Part 1 of 3: Who Gets the $166 Billion? The Refund Fight After the Supreme Court Struck IEEPA Tariffs
Part 1 of a 3-part series on the litigation wave following the Supreme Court's IEEPA tariff ruling.
In August 2025, a man named Nathan Ward bought a pair of Ray-Ban sunglasses. Like a lot of people that summer, he paid more than he would have a few months earlier. Six months later, he sued the manufacturer, alleging the price premium traced back to tariffs the Supreme Court had since struck down as unlawful.
One pair of sunglasses, one federal lawsuit, and a question now echoing across dockets nationwide: when a tariff turns out to be illegal, who actually gets the money back?
The Ruling That Started It
Case: Learning Resources, Inc. v. Trump
Court: Supreme Court of the United States, 146 S. Ct. 628 (2026)
Decision: February 20, 2026 (6-3)
Holding: The International Emergency Economic Powers Act ("IEEPA") does not authorize the President to impose tariffs to fight the influx of illegal drugs.
The decision invalidated billions of dollars in import duties collected since early 2025. After the ruling, U.S. Customs and Border Protection ("CBP") launched its automated CAPE refund system to process the claims. According to BDO USA, the refund pool sits at roughly $166 billion plus interest — of which about $85 billion had been accepted for processing by late May 2026, with $20.6 billion already sent to Treasury for disbursement.
But the refund line does not end at CBP.
The Mismatch at the Center of It All
Under federal law, only the "importer of record" — the party that filed the entry with CBP — has standing to seek a refund from the government. But the importer of record is often not the party that actually absorbed the cost of the tariff. It may have passed the entire cost downstream, shared it with supply chain partners, or absorbed only a portion itself.
And the importer of record can be almost anyone in the chain: a domestic end user, a retailer, a wholesaler, a distributor, a foreign seller, a customs broker, or the manufacturer.
That creates a structural mismatch baked into the system: the party legally entitled to claim the refund is not necessarily the party that paid the tariff. That gap is where the litigation lives.
Three Choices, Made in 2025, That Define Exposure in 2026
When the Liberation Day tariffs took effect in early 2025, importers and their counterparties generally responded in one of three ways:
Absorption. Some absorbed the cost under fixed-price contracts and took the margin hit.
Pass-through. Others pushed some or all of it downstream through price adjustments, contract amendments, explicit surcharges, or informal cost-sharing.
Restructuring. A third group reworked the underlying deal with concessions, discounts, or rebates to shift or neutralize the tariff impact without ever calling it a surcharge.
This was not a fringe phenomenon. A 2025 Thomson Reuters survey found that 72% of companies changed sourcing patterns, 52% renegotiated supplier contracts, and 49% front-loaded inventory ahead of the duties.
The pricing strategy a company chose in 2025 now affects its legal exposure in 2026. Each decision left a fingerprint, and plaintiffs are following those fingerprints up and down the supply chain.
What Comes Next
Within hours of the Learning Resources decision, the lawsuits started landing — consumer class actions and commercial disputes alike, many reaching well beyond the immediate importers of record and beyond the face value of the tariffs themselves.
Over the next two posts in this series, I'll map where the fights are happening:
Part 2 — the consumer class actions: explicit pass-through surcharges and embedded price increases, and why a CEO's offhand comment about "raising prices because of tariffs" can become an invitation to sue.
Part 3 — the quieter, often complicated by business relationship and sourcing strategy, commercial disputes moving up the supply chain, and why this looks less like a one-time cleanup and more like a permanent risk-management problem.
If your company imported anything between early 2025 and now, you are somewhere on this map. The useful question is where.
Where does your business sit in the refund chain — and does your contract say so?
Disclaimer: This blog post is not legal advice. It is for informational purposes only. Reading this content does not create an attorney-client relationship. Consult with a licensed attorney to address your specific issues. Do not act upon this information without seeking professional legal counsel. IB Law Firm does not endorse any of the cited sources and is not responsible for the content of linked resources