What Trump court loss means for billions in tariffs paid to government

President Donald Trump’s trade war suffered a big setback with many of his administration’s tariffs ruled illegal by a federal appeals court last Friday. Billions of dollars in trade duties may potentially need to be refunded to businesses as trade deals struck by the White House with other nations are thrown into question. But for now, the underlying stance within the shipping industry and supply chain has not changed, according to logistics professionals, with the court decision — a stay is in place until October 14 — contributing to the uncertainty that has dogged business decision making throughout 2025.

“Right now, we have not heard anything much or seen any changes,” said Paul Brashier, vice president of global supply chain for ITS Logistics.

With the tariffs still imposed until October 14 and the expected appeal by the Trump administration, shippers are sitting tight. “Most shippers are awaiting the appeal to the U.S. Supreme Court and its final decision. There has been a lot of frontloading as well so impact for now should be minimal,” he said, referring to the period early this year when imports surged as businesses loaded up on inventory to avoid tariff effective dates.

Treasury Secretary Scott Bessent said on Tuesday he believes the Supreme Court will uphold Trump’s use of a 1977 emergency powers law to impose the tariffs on trading partners, and the administration has a backup plan if it does not. Later in the day, President Trump said he would ask the Supreme Court for an “expedited ruling.”

Mike Short, president of global forwarding at C.H. Robinson, said his company has received calls from multiple customers reaching out for clarity on the likelihood of this going to the Supreme Court, if they’ll uphold the ruling, and what the refund process could look like.

“This decision concerns reciprocal tariffs on goods from most countries, in addition to drug-related tariffs affecting imports from Canada, Mexico, and China. These tariffs account for the lion’s share of the duty outlay for many of our customers, so despite no immediate change, they’re eager to know and plan for the ‘what ifs,'” said Short.

Josh Teitelbaum, senior counsel of Akin and a former U.S. Commerce official, said it is advising companies to stay the course. “Companies should not be shifting their sourcing based on what they think the Supreme Court will say, it’s just too uncertain,” said Teitelbaum. “If the Court says the President exceeded his authority, he will very likely impose new tariffs under different authorities, which have their own requirements and limitations on what the rate may be and how long it can stay in place,” he added.

Alan Baer, CEO of OL USA, said companies are dealing with a lot of mixed signals as product ordered and arriving in October is already on the water.

In addition to an expected White House appeal to the Supreme Court, Baer noted that Trump could also go to the Senate, which might provide him with special powers for the next 6 to 9 months to enact tariffs, with an end date prior to the Nov. 26 elections. Or, the administration could focus more on a “slew of commodity-specific tariffs like the steel and aluminum.”

“I don’t see the White House giving up on collecting the $30 billion-plus in taxes,” he said, referring to how much the federal government has been collecting per month from the trade duties.

“Most companies will remain cautious with their forward ordering unless they see demand picking up,” Baer added.

So far this fiscal year, the U.S. has generated $142 billion in tariff revenue, according to the most recent Treasury Department data. 

How tariff refunds would work

Short said if the Supreme Court reviews the case and upholds the lower courts’ decision, it remains unclear whether their ruling will specify retroactive refunds of duties already paid or only prevent tariffs from being applied to future shipments. If the ruling does address refunds, these may occur in one of two ways: either Customs will process the refunds automatically, or brokers will need to undertake additional work to secure them, according to Short. “In the latter scenario, the workload for our customs teams would double overnight and be met with importers very eager to get those dollars back,” he said.

If tariffs do need to be refunded, Dan Anthony, President of Trade Partnership Worldwide, says the process would only be as difficult as the administration chooses to make it.

“Blanket refunds are fairly straightforward: all affected imports have an IEEPA-specific code and related tariff amount that should allow for automated refunds of payments,” Anthony said. “An individual request process would make it infinitely more complex. But any sympathy should be for the importers forced to jump through hoops, not government agencies that created work for themselves in an effort to keep illegal tariffs paid by Americans,” he said. 

