Since the April 4 tariff bombshell was dropped on the U.S. market and brands around the world seeking to sell product to the U.S., the conversation has been about the new tariff levels for neighbors like Canada and Mexico, long-time trading partners and allies in the UK and EU, and long-time producers in China and Southeast Asia. There has also been considerable concern for smaller countries that have very small export businesses that have been assessed outrageously high tariffs, not necessarily because they were charging high tariffs on U.S. goods, but they were caught up in the Trump Administration’s formula that penalized countries with a high trade surplus with the U.S. (they sold more to the U.S. than the U.S. sold to them).
The conversation has now shifted once again to a new question: Will U.S. companies and consumers have to pay any additional tariffs at all, and how much of a rebate will U.S. companies be eligible to receive if a recent appeals court ruling stands? How do consumers who paid higher prices that were said to be due to higher tariffs receive their refunds for those higher prices? The possibility for additional lawsuits and market turmoil is staggering.
These questions obviously kept many awake throughout the long weekend, as they pondered the potential liabilities created by the Appeals Court ruling (if it stands).
On Friday, August 29, a divided U.S. Court of Appeals for the Federal Circuit (Appeals Court) ruled 7-4, going into the long Labor Day weekend, that the Trump Administration’s reciprocal tariffs were illegal but also stayed that ruling until October 14, giving the Administration time to file an appeal to the U.S. Supreme Court. The Appeals Court had been asked to weigh in on a May ruling by the U.S. Court of International Trade regarding V.O.S. Selections v. Trump.
Reuters reported on Tuesday, September 2, that “Wall Street started off September on a sharply lower note on Tuesday as investors weighed the future of President Donald Trump’s tariffs after a federal Appeals Court ruled most of his sweeping tariffs illegal,” suggesting that the 249-point drop in the Dow, a 175-point decline in the Nasdaq, and a 0.69 percent dip in the S&P 500 were a direct result of the Friday ruling.
“It was no real surprise that Trump tariffs action was found to be illegal,” commented Active Lifestyle Industry Analyst and Advisor Matt Powell. “The worst is that this decision adds yet another layer of uncertainty and confusion, just when the industry seemed to be getting its arms around the [initial] bad news.”
Powell said he fears this latest news makes the Holiday selling season even more challenging.
A Billion-Dollar Refund?
After a series of first- and second-quarter earnings releases described market uncertainty and consumer uncertainty as reasoning for lower guidance (or no guidance) for the back half of the year, this latest round of rulings will cause even more confusion for the market and consumers. If the Supreme Court rules in support of the Appeals Court ruling, it may very well challenge the legitimacy of the Trump Administration over the next three and a half years and would clearly have the potential to undermine the Republican Party’s opportunities in the 2026 midterms.
Axios wrote this week that “Corporate America may be due for a multi-billion-dollar refund” due to the recent ruling, suggesting that such a refund would only be received if they are willing to request it. Any suggestion that the Administration would refund tariff payments to U.S. companies would run counter to Trump’s contention from Day One that the exporting country pays the tariff. That alone becomes problematic in the U.S. political dialogue.
“Depending on what happens with the court cases, there may be an opportunity to get some of those tariffs refunded,” said Everett Eissenstat, former deputy director of the National Economic Council under the first Trump administration and a current partner at the law firm Squire Patton Boggs.
Politico was reading the tea leaves (or the Ouji Board if that’s your jam) in early August when the digital publisher suggested that after boasting of the billions raised from tariffs since April, President Trump faced the possibility that the U.S government will have to pay a lot of the tariffs back.
“Several companies and states have challenged Trump’s use of an emergency law to impose some of his duties on individual countries, in a legal dispute that is likely to work its way up to the Supreme Court,” Politico wrote on August 6, 2025. “As part of the case, companies have demanded the federal government pay them back for the tariff fees they’ve already paid out.”
The publication pointed out that Trump’s own Justice Department has acknowledged in legal briefs filed with a U.S. Court of Appeals that if the tariffs were ruled unlawful, importers would be entitled to refunds that would need to be paid via Customs and Border Protection standard administrative procedures.
