Supreme Court Forces Trump to Return $166 Billion in Tariffs Imposed Without Constitutional Authority

The United States government has begun the process of refunding up to $166 billion (£130 billion) in tariffs charged under President Donald Trump, after the Supreme Court ruled the policy was imposed without constitutional authority. The Trump administration on Monday launched a new system — known as CAPE — to begin refunding the duties to US importers, allowing Customs and Border Protection to issue consolidated electronic payments and streamlining what would otherwise be a complex, entry-by-entry refund process.

Importers and their brokers are now able to begin claiming refunds through an online portal, with Customs and Border Protection administering the system. As of 14 April, 56,497 importers had completed registration and were eligible for refunds totalling $127 billion (£99.6 billion), including interest.

A Landmark Ruling Two Years in the Making

In a 6-3 decision, the justices ruled that the tariffs exceeded the powers granted to the president by Congress under a 1977 law providing authority to regulate commerce during national emergencies created by foreign threats. The ruling, handed down on 20 February 2026 in Learning Resources, Inc. v. Trump, was authored by Chief Justice John Roberts.

Chief Justice Roberts wrote that based on 'two words separated by 16 others' in the statute — 'regulate' and 'importation' — the President had asserted 'the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time.' Those words, he wrote, 'cannot bear such weight.' The court further noted that IEEPA contains no reference to tariffs or duties, and that until 2025, no president had ever read the law to confer such power.

The decision invalidated both the 'Reciprocal Tariffs' first imposed on 'Liberation Day' in April 2025 and the 'Trafficking and Immigration Tariffs' relating to fentanyl, representing a significant check on executive authority.

What Businesses Can Claim — and What They Cannot

Customs and Border Protection said in court filings that over 330,000 importers paid a total of about $166 billion (£130 billion) on over 53 million shipments. Not all of those orders qualify for the first phase of the refund rollout.

Refunds are limited initially to cases in which tariffs were estimated but not finalised or within 80 days of receiving a final accounting. To receive refunds, importers must register for CBP's electronic payment system. Reed Smith partner Michael Lowell noted that 'customs is estimating that refunds will be processed within 60 to 90 days after submission,' and that 'if importers file as soon as the system opens, refunds could begin flowing by mid-June to mid-July.'

Crucially, refunds go to importers of record — the companies that actually paid the duties to Customs — not directly to consumers. The US Chamber of Commerce has made clear that 'businesses that did not directly pay the tariffs are not eligible for a refund' and that only tariffs applied under IEEPA qualify.

Tariffs Are Far From Over

Despite the ruling, the broader use of tariffs under the Trump administration is not expected to cease. Within hours of the Supreme Court's decision, President Trump signed a proclamation imposing a new 10 per cent global tariff under Section 122 of the Trade Act of 1974, effective 24 February 2026.

Reed Smith partner Michael Lowell described tariffs as 'a central component of the administration's economic and trade policy,' adding that they are 'not going anywhere.' The Supreme Court's decision does not affect tariffs currently in place under other major trade statutes, including Section 232 on national security grounds, Section 301 on trade agreement violations, and Section 201 safeguards.

The scale of the refund process is without modern precedent in American trade history. Penn-Wharton Budget Model economists estimated that IEEPA-based tariff collections total approximately $175 billion to $179 billion (£137 billion–£140 billion), a figure that exceeds the combined fiscal 2025 spending of the Department of Transportation and the Department of Justice. For companies that absorbed billions in import costs over the past year, the refund portal represents a critical, if procedurally complex, opportunity to recover those losses — even as new tariffs continue to reshape the global trade landscape.