The U.S. government may have to refund up to $175 billion in tariffs collected last year under a program the Supreme Court has now deemed illegal. Or maybe not. There are as many questions as answers, but experts say there are steps all companies, including distributors, can take now to put themselves in the best position to get any refunds that may be coming and to minimize future tariff-related costs.
Among the most important actions for distributors that are the importers of record is to evaluate what tariffs your company paid under the International Emergency Economic Powers Act (IEEPA). The Supreme Court ruled Feb. 20 that President Trump had no authority under IEEPA to impose those tariffs, which the Penn-Wharton Budget Model estimates totaled between $175 and $179 billion before the high court ruling.
Acting fast is important because there are deadlines for filing protests and lawsuits against tariffs, and also because the customs brokers who hold many importation documents will be deluged with requests for that information.
For distributors that did not import goods directly but paid higher prices for products imported by their suppliers, it’s also important to identify which goods fell under IEEPA tariffs so they can negotiate rebates from suppliers that ultimately receive refunds.
Other steps include ensuring that imported goods are coded correctly so that the lowest possible tariffs are applied. And distributors will want to stay abreast of developments in Washington, as the Trump administration is conducting investigations that could lead to new tariffs, under statutes other than IEEPA, particularly on goods deemed vital to national security—an expansive list that ranges from industrial machinery to pharmaceuticals.
Do Distributors Owe Refunds to Their Customers?
Given the many tariff-related developments of late, it’s no wonder distributors have questions.
Mike Mortensen, president and CEO of Anchorage, Alaska-based distributor ARG Industrial, says most of the tariffs-related costs he absorbed last year were “price increases that manufacturers passed on over the last year rather than direct line-item tariff charges. I’m not quite sure how any of that would be able to be unwound or refunded.”
And refunds would raise another question, Mortensen says: “Do we as distributors need to refund our customers? The whole thing seems like a gigantic mess.”
It’s a mess that impacts the many distributors that paid higher prices to suppliers last year as a result of the Trump administration tariffs. Nearly 90% of tariff fees paid by importers were passed on to companies, including distributors, or consumers, according to a recent report by the Federal Reserve Bank of New York.
Many distributors then passed on those higher costs to their customers. Alex Chausovsky, president and CEO of 3DM Consulting, says his distributor clients raised prices three to six times in 2025 due to tariffs.
Being transparent both with suppliers and customers about tariff-related costs is important for distributors, says Chris Blaylock, leader of the manufacturing and distribution team in the Chicago area for Wipfli, an accounting and consulting firm.
“Distributors are looking at the front end and back end in terms of how they interact with suppliers and customers,” Blaylock says. “They’re evaluating tariff exposure, understanding where they are most vulnerable, and, if necessary, pivoting on that exposure so that its less or at least the uncertainty is less.”
Part of that process, Blaylock says, includes having “candid conversations with those suppliers about pricing structure, contract terms, how they’re going to manage any changes in costs that might flow thru the supply chain.”
Blaylock says distributors should also review the products they are purchasing to make sure their suppliers are using the proper HTS (Harmonized Tariff Schedule) codes on those goods. Putting the wrong HTS code on a product could lead to the importer paying a higher tariff than necessary.
Some companies are going beyond conversations to taking legal action to protect themselves, according to Vinicius Adam, a trade attorney at VAdam Law. He was quoted by Reuters as saying some client firms are warning their suppliers in writing that they may stop buying from them if they do not share any refunds forthcoming as a result of the ruling against the IEEPA tariffs.
How to Apply for Tariff Refunds
Whether the U.S. government will refund the tariffs collected under IEEPA remains unclear. Treasury Secretary Scott Bessent said last fall it would pay refunds if the Supreme Court ruled against the administration on IEEPA tariffs. But the Supreme Court has left it to lower courts to decide whether to require such refunds.
On March 4, the U.S. Court of International Trade ordered the government to refund tariffs collected under IEEPA, but the Trump administration is expected to appeal.
Refunds are unlikely to come quickly, and any resolution could take “weeks, months or even years,” Blaylock says.
Nonetheless, there are steps distributors should take now, especially if they were the importers of record, as only those companies will be entitled to refunds, according to a recent blog posted by Avalara Inc., a provider of software for automating tax collection and payment. To obtain refunds, importers likely will need documentation of the importer goods and proof they paid tariffs under IEEPA, Avalara says. That means it’s important to collect those documents now.
How to apply for refunds depends on whether the tariffs have been “liquidated”—that is, the final, actual tariff duty has been paid—or “unliquidated”—which means the importer paid only the estimated duty on the goods. Avalara says importers must put up a bond with the estimated duty in advance and pay the actual duty within about a year.
If only the estimated payment has been made, the importer can file a Post-Summary Correction with U.S. Customs and Border Protection asking for a refund of part of the payment made. If the tariff was liquidated, the importer can file a protest with CBP or sue the government in the U.S. Court of International Trade, Avalara says.
That protest must be filed within 180 days of the date of liquidation, that is the day the final fee was paid, according to Avalara. If CBP denies a protest, the filing company has 180 days to sue.
What About The New Trump Tariffs?
While the IEEPA tariffs were significant, they represented only about half the new tariffs President Trump imposed since taking office in January 2025. Other tariffs remain in place, including what are known as Section 232 tariffs related to national security and Section 301 tariffs against countries for unfair trade practices.
In addition, immediately following the Supreme Court decision against the IEEPA tariffs, President Trump imposed new 15% across-the-board tariffs under a provision known as Section 122. Those tariffs, however, expire after 150 days, sometime in July, unless renewed by Congress.
What’s more, the administration is investigating whether it should impose new tariffs under Section 232, the law that relates to products deemed vital for national security, such as semiconductors, pharmaceuticals, robots, processed minerals, lumber, pharmaceuticals and industrial machinery. Tariffs not only aren’t going away, they may increase on certain items.
Chausovsky of 3DM consulting says distributors should be in “a constant of vigilance right now” to assess the impact of new tariffs on their product lines.
That’s the stance, industrial equipment and supplies distributor Global Industrial is taking, says CEO Anesa Chaibi.
“We’re watching and waiting, and then we’ll do, not unlike how we executed last year, to mitigate the risk as best we can,” Chaibi told stock analysts on an earnings call last week. “At this point, you know, I think we’re in this with everyone else that’s in the same space of just dealing with how this unfolds.”
Chaibi said last year Global Industrial responded to tariffs with price adjustments and some sourcing shifts. “The team focused on what we could control and mitigated the risk of the things that were out of our control,” she said.
Distributors can’t control what the government does next on tariffs. But they can act now to compile documents related to tariffs they paid so they can apply for any refunds that are forthcoming. They can also negotiate with suppliers to get the best terms if future tariff-related price hikes are imposed, while also letting customers know how they will respond to any new import fees.
Do not miss any content from Distribution Strategy Group. Join our list.
