Who will get the $175 billion in refunds after US SC tariff ruling? Indian exporters?

The US Supreme Court said on Friday (February 20) that tariffs imposed by President Donald Trump under an economic emergency law were illegal. The decision has raised several questions about what happens next, the most pertinent being about levies already paid and refunds.

Scotus did not spell out how the US government should refund the illegal tariffs, worth an estimated $175 billion. When asked about refunds, Trump said at a press conference that “we’ll end up being in court for the next five years”.

According to The Budget Lab at Yale, the US top court “did not rule out allowing importers to claim refunds on any IEEPA tariffs they may have paid”. “While there are a range of questions regarding the process firms will go through to obtain refunds, it is likely that a substantial portion of the revenue raised via IEEPA in 2025 will be returned to firms,” it said.

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It’s a complicated matter. We answer the refund question and who will get them. Let’s start with the basics.

How are tariffs collected?

For nearly all goods subject to tariffs, an importer posts a bond with the Customs and Border Protection agency and pays an estimated tariff on the merchandise to bring it into the United States.

The government makes a final determination of the tariffs on those goods, a process known as liquidation, which usually happens 314 days after entry of the goods. Excess payments are refunded, or the importer must cover the shortfall.

Importers filed suit at the US Court of International Trade to try to stop the process of determining final tariff payments while the Supreme Court was considering the case, but that court denied the request, reports Reuters.

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Did the US SC direct how refunds will be collected?

No. In a dissenting opinion, Justice Brett Kavanaugh said the court’s ruling was likely to generate serious practical consequences in the near term, including refunds. He noted it was acknowledged at oral arguments that distributing refunds was likely going to be “a mess”.

The case will now go back to the Court of International Trade to sort through the refunds.

What has the US administration said about refunds?

Trump said the United States could face extended legal disputes if it were forced to refund tariff revenues.

Asked whether he would refund revenue collected from his tariffs, “They [US SC] take months and months to write an opinion and they don’t even discuss that part.. We’ll end up being in court for the next five years.”

Earlier, Treasury Secretary Scott Bessent told Reuters that the agency had enough cash on hand to refund importers, but warned the process could take up to a year. “It won’t be a problem if we have to do it, but I can tell you that if it happens — which I don’t think it’s going to — it’s just a corporate boondoggle.”

How could refunds be handled?

More than 1,000 lawsuits have been filed by importers in the US trade court seeking refunds, and a flood of new cases is likely.

The court ruled in December that it had the power to reopen the final tariff determinations and order the government to pay refunds with interest – an authority the Trump administration said in court it would not challenge. That decision removed potential legal complications to refunds, according to trade experts.

When the smoke clears, trade lawyers say, importers are likely to get money back — eventually. “It’s going to be a bumpy ride for a while," trade lawyer Joyce Adetutu, a partner at the Vinson & Elkins law firm, told AP.

The refund process is likely to be hashed out by a mix of the US Customs and Border Protection agency, the specialised Court of International Trade in New York and other lower courts, according to a note to clients by lawyers at the legal firm Clark Hill. “The amount of money is substantial,” Adetutu said. “The courts are going to have a hard time. Importers are going to have a hard time.’’

What will importers have to do to get refunds?

Each importer might have to sue in the Court of International Trade to get a refund, and it is not clear that a class action could be formed to cover the broad range of companies that paid tariffs, legal experts said. Importers have two years to sue to claim a refund, under the US trade law.

The process could disproportionately hurt smaller businesses, many of which already suffered more from tariffs than well-funded companies like Costco. Lawyers for importers said some smaller importers might abandon a potential refund rather than pay thousands of dollars in legal and court fees to bring a case, reports Reuters.

Is there a precedent for such refunds?

The Court of International Trade has overseen large-scale refunds before. The US Congress enacted a harbor maintenance tax in 1986 that was assessed on the value of all cargo into and out of US ports.

The Supreme Court ruled part of the tax was unconstitutional in 1998. The Court of International Trade oversaw a refund process involving more than 100,000 claimants that was managed by Judge Jane Restani, who remains on the court.

Will it be a complicated affair?

Trade experts said the government has tracked tariff payments and improved recordkeeping systems that should make it easier to determine the size of refunds. Small businesses have called on the Trump administration to issue automatic repayments and have expressed concern that the government might scrutinise entry paperwork in a way that slows the refund process.

Even if refunds are distributed, some companies that sought them might not get the money. That’s because the company might not have been the importer of record, which is the entity responsible for ensuring imported goods comply with regulations and paying duties.
Once the refund is distributed, it will depend on the contractual arrangement between the company that paid the tariff and the importer of record to determine who ultimately gets the money, creating another potential legal dispute.

The process could take years, trade groups have warned.

For that reason, some companies with potential tariff refunds have been selling their potential claim to Wall Street investors.

Will countries get refunds?

Last year, the accountancy firm PwC had estimated the potential refund opportunities for various countries in case the US SC ruled against the tariffs.

According to their analysis, exports from India had faced tariffs to the tune of $487 million for trade conducted until October 2025, out of a total of $108 billion. “Even if refunds are ultimately permitted, the recovery process could be complex and resource-intensive,” PwC had warned in a report, saying that companies would need to navigate complex customs procedures, reports The Indian Express.

What about Indian exporters?

The tariffs imposed by Trump were paid by importers, not exporters. This increased cost was passed on to American consumers, leading to inflation. So American businesses and people were footing the bill for Trump’s trade war.

That said, exporters were also affected, including those from India. The US, after all, is India’s biggest export market, and the levies made Indian products uncompetitive, reports India Today.

However, it is unlikely that Indian exporters will be compensated for their losses. “Even if the tariffs are ruled illegal, I don’t think there’s any provision for penalty payments or compensation. The costs borne and the investments made during this period are unlikely to be reversed, or may take too long,” economist Ajit Ranade told the publication in 2025_._

With inputs from agencies