back.
Barry Appleton, a law professor and co-director of New York Law School's Center for International Law, framed the decision as a straightforward win:
"This is a great decision for importers and consumers who paid."
He added that the ruling should "make things easier for the courts" and "get a process underway for those importers who paid within the last 180 days."
This ruling did not arrive in a vacuum. On Monday, another federal court rejected the administration's attempt to slow the refund process. The U.S. Court of Appeals for the Federal Circuit had already sent the matter to the New York trade court to sort out. Each procedural move has pushed the government closer to the same destination: writing very large checks.
Ryan Majerus, a trade lawyer at King & Spalding and former U.S. trade official, expects the government to appeal or "seek a stay to buy more time for U.S. Customs to comply." That would be the logical next step. Courts move slowly, and $175 billion does not move at all without significant bureaucratic machinery behind it.
Which brings up the real bottleneck. Alexis Early, a trade lawyer at Bryan Cave Leighton Paisner, noted that Customs' system was "not designed for a mass refund." The agency now has to build a process from scratch to handle what could be the largest tariff refund operation in American history.
"The devil will be in the details of the administrative process."
She's right. A court order is one thing. Executing it across thousands of importers, millions of transactions, and a customs infrastructure built for collection rather than disbursement is another thing entirely.
The Supreme Court's Feb. 20 decision settled a constitutional question that conservatives have debated for years: where does executive emergency authority end and congressional power over taxation begin? The majority ruled that Congress holds the taxing power, full stop. The IEEPA, a 1977 law designed for genuine national emergencies, was never meant to function as a permanent tariff mechanism.
This is, at its core, a separation of powers story. And separation of powers is not a partisan principle. It is the structural backbone of the republic. When Congress holds the power of the purse, it means the people's elected representatives in both chambers must authorize how the government takes money from citizens and businesses. That principle doesn't bend because the policy goal is popular or the emergency feels urgent.
The sweeping double-digit import taxes levied on nearly every other country under IEEPA were ambitious in scope. But ambition does not override Article I. The Court said so, and now the financial consequences are arriving on schedule.
Importers now have a legal green light, but the money will not flow overnight. Customs must devise a refund mechanism that it has never needed at this scale. The government will almost certainly appeal or seek delays. And the 180-day window for formally contesting duties after liquidation means timing matters for every company deciding whether to file.
Meanwhile, Congress faces the question it has been avoiding: if tariffs are going to be a central tool of American trade policy, the legislative branch needs to own them. Pass the rates. Vote on the numbers. Put names next to the policy.
That is how self-government is supposed to work. The courts just issued a $175 billion reminder.