What if the Supreme Court Overrules the Reciprocal Tariffs? Plan Now for Refunds, Protests, and Contract Reconciliation

By Brett W. Johnson, T. Troy Galan, Cole Craghan, and Thomas Williams

As the U.S. Supreme Court weighs the legality of President Trump’s “reciprocal tariffs,” companies that sell goods internationally face a pivotal inflection point. If the tariffs are struck down, the decision will not simply unwind a trade policy — it may trigger a complex refund process involving billions of dollars in tariffs. This will lead to disputes over who receives repayment, and potential friction between suppliers and customers whose contracts passed tariff costs downstream.

Such disputes appear to be on the horizon, as the U.S. Supreme Court considered oral arguments on the reciprocal tariffs on November 5, 2025, and several Justices signaled their skepticism about whether the International Emergency Economic Powers Act (IEEPA) permits the president to impose tariffs unilaterally. While the outcome remains uncertain, businesses that act now to preserve refund rights and clarify contractual obligations may be best positioned to receive refunds and avoid costly disputes if the tariffs are ordered to be repaid.

I. The Stakes and Scope

The case before the U.S. Supreme Court, Learning Resources, Inc. v. Trump, challenges whether the IEEPA authorizes the president to impose tariffs.¹ Both the Court of International Trade and the U.S. Court of Appeals for the Federal Circuit ruled that it does not, holding that the statute’s language permitting the president to “regulate imports” does not confer tariff-imposing authority.

Importantly, the pending case affects only the “reciprocal tariffs” imposed under the IEEPA. Tariffs imposed under Section 232 (national security) and Section 301 (unfair trade practices) remain fully in force and are unaffected by this litigation. Nonetheless, the potential impact is broad. The reciprocal tariffs have applied to imports from virtually every U.S. trading partner, and their application layered a new cost on top of existing tariffs.

II. What Happens if the Tariffs Are Overturned

If the U.S. Supreme Court finds that the reciprocal tariffs were unlawful, U.S. Customs and Border Protection (CBP) will need to determine how to refund tariffs already collected. Because no modern precedent exists for such a large-scale reversal, CBP’s implementation path remains uncertain.

Two existing administrative mechanisms are most likely to govern:

Although the term “protest” may sound adversarial, it is the standard administrative process for duty recovery. Protests must be filed within 180 days of liquidation (or 90 days for mail shipments) and missing that statutory deadline generally bars recovery.

Although some have speculated that CBP might issue automatic refunds, statements from the U.S. Solicitor General during oral argument suggested otherwise. CBP will likely require companies to affirmatively pursue refunds through the existing protest or PSC framework. Timely filing will be critical; once liquidation occurs, inaction generally becomes final. As such, companies should be reviewing now to determine whether they need to preserve their claim by filing a protest now.

III. The Role of the Importer of Record

Which party actually receives the refund directly from CBP may be as contentious as whether it is available. Under CBP regulations, only the importer of record — the entity that made entry and paid the tariffs — is legally entitled to any refund. This distinction matters because it may not align with the commercial party that ultimately bore the tariff’s cost.

For example, under Delivered Duty Paid (DDP) INCOTERMS 2020 term, the foreign seller typically serves as the importer of record and thus receives any refund, even if the cost was passed through to the end customer in the sale price. Conversely, under Delivered Duty Unpaid (DDU) or Free on Board (FOB) INCOTERMS 2020 terms, the U.S. buyer may be the importer of record and would receive any refund directly. In some cases, regardless of the actual term used in the contract, a different party than intended is listed as the importer of record.

Companies should identify the importer of record for each entry, confirm how tariff costs were allocated in contracts, and ensure they have documentation substantiating those facts. This groundwork will determine who can lawfully claim refunds and help minimize disputes once CBP begins processing claims. This may require demand letters from the party responsible for the import as referenced in the contract or even the end customers to the listed importer of record to preserve the claim or protest right discussed above.

IV. Contract Reconciliation: The Real Legal Battleground

A difficult question will be who ultimately keeps any tariff refunds. Many supply and distribution agreements executed during the tariff period contained “tariff pass-through” clauses allowing price increases to reflect tariffs paid. If those tariffs are now refunded, parties must determine whether refunds flow back to the original buyer, remain with the seller, or are shared under the contract’s pricing mechanisms.