Many support the concern that any refunds that would have to be paid would create, at a minimum, a logistical nightmare for the Trump Administration and companies filing for refunds.
A quick search response via Google AI suggests that those seeking a refund would have to proactively file a refund request with U.S. Customs and Border Protection (CBP) and monitor their import records for relevant entries.
“While the government may eventually issue a universal refund, it’s more likely that companies will need to file their own protests or other actions to preserve their right to a refund. Importers are encouraged to consult with a customs attorney to understand specific requirements and deadlines for filing, such as the 180-day deadline from liquidation for a protest, and to have a process in place to collect necessary documentation,” the AI response noted.
Axios reported that Eissenstat suggested companies carefully track tariff payments in case of potential refund opportunities. He reportedly added that the administration will aggressively enforce tariff payments, so record-keeping is critical regardless of the court’s decision.
“If it’s an existential issue, I’m sure they’re going to want to get those refunds back, especially if they were, if the court deems, they were, collected unlawfully,” Eissenstat told Axios.
A Disaster for the United States (or Trump?)
President Trump on Tuesday, September 2, called the Appeals Court ruling “an emergency,” and said he would appeal to the U.S. Supreme Court as soon as Wednesday, September 3. Trump said on a Tuesday radio show that there is “a pall over the country” waiting for the Supreme Court to decide as justification for an expedited hearing and ruling.
“If that decision were lost, it would be an economic disaster for the United States,” Trump said Tuesday during a White House press conference. “Our country will be weak, pathetic and not rich” if the tariffs are reversed, Trump said.
He also added that the tariffs have provided leverage in negotiated peace deals.
“Perhaps more damaging for the President, it would also undercut one of the core arguments he’s made to justify his trade agenda: that his tariffs are bringing in unprecedented revenue that can help pay for his tax cuts and, one day, could replace the income tax altogether,” Politico wrote.
But Eissenstat also suggested that there may be a risk for companies requesting those refunds. “As individuals, they may not like the exposure,” he said, apparently alluding to the possibility of retaliation by the Administration.
A Citibank View
Citibank analysts pondered the effect (and uncertainty) of a potential U.S. Supreme Court ruling. Citi indicated in a Tuesday, September 2, note that if “reciprocal tariffs” were to go away, it would be a positive for its group of retailers under coverage.
“While there might be other ways to tariff certain items on a sector-specific basis, we do not believe the majority of the products our retailers sell would be high on the list of targets,” the Citi team wrote. “However, the fact that this issue will likely make its way to the Supreme Court creates extreme uncertainty for our retailers, making the planning process even more difficult than it was. One key question is whether companies might alter shipment timing, making an assumption of a certain outcome.”
However, the bank stated that if the Appeals Court decision on Friday, August 29, were ignored, and the market continued operating under the assumptions and uncertainty that already existed as of Thursday, August 28, they believed those most at risk are the specialty apparel retailers, given the lack of pricing power in apparel.
“Off-pricers are best-positioned within the apparel world to capitalize on the uncertainty, creating an ideal buying environment and benefiting from consumers seeking value,” the Citi team wrote. “We believe WMT is in a favorable position as well, given its mindshare for value. In hardlines retail, the retailers with scale (HD & COST) are best positioned to mitigate tariff pressure through negotiating power, sourcing flexibility, and select price increases.” They also said auto parts retailers and Tractor Supply stand to benefit from inflation, driving higher ticket growth and leveraging fixed costs.
If the Supreme Court upholds the Appeals Court ruling, Citi said those that should see the largest benefit are companies with a high percentage of U.S. sales that rely on foreign imports from high-tariff countries, or those that previously faced the largest tariff burden.
“But let’s face it, removal of tariffs would be a positive for most,” Citi wrote in the Tuesday note, “creating a more risk-on dynamic for retail stocks.”
Citi said another key question for all who have paid tariffs is whether they would receive that money back.
