Supreme Court punts tariff refund decision on obscure trade court

State of play: Companies, including Costco, Revlon and Bumble Bee Foods sued in the Court of International Trade last year to preemptively secure refunds if SCOTUS ruled against the administration.

• Potentially, companies could ultimately be entitled to more than $175 billion, according to a new estimate released Friday from Penn-Wharton Budget Model economists.

What they're saying: The president slammed the Supreme Court for ducking the refund question in a White House press conference Friday afternoon.

• "It wasn't discussed," he said. "Wouldn't you think they would have put one sentence in there saying, 'keep the money or don't keep the money,' right?" he asked in response to a reporter's question about refunds.
• "I guess it has to get litigated for the next two years. So they write this terrible, defective decision, totally defective. It's almost like not written by smart people," he said.
• The president also announced he'll be imposing a new global 10% tariff to replace the ones overturned by the court.

Context: The court ruled that the president doesn't have the power to "unilaterally impose unbounded tariffs and change them at will."

• The justices found that the International Emergency Economic Powers Act does not clearly authorize the president to impose tariffs, meaning the government collected the fees illegally.

Flashback: Mass refunds have been issued before.

• The court ruled in 1998 that a tax on exporters was unconstitutional, so the Court of International Trade facilitated the process to help companies reclaim their money.

Here's what we know about refunds:

What SCOTUS said about refunds

The only time the court addressed refunds was in Justice Brett Kavanaugh's dissenting opinion, in which he said the decision would likely generate "serious practical consequences in the near term."

• "The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others."
• "Refunds of billions of dollars would have significant consequences for the U. S. Treasury. The Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers."
• "But that process is likely to be a 'mess,' as was acknowledged at oral argument," he wrote.

What Trump has previously said about refunds

President Trump previously lamented the messiness of issuing refunds as one justification for why the court should rule in his favor.

• He's also repeatedly said that losing the case could "literally destroy the United States of America."

How tariff refunds could work

There were three general ways the government could've handled the refund process, according to Patrick Childress, who served in the Office of the U.S. Trade Representative under both Trump administrations.

• The government could proactively refund IEEPA-related tariffs to all companies.
• Companies could use existing Customs and Border Protection processes to affirmatively apply to receive refunds.
• But instead, the president has chosen a legal fight.

So what's next?

Since the administration has balked at issuing refunds, companies will need to go through the Court of International Trade to get their money.

• The court will need to decide a mechanism for how to refund entities, a process that hasn't been established so soon after the SCOTUS ruling.

Zoom in: Luis Arandia, a customs and tariffs attorney, tells Axios that the issues' complexity is "mind-boggling."

• "We're talking about 20 million plus entries, over 300,000 importers potentially affected. It's a huge deal."

Worth noting: Refunds would ultimately go back to the importer who originally paid the tariff.

• That means Americans aren't likely to see any money back, although retailers could cut prices if they succeed at the CIT.

What we're watching: It could take 12-18 months for refunds to be issued, according to a TD Securities report reviewed by Axios.

Go deeper: Business groups praise Supreme Court move to void Trump tariffs