In some cases supply agreements or purchase orders may include express provisions addressing tariff refunds, credits, or cost adjustments. Most, however, do not. In those cases, resolution will turn on broader contract law principles and risk-allocation provisions, such as indemnity, force majeure, or change-in-law clauses, and, in some instances, the legal precedent applicable to the agreement under the choice-of-law and venue clauses.

For companies without clear contract language, this becomes a matter of legal interpretation and negotiation. One key question is whether the original tariff pass-through represented a temporary compliance adjustment or a permanent repricing of the goods. That distinction will likely govern who is entitled to the proceeds of any refunds issued by CBP.

These issues are ripe for contract dispute dependent on the choice-of-law provision (which in many cases does not designate specific state laws in the United States). Companies should begin reviewing contract terms now to identify potential refund “hooks” or legal theories before tensions arise. A careless email or informal concession to a counterparty could waive rights or weaken a claim. In high-value relationships, involving trade counsel early can prevent post-refund litigation that could otherwise erase any financial benefit.

V. Documentation, Compliance, and Preparation

If the tariffs are struck down, CBP will be inundated with refund requests far exceeding normal processing capacity. Importers with complete and well-organized documentation may be best positioned for faster resolution.

Now is the time to assemble:

Companies should not rely solely on customs brokers in preserving rights. First, the broker will likely be overwhelmed once the decision is announced, and CBP may require direct verification from the importer of record. Second, the broker may not have completed the documentation correctly to preserve the ability to protest. 

However, a customs broker is essential to file the necessary paperwork to preserve any claim. For entries still within the typical 300-day liquidation window, companies may consider requesting liquidation extensions, which CBP can grant for up to three years. This preserves the ability to file PSCs instead of protests, offering more flexibility if the U.S. Supreme Court overturns the tariffs. In some cases, a preservation protest may be warranted.

VI. Compliance Cautions and Enforcement Risks

Before rushing to claim refunds if the U.S. Supreme Court overturns the tariffs, companies should first evaluate their auditing compliance posture. The U.S. Department of Justice has emphasized that it intends to enforce trade-related violations aggressively, and CBP has made clear that refund submissions will be reviewed carefully. Companies should consider avoiding seeking a refund when it may trigger an enforcement action.

Prior to potentially filing any refund-related submission, importers should confirm that entries were properly classified and that no underpayments, mis-declared Harmonized Tariff Schedule (HTS) codes, or valuation issues exist. In addition, companies should evaluate whether their import transactions may be a part of any unlawful scheme – intentionally or unintentionally. One such scheme includes the issuance of parallel commercial invoices, one that is accurate and paid by the company and the other one inaccurate and provided to CBP to lower the tariff payments. If any such schemes are identified, a voluntary self-disclosure (VSD) may be advisable before pursuing refunds. This step can significantly mitigate penalty exposure while demonstrating good-faith compliance.

CBP is expected to treat tariff-refund claims as a sensitive category, particularly if they coincide with prior compliance concerns. Engaging experienced trade counsel to review records and structure any necessary VSDs can help ensure the refund process strengthens, rather than undermines, a company’s compliance profile.

VIII. Thoughts

It is impossible to “read the tea leaves” and predict how the U.S. Supreme Court will rule in Learning Resources v. Trump. While several Justices expressed skepticism toward IEEPA-based tariff authority, the final decision could still go either way. If the tariffs are upheld, importers will continue under the existing regime. If they are overturned, the refund process will be complex, time-sensitive, and, in many cases, contentious.

Companies that begin preparing now — by organizing documentation, reviewing contractual obligations, engaging experienced trade counsel, sending demand or preservation letters, audit compliance, and potentially filings VSDs — may be better positioned to recover tariffs efficiently, and avoid creating new compliance issues in the process. Involving trade counsel early helps ensure that companies recover what they are owed without inadvertently creating additional legal exposure.

In the same way, revisiting contracts with professional guidance often reveals how risk could have been allocated differently or documented more clearly in light of the fluctuating tariff environment. Those lessons — learned now — can better position companies for the next wave of trade policy changes. Readiness today, guided by informed experience, may be the difference between a refund opportunity realized, and one lost to delay, dispute, or enforcement risk.