The U.S. Supreme Court ruled today that many of President Trump’s tariffs are illegal but the aftermath has a high potential to disrupt business even more. In its 150+ page opinion, featuring an intriguing debate on the separation of congressional and presidential powers, the Court ultimately concluded the reciprocal tariffs against all countries and fentanyl tariffs against China, Mexico and Canada are illegal based on the core ruling that the International Emergency Economic Powers Act does not permit tariffs.

The Court, however, left it to the lower courts to determine the appropriate remedy for businesses to get their money back. This will likely take at least a few months as the courts deliberate on their options, including ordering U.S. Customs to issue refunds without requiring further action from businesses or requiring new lawsuits seeking refunds (including refunds of other recent tariffs justified under IEEPA but not directly reviewed by the Court). Regardless of the remedy, business disruption is expected to increase based on the Trump administration's anticipated next steps.

Most immediately, as government officials have signaled for weeks, the administration will likely begin implementing tariffs under different statutory authorities that more explicitly permit them. This will require businesses to remain vigilant in monitoring new government actions and assessing how they affect sourcing decisions.

This upcoming period has the potential to be even more disruptive than previous tariff changes, given new statutory authorities will introduce novel factors that businesses must evaluate. For example, the effective periods when tariffs are in place could start and stop more frequently and these new authorities could impact new scopes of trade. Furthermore, there is a lingering possibility of new novel administration legal arguments asserting that past tariffs should remain in place.

Many companies have been preparing for a refund process by ensuring they have data and supporting commercial and customs documentation readily available to identify:

• Their imports and tariffs paid;
• Types of tariffs paid; and
• Adjustments from any refunds already received.

This preparation should continue or be accelerated if not started. 

Additionally, businesses that are not importers but regularly purchase goods from importers should also prepare. If these purchasers anticipate negotiating reimbursements tied to the refunds their importers receive, they should ensure they have comparable purchase data and support documentation detailing the financial impact the tariffs had on them.

For more information, please contact Corey Norton, Sean Aasen, Katja Garvey or any member of Porter Wright's International Business & Trade group.