Tariff Ruling Creates Legal Tussle Over How to Divvy Up Refunds

Companies that aren’t importers but still shouldered tariff costs are trying to get a piece of roughly $170 billion in potential refunds on the horizon.

Whether and how refund benefits are shared among companies that bore the costs will be a significant question in the tsunami of litigation expected in the months and years ahead.

“People are talking about the mess of Customs giving refunds,” said Lee Smith, leader of Baker Donelson’s international trade practice, but “Customs gives refunds, and the government pays money, all the time.”

“The real mess is the contractual relationships between private actors, and the money involved,” he added. “People wanting to keep it, and people wanting to get it back.”

If refunds are issued after the Supreme Court struck down a large portion of President Donald Trump’s tariffs, they’d go to the importer of record—the company that completed Customs paperwork and paid the initial tariff costs when a good was brought into the country.

But importers have frequently passed those costs on to their customers. In some cases, tariffs were passed all the way down the supply chain to consumers.

The justices didn’t directly address the question of whether or how the government should pay back the roughly $170 billion collected over the past year on tariffs imposed under the International Emergency Economic Powers Act. It’s now up to the US Court of International Trade to weigh in on refund questions.

Nonetheless, attorneys said they’re already getting many questions about tariff refunds from companies that aren’t importers.

Even before the Feb. 20 Supreme Court decision, Smith said he was seeing companies pressure the importers they bought from to file at the Court of International Trade to get in line for a refund.

Smith’s firm is seeing companies reach out to importers that passed tariff costs along to them, saying, “the Supreme Court ruled these are illegal, and you made us pay it. Please let us know that you’re filing at the court and getting a refund. We’ll get that refund.”

“This is going to spiral, probably, into quite a bit of commercial litigation,” he added.

Dissecting Contract Terms

Amid the flurry of tariffs Trump imposed since last year, many companies added provisions into their commercial contracts determining how increased tariff costs would be shared. It’s less common to see the allocation of refund benefits detailed in those contracts, and it’s not certain that benefits would be allocated in the same way as costs.

Lawyers emphasized that such questions will always depend on the details of an individual contract.

“It’s already clear to us that the claims by third parties to whom the cost of tariffs were passed on are incredibly diverse, and very fact dependent,” said Dennis Hranitzky, co-lead of Quinn Emanuel’s tariff refund task force and head of the sovereign litigation practice.

As Trump ramped up his tariff measures —particularly in the wake his April 2025 move to impose widespread “reciprocal” tariffs—importers scrutinized existing contracts to see if they could pass costs to their counterparties and customers, said Thomas Allen, a partner at K&L Gates.

“What we learned at that point in time was that contracts really, historically, didn’t do a great job of capturing this situation,” Allen said.

Ron Kirk, senior of counsel at Gibson Dunn and a former US Trade Representative in the Barack Obama administration, said even as recently as last summer it was “very much the exception to the rule” for companies to have contract provisions anticipating unforeseen tariff escalations.

As tariff policies evolved, contracts more frequently spelled out how parties would share liabilities—but it’s less common for them to detail how a refund would be allocated.

Allen said he has seen contracts that describe which party captures a benefit, but that “it’s more common for it to be silent” on that point.

It’s not a given that refund benefits would be treated the same way as tariff costs under any given contract, multiple lawyers said.

“We can anticipate litigation on these issues,” said Janet Whittaker, senior counsel at Clifford Chance.

Whittaker said her firm has been advising clients to make sure their contracts envisage the possibility that the tariffs are found to be invalid, and refunds due.

A close reading of a contract is critical to understanding whether and how tariff cost provisions might also apply to refunds, Hranitzky said.

“When you want to argue that there’s an implied term in a contract, it’s really important to read the contract as a whole—in part, to see how specific the parties were on other terms,” he said. “When the parties are consistently specific, that’s an argument against implying terms, especially when one would expect the parties to view the term as being important.”