Trump Lost The Tariff Case. He Might Still Keep Some Of The Money.

President Donald Trump is launching a new effort to try to avoid paying back billions of dollars worth of tariffs he illegally collected. Legal watchers say there’s a chance the White House effort could succeed.

The Trump administration will be back in court Tuesday to make the case that, despite the Supreme Court’s ruling invalidating tariffs the president imposed under a 1977 law, they are not required to pay all of those duties back. Though they are processing refunds for thousands of importers, they are arguing they are doing so voluntarily. And they are digging in on other tariff payments that have already been finalized by the government, which legal experts say could add up to tens of billions of dollars.

“The message from the government is pretty straightforward: we don't have the authority to issue these refunds, and unless a court orders us to repay a specific company, we're not going to do it,” said a former Trump administration official and trade lawyer close to the White House. "They’re ready to claw back what they know they legally can." The person was granted anonymity to candidly discuss the Trump administration’s strategy.

The White House did not respond to a request for comment.

Importers are preparing to fight back, including with a class action lawsuit. It sets up another messy chapter in what has already been a protracted legal fight over the president’s signature tariff policies — one that could wind its way back up to the Supreme Court.

Part of the issue is that the high court’s February ruling striking down Trump’s tariffs did not weigh in on what the administration should do with the money it had already collected from the duties. So the question fell to the U.S. Court of International Trade, an obscure New York-based federal court that focuses exclusively on trade issues.

In an April order, CIT Judge Richard Eaton directed the Trump administration to issue refunds to all the companies that paid the now-defunct tariffs. The White House initially signaled it would comply, setting up a repayment system overseen by Customs and Border Protection for companies to submit requests for refunds and receive payments from the government. As of May 22, they have approved more than $85 billion in repayments, according to the government’s court filings. But it is limiting eligibility to specific types of tariff payments, despite growing impatience from the judge.

After weeks of increasingly contentious court filings, the Justice Department officially appealed Eaton’s April order last week, arguing the CIT exceeded its authority when it ordered universal refunds, and that the government cannot refund payments that have already been finalized by CBP.

The fight over how many importers are entitled to relief now sits with the U.S. Court of Appeals for the Federal Circuit, and legal experts say the government has some reasons for optimism. Among other things, they point to a Supreme Court ruling last year that federal courts generally cannot issue nationwide injunctions that apply to people who are not parties to a lawsuit — as Eaton did in his April order.

“That issue could really go both ways,” said James Kim, an international trade partner at ArentFox Schiff, adding that “the DOJ has good arguments” that the Supreme Court decision regarding federal court injunctions also applies to the CIT. “Despite what Judge Eaton has said on that — it’s going to be interesting to see how this plays out.”

Matthew Seligman, founder of the firm Grayhawk Law and a lawyer representing importers seeking tariff refunds, offered a starker verdict: "It was inevitable that the government would appeal [Eaton’s April order requiring universal tariffs] and win."

In Seligman’s opinion, Eaton’s argument violated the Supreme Court’s precedent and “simply ignored” a federal law that says CIT generally has the same powers and limitations as district courts.

"The lasting effect of the universal refund order will be that importers have needlessly been kept in the dark for months about what exactly they need to do to get the refunds to which they are legally entitled,” he said.

A decision by the Federal Circuit to intervene in Eaton's April refund order could potentially change the current repayment process as the appeal proceeds. Such a move could create further uncertainty for importers whose claims remain unresolved, potentially delaying repayment for companies still waiting on refunds.

For now, Eaton's refund orders remain in effect, and the judge is continuing to press the administration for details on how and when it plans to repay the rest of the affected importers.

That makes Tuesday's hearing significant. Eaton has indicated he wants answers even as the broader legal fight plays out, sending a letter after the government appealed last week warning that more litigation challenging repayments “would discourage continuing progress.”

Sara Albrecht, chair and CEO of the Liberty Justice Center, a public policy legal advocacy group that represents companies at the center of the refund and tariff litigation, praised Eaton for being “very proactive in directing this case.”

Tuesday’s hearing “will explain a lot … on what the government is thinking and their positions,” Albrecht added. “We’ve got plans A, B, C and D for June 9th … We’re ready.”

In a motion Thursday, the plaintiffs — a group of small importers including a wine seller, a bike company and a fishing retailer — asked the CIT to certify a class action on behalf of all importers locked out of the refund system — a move that could open a path for smaller businesses that cannot afford their own litigation.

If the Trump administration prevails in its effort to restrict broad repayments, companies could be forced to sue individually to try and get paid back, a process that lawyers say could be prohibitively expensive for many small businesses and lead many to abandon their claims, altogether.

The government's appeal, however, raises the same underlying question: whether the court has authority to order repayment for anyone beyond the handful of companies that actually sued the administration in the original case.

Jay Foreman, CEO of Basic Fun!, a Florida toy company behind Tonka trucks and Care Bears, said the government's posture amounts to a deliberate strategy of attrition. His company has received about $450,000 of an estimated $7.5 million it says it is owed from paying the illegal tariffs.

"It's almost like the insurance companies — they just deny your claim, and it's only the people that are willing to fight through four or five, six denials that get paid," Foreman said. "They figure a bunch of people will drop out."