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By Hugh Cameron
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The government is pressing ahead with refunds on the tariffs that were struck down by the Supreme Court in February, but a group of states is now suing to block the new duties they say have been imposed as a direct replacement for these.
According to documents filed by customs officials with the U.S. Court of International Trade and cited by the Financial Times, the Trump administration has now paid out around $100 billion in tariff refunds to importers.
This represents roughly 60 percent of the $166 billion that businesses are estimated to have paid in President Donald Trump's now-defunct global tariffs, which the Supreme Court ruled he had unlawfully imposed using the International Emergency Economic Powers Act (IEEPA).
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“President Trump is so intent on raising the cost of living for Americans that he is willing to break law after law after law to do so. This is President Trump’s third attempt to illegally impose tariffs that would make life more expensive for American families and small businesses, and this is the third time we're taking the Administration to court over this misuse of power. Tariffs are taxes, and the American people cannot and should not shoulder the extra costs that come from the President’s failed and illegal economic policy — no matter how much the President wants them to," California Attorney General Rob Bonta told Newsweek.
This tariff framework has since been largely rebuilt, however, with the president now imposing sweeping, double-digit levies on dozens of trading partners due to what the administration alleges are insufficient efforts to combat “forced labor” in their supply chains. But the similarities in size and scope between the old and new tariffs have sparked a lawsuit from two dozen states, who consider the forced labor justification a “pretext” for imposing the same tariffs that were deemed illegal in February.
“After losing at the Supreme Court, the administration is once again trying to illegally raise taxes on families and businesses with a new round of tariffs,” said Letitia James, the attorney general of New York, one of the 25 states suing over the new duties.
A spokesperson for U.S. Customs and Border Protection (CBP) told Newsweek the new tariffs were "targeting countries that lack effective bans on importing goods produced with forced labor" and said the agency was “aware that lawsuits have been filed in the Court of International Trade challenging the imposition of these duties.”
Newsweek also reached out to the Office of the U.S. Trade Representative, another department listed in the suit, for comment.
Trump Administration Pressing Ahead With Refunds
According to filings in the U.S. Court of International Trade, over 330,000 importers unduly paid tariffs on more than 53 million shipments thanks to Trump’s IEEPA duties. The administration has agreed to return, with interest, the amount paid by American businesses, though it has sought to avoid rebates for certain entries and experts say it is unlikely the full amount will ever be repaid.
Speaking to Newsweek earlier this week, international trade expert Kathleen Claussen noted that not every importer applied for a rebate, and that many companies may have gone bust during the tariff period and have therefore not been in a position to request their refund.
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However, some trade experts have been left surprised by the rate at which the administration is paying out the rebates, given officials had previously said this process could take years.
Speaking at the Economic Club of Dallas in February following the Supreme Court decision, Treasury Secretary Scott Bessent said the refund process “could be dragged out for weeks, months, years.”
"By and large, the refunds process has gone more smoothly than I would have anticipated. CBP actually has validated entries faster than Treasury could pay them," Greg Husisian, International Trade Partner at the global law firm Foley & Lardner, told Newsweek. "Clearly, the ability to make payments electronically and using an automated system has proceeded better than anyone reasonably could have anticipated, especially when compared with how long major refund actions have taken in the past."
According to the Financial Times, CBP has said that over $128 billion worth of refunds have been “accepted for processing,” indicating that more refunds could be on the way.
States Suing in Response to New Duties
Last month, the administration placed levies of between 10 and 12.5 percent on over 80 nations in total—including Canada, China, and the 27 that make up the European Union—who together account for nearly all the country’s imports.
The United States said the duties are in response to countries allowing goods produced using forced labor to enter the supply chain, following a monthslong investigation into the matter.
“The United States has had a forced labor import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same,” said U.S. Trade Representative Jamieson Greer.
The new tariffs took effect just as the stopgap duties implemented following the Supreme Court decision in February were set to expire, raising doubts among analysts and now state officials as to their justification.
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“The forced-labor rationale looks like a legal vehicle for a policy the administration was determined to pursue anyway: permanent, across-the-board protectionism,” said Mercatus Center Economist Veronique de Rugy, in comments shared with Newsweek. “The courts close one door, and the administration goes hunting for another statute to get the same tariffs through.”
“All available evidence suggests that the forced labor claim is a facade to replace the IEEPA tariffs that SCOTUS ruled illegal with alternative tariffs viewed as resting on more solid legal grounds,” said Jason Miller, a professor of supply chain management at Michigan State University’s Broad College of Business.
Miller told Newsweek that the number of exemptions to the tariffs appeared “odd” given these were apparently targeted at forced labor, and said he was skeptical the government could conduct the necessary investigations “on dozens of trading partners in just a few months.”
And these opinions have now been shared by attorneys general for the 25 states suing over the tariffs. According to the suit filed with the Court of International Trade, the new, nearly worldwide duties are effectively a continuation of those which were ruled illegal, follow a rushed and superficial investigation, and contain several inconsistencies if intended to prevent imports made with forced labor.
"The tariff action is arbitrary, capricious, and contrary to law," the filing read. "The Plaintiff states oppose forced labor in all its forms and support protections for workers around the globe. But the Administration cannot use forced labor as a pretext to continue its illegal tariff scheme."
In the suit, New York has been joined by Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Virginia, Vermont, Washington and Wisconsin.
Contact Newsweek editors on this story: Ben Kelly and Sam Wilson.
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