Nevertheless, the breadth of the global trade war is immense. Tariffs on more than 90 countries and all of the products exported into the United States are in effect. The U.S. Customs Harmonized Tariff System (HTS) provides duty rates for virtually every existing product.

The Harmonized Tariff Schedule of the United States (HTSUS) contains over 11,000 eight-digit subheadings, according to Michael Lowell, partner and chair of the global regulatory enforcement group for Reed Smith, and only about 5% of those are exempt from the reciprocal tariffs. Every HTSUS code is subject to the “fentanyl” tariffs on Canadian-, Chinese-, and Mexican-origin goods, unless the product is eligible for duty-free treatment under the United States-Mexico-Canada Agreement.

Lowell added the Section 232 tariffs are more targeted.

“There may be 800 or so codes targeted by the Section 232 tariffs, but they also cover a wide range of products beyond just what an importer may think of as aluminum, copper, or steel products,” he said.

Felicia Pullam, former executive director of the Office of Trade Relations at U.S. Customs and Border Protection and senior director for geo-commerce in APCO’s Center for Trade, Investment and Market Access, said that in the short-term, refunding the tariffs would be an enormous challenge for the administration, but doable.

“It’s not something that could be done overnight, but I think they could put processes and resources in place to do manage it over time,” said Pullam. “The funds that CBP collects from tariffs goes into the U.S. Treasury – they are not earmarked for anything,” she said. If they had to be refunded, it would contribute to the U.S. budget deficit and overall debt, “just like most other kinds of federal spending,” she said.

Small businesses that use a third party (e.g. UPS, FedEx, DHL, brokers) as the importer of record would face additional challenges. In these cases, the U.S. government would refund the third party, which must then create a process for refunding customers, according to Anthony. “This can lead to significant delays for actual importers even if the government process goes off without a hitch,” he said.

Appealing trade duties, but not counting on the courts for now

Tariff experts said that shippers have 314 days from the time their freight is processed through U.S. Customs to file an appeal. Lowell said with the frontloading of product ahead of the tariffs starting back in February, the window for companies to appeal any tariffs is the end of December.

In the event the Supreme Court does receive the case and rules the tariffs are illegal, Pullam says the longer the IEEPA tariffs are collected, the greater the issue if the government must pay them back. “For that reason, since these tariffs have always been considered legally risky, it might be in the best interest of the country and of the Trump administration to switch over to other types of tariffs sooner, rather than later,” she said.

But she does not think a loss in court would undo any of the trade deals. “The deals are mostly frameworks and are not formulized treaties. Negotiations are still ongoing,” Pullam said. Additionally, the administration has already prepared to roll out tariff alternatives quickly if IEEPA tariffs are overturned. “We would just lose federal revenue and move onto another stage of the negotiations,” she added.

If the government does need to repay importers, it cannot undo the other impacts of the tariffs, like lost business. But Pullam says more extreme fears about the impact of court decisions do not concern her. “It will not sink the economy. Claims to the contrary sound more like desperation,” she said.

Short said companies also need to keep in mind that regardless of the outcome of those court proceedings, it’s clear that tariff and trade disruptions are far from over.

“The reality is tariff volatility has become the new normal. Multiple Section 232 investigations are active — spanning sectors such as lumber, pharmaceuticals, furniture, aerospace, trucks and truck parts, seafood, and critical minerals. As we saw with copper in July, these investigations can swiftly lead to new tariffs. The steel and aluminum tariff had 700 product categories added to it as well,” he said.

Lowell said the court decision has only increased uncertainty for importers.

“At a practical level, nothing is new today compared to this time last week. But we’re still seeing a flurry of questions indicating the ruling is creating internal questions for businesses,” he said. “Most of those questions assume the tariffs are here to stay. No one seems to be counting on the courts to save them from tariffs,” he added.