Downstream Tariff Refund Suits Face Hurdles From Antitrust Law

Downstream purchasers—distributors, retailers, or end consumers—are now asking if they can claim a share of about $170 billion in potential refunds after the US Supreme Court’s landmark decision invalidating tariffs imposed under the International Emergency Economic Powers Act.

The Supreme Court held Feb. 20 that the statute doesn’t authorize tariffs—a revenue-raising measure historically within the province of Congress under the Import Clause and the Taxing and Spending Clause.

The decision had immediate practical consequences. US Customs and Border Protection had collected billions of dollars in tariffs before the ruling, yet the Supreme Court didn’t prescribe a specific remedy or direct refunds of tariffs already paid. Importers of record moved swiftly to recover, pursuing administrative relief from CBP and filing suit in the US Court of International Trade.

So can downstream purchasers share in those refunds on the theory that the importer of record passed on some or all of the tariff costs through higher prices? Drawing on decades of antitrust jurisprudence—principally the Supreme Court’s decisions in Hanover Shoe, Inc. v. United Shoe Machinery Corp and Illinois Brick Co. v. Illinois—we explain why importers of record should retain any tariff refunds and why downstream parties face formidable legal and practical barriers to recovery.

Downstream purchasers advance several common arguments. First, they contend importers passed on tariff costs through higher prices and were effectively made whole, such that retaining both the price increase and the refund would be unjust enrichment. Second, they argue they are the real parties-in-interest because they ultimately bore the economic burden. Third, some assert contractual or quasi-contractual rights to share in refunds.

Each argument, while superficially appealing, encounters serious legal and practical obstacles. As a matter of customs law, tariff liability attaches to the importer of record, and refunds are payable to the party that paid the duties. More fundamentally, these pass-on theories are the same theories the Supreme Court has repeatedly rejected in the antitrust context.

Antitrust Guidance

Antitrust law provides the most developed precedent on the pass-on question through two complementary doctrines. Hanover Shoe bars defendants from raising a “pass-on” defense to reduce damages owed to a direct purchaser. Illinois Brick bars indirect purchasers from suing for overcharges allegedly passed on through the distribution chain. Together, these doctrines confine damages claims to the first purchaser—the party that dealt directly with the alleged wrongdoer.

The reasoning is directly applicable to tariff refund disputes. In both contexts, tracing the economic incidence of a cost increase through multiple levels of a supply chain involves inherently speculative inquiries, requiring analysis of pricing decisions, market conditions, competitive dynamics, cost structures, and demand elasticity at every distribution level. The Supreme Court found these inquiries beyond the practical competence of courts and juries.

In the tariff context, the importer of record transacted directly with CBP and paid the unlawful tariffs; downstream purchasers claiming to have borne those costs indirectly assert the same type of pass-on theory the Supreme Court has rejected.

Class Action Considerations

The class action mechanism presents additional obstacles. Under Federal Rule of Civil Procedure 23(b)(3), a plaintiff must demonstrate for class certification that common questions predominate over individual ones.

In pass-on cases, predominance is particularly hard to establish because the amount of any overcharge passed on to a given purchaser depends on specific contractual arrangements, pricing practices, and competitive conditions. Courts have repeatedly held that purchaser-by-purchaser analysis defeats predominance. They have also expressed skepticism about the manageability of class trials involving pass-on theories, providing an independent basis for denying certification.

Potential Claims, Obstacles

Unjust enrichment. A downstream purchaser might argue that an importer retaining a refund after passing the tariff cost to customers is unjustly enriched. However, proving that the tariff was passed on to a particular purchaser requires the same speculative, individualized analysis that Hanover Shoe and Illinois Brick counsel against. Class certification is also problematic where alleged enrichment arises from varied transactions.

Breach of contract. Some purchasers may contend that their supply agreements required the importer to pass through tariff refunds. The viability of such a claim depends on the specific contract terms.

Illinois Brick acknowledged a narrow exception for pre-existing cost-plus contracts, which could apply if a supply agreement includes an explicit pass-through provision. However, this exception is narrowly construed, and most commercial contracts don’t mechanically tie pricing to input costs or require sellers to share government refunds. Classwide resolution is impracticable where contracts differ in pricing mechanisms and cost-risk allocation.

Tort and statutory claims. Downstream purchasers might frame claims as fraud, negligent misrepresentation, or state consumer protection actions. These theories face the same fundamental pass-on problem: Proving quantifiable injury requires tracing the tariff’s economic incidence through the supply chain.

Fraud-based claims additionally require proof of individualized reliance, long recognized as a significant obstacle to class certification. Even where a statute relaxes the reliance requirement, plaintiffs must still demonstrate classwide damages through the same speculative, purchaser-by-purchaser analysis.

The Supreme Court’s decision created a potential opportunity for importers of record to recover unlawfully imposed tariffs, but it didn’t create a right of recovery for downstream purchasers. Practitioners defending importers in potential class actions or individual claims by downstream purchasers will find in the Hanover Shoe and Illinois Brick antitrust framework a well-developed body of law that supports limiting refunds to the party that paid the tariff. The speculative nature of pass-on proof, the risk of duplicative recovery, and the impracticability of classwide adjudication all weigh heavily against extending refund recoveries beyond the importer of record.

The case is Learning Resources, Inc. v. Trump, U.S., No. 24-1287, decided 2/20/26.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Greg Wells is counsel in Vinson & Elkins’ antitrust practice group.

Joyce Adetutu is a partner in Vinson & Elkins’ export controls and economic sanctions and national security reviews (CFIUS) practice group.

Stephen Josey, Stephen Medlock, Randall Johnston, and Adam Kleven contributed to this article.

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