The likelihood of businesses obtaining tariff refunds increased markedly on Wednesday, following the Trump administration’s arguments to maintain the majority of its levies, which were met with considerable skepticism from various conservative and liberal justices on the Supreme Court. According to data, the federal government has amassed nearly $90 billion in revenue from the tariffs currently under challenge. The figure is expected to continue its upward trajectory until a verdict is rendered, a process that may extend over several months. Justice Amy Coney Barrett, appointed by President Donald Trump, brought up the issue on Wednesday, questioning Neal Katyal. “If you win, please explain the reimbursement process. Could it potentially result in a chaotic situation?” she stated. Katyal asserted that the five businesses he represents should unequivocally receive a refund if the justices rule in their favor; however, he noted that for other businesses, the situation would be “a very complicated thing.” “Thus, a disarray,” Barrett interjected. “It’s difficult, absolutely, we don’t deny that,” Katyal remarked. Enterprises beyond the five represented by Katyal might not qualify for automatic refunds. Rather, they might need to submit individual appeals to lower courts to pursue the possibility of a refund, noted Thomas Beline.
“As an importer, my focus would be on analyzing my importations from the past several months and the timeline for when the entries will liquidate,” he stated, alluding to the procedure that CBP follows to ascertain an importer’s conclusive tariff payment. Prior to that, importers undertake what is regarded as an estimated tariff payment. The process for CBP to determine a final figure can extend over several months due to the complexities inherent in the tariff code. Beline advises importers to seek liquidation extensions or file protests with CBP, actions that halt the complete settlement of entries and may facilitate obtaining a refund. On Wednesday, Katyal referenced the administrative process outlined by Beline. The 1998 Supreme Court decision regarding harbor maintenance fees was also emphasized, leading to tariff refunds for importers. However, in the 1998 ruling, it required two years for the return of $730 million in tariff payments to the importers — a sum that pales in comparison to the tens of billions of dollars being deliberated in the current Supreme Court case. “Given the high volume of expected refunds, it would not be surprising if CBP implemented a streamlined or automated process, as seen in prior duty refunds, with importers possibly needing to update payment details via a CBP form,” stated Ashley Akers, a senior counsel at the Holland & Knight law firm and a former Justice Department trial lawyer. “It is also possible, albeit unlikely, that CBP would issue automatic blanket refunds without specific claims.” Ultimately, the refunds that businesses receive may be accompanied by statutory interest, she stated.
For several months, investment banks such as Oppenheimer and Jefferies have engaged with importers to facilitate arrangements in which they divest their interest in a prospective tariff at a reduced rate in return for immediate liquidity. If the Supreme Court rules against the Trump administration, these investment banks would receive a portion of the total tariff refund that businesses relinquished. Representatives for Jefferies and Oppenheimer refrained from providing any comments. Oppenheimer disseminated in July, the firm indicated that the “market rate” for what businesses might obtain upfront ranged from 20% to 30% of the payments made to address the tariffs under dispute. “This solution provides the ability to de-risk the outcome and receive a guaranteed payment now, without having to wait for final court rulings,” stated the marketing material prepared by the firm’s special assets team. Furthermore, Oppenheimer indicated that divesting a refund stake would enable companies to circumvent the necessity of a public legal filing that might be mandated to secure the funds, thereby evading potential backlash from the Trump administration. Individuals from the public gather outside the Supreme Court to participate in oral arguments regarding President Donald Trump’s efforts to maintain extensive tariffs.
Kyle Peacock noted that businesses seeking to acquire tariff refund stakes have been “aggressive” in their approaches to his clients, more than 100 of whom have divested their tariff refund stakes. “There’s a very concerning mentality that’s emerging,” remarked Peacock. When businesses communicate with their clients, they assert, ‘You’ll never obtain this, so accept this modest sum, or you won’t progress.’ Firms are quick to capitalize on opportunities presented by importers, particularly in response to Trump’s recent threats of imposing new tariffs, such as the additional 100% levies on Chinese goods announced last month. Their target customer, he noted, seems to be importers that are “more credit-stretched.” It is the customers of this nature who ultimately agreed to what Peacock deemed “extremely low offers” ranging from 5% to 7% of a potential tariff refund in the future. Ultimately, rather than imposing the anticipated 100% tariff, Trump opted to reduce Chinese tariffs by 10%. Following the oral arguments on Wednesday, numerous clients of Peacock who sold refund claims are experiencing a degree of “seller’s remorse,” while those who refrained from selling are typically feeling “more cautiously optimistic.”