A New York court has ordered Customs to begin repaying hundreds of thousands of importers — before the government could find a way to avoid it.
The US Constitution has a clause requiring that all import duties be uniform across the country.
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Earlier this week, a federal judge in New York invoked it — building on the Supreme Court ruling that found US President Donald Trump had no legal authority to impose tariffs under IEEPA — to make sure hundreds of thousands of importers get their money back.
In a three-page order, Judge Richard Eaton directed Customs and Border Protection to immediately stop applying IEEPA or International Emergency Economic Powers Act to imports and to begin processing repayments.
This in turn extended the benefit of last month's Supreme Court ruling not only to the company that brought the case but to every affected importer in the country.
The order follows the Supreme Court's 20 February ruling in Learning Resources, Inc v Trump, which held 6-3 that the IEEPA does not authorise the president to impose tariffs.
The majority of the US' top court found that taxation power clearly belongs to Congress and that Trump could not unilaterally set and change tariffs by invoking emergency powers legislation.
The ruling struck down the sweeping "reciprocal" tariffs he levied on nearly every other country, as well as broader double-digit import taxes imposed the previous year.
Notably, the Supreme Court said nothing about refunds and that question was left entirely to future proceedings, which Eaton has stepped in to clarify.
Closing the exit
Eaton used the vacuum deliberately. A significant portion of his order is devoted to dismantling a preemptive government escape route.
The administration might have invoked the Supreme Court's 2025 decision in Trump v CASA, Inc — which barred "universal injunctions" — to limit any refund order to the named plaintiff only.
Eaton rejected that argument on the grounds that it does not apply here.
Namely, the Court of International Trade was established not under the Judiciary Act of 1789 but under the Customs Courts Act of 1980, and it carries its own national jurisdiction and exclusive subject-matter authority over import disputes.
To limit relief to individual plaintiffs, he argued, would deny justice to importers who have not yet filed suit and frustrate the efficient administration of trade law — and would violate the Constitution's requirement that all duties and imposts be uniform across the United States.
As a practical safeguard against conflicting rulings, the court's chief judge has designated Eaton as the sole judge for all IEEPA refund cases.
The refund machinery
Now, US Customs must process all outstanding import entries subject to IEEPA duties without applying those duties, and must redo any already-processed entries for which the process is not yet legally final.
All goods passing through US Customs enter a process called "liquidation", in which 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 order was prompted by a case brought by Atmus Filtration, a Nashville, Tennessee company that makes filters and filtration products and estimates it paid $11m (€9.5m) in illegal tariffs.
But its implications are vast. US Customs collected approximately $133.5bn (€114.7bn) in now-defunct tariffs through mid-December alone and could ultimately be on the hook for refunds worth up to $175bn (€150.3bn), according to calculations by the Penn Wharton Budget Model.
The order does not address the mechanics of paying that back — a closed conference with government lawyers scheduled for 6 March will begin to consider that process.
When asked why the meeting was closed to the public, Gina Justice, the clerk for the trade court, told Reuters on Thursday that it was a "settlement conference."
No precedent for mass refunds
US Customs systems were "not designed for a mass refund", according to trade lawyer Alexis Early, a partner at Bryan Cave Leighton Paisner.
"The devil will be in the details of the administrative process."
Trade lawyer Ryan Majerus, a partner at King & Spalding and a former US trade official, said he expected the government to appeal or seek a stay to buy more time for Customs to comply.
Barry Appleton, a law professor and co-director of New York Law School's Centre for International Law, was more sanguine.
"It will make customs brokers busy. It should make things easier for the courts — and get a process under way for those importers who paid within the last 180 days."
On Monday, the US Court of Appeals for the Federal Circuit had already rejected the Trump administration's attempt to slow the refund process, referring the matter to the trade court in New York.
