Tariffs Struck Down: What’s Next and How do Companies Get Refunds?

Episode transcript:

Note: This transcript is generated from a recorded conversation and may contain errors or omissions. It has been edited for clarity but may not fully capture the original intent or context. For accurate interpretation, please refer to the original audio. 

JOHN QUINN: This is John Quinn, and this is Law, disrupted and today we’re gonna be talking about the word of the moment. It’s maybe been the word of the last several months, that’s tariffs. And in a historic trade decision, last Friday, the United States Supreme Court struck down kind of the signature international trade budget balancing arguably geopolitical measure of his whole platform. It struck down the tariffs. 

And today we’re gonna talk to two of my partners, Dennis Hranitzky, who’s a partner in our Salt Lake City office, and Fritz Scanlon, who’s of counsel in our Washington DC office, who have been following this and spending a lot of time even before this decision, trying to understand the tariffs, and now to understand the decision and what the president is going to do next. What he said he is going to do next, the basis for that. And lastly, but maybe most importantly, the potential for tariff refund claims. So let’s start out, gents. Tell us what did the court decide last Friday? 

DENNIS HRANITZKY: Well, so John, basically, a little background. There are several sort of types of tariffs that the administration has imposed.

You know, some during this administration, some going back to the first Trump administration, this decision relates only to one category and that category was the most controversial category. Those are the categories, the tariffs that were imposed under statute called IEEPA statute. 

That dates from the 1970s, and the reason the administration I think liked IEEPA because, based on sort of their interpretation of the statute, it gave the president maximum flexibility to do whatever he wanted. He didn’t, there was no requirement that there be any sort of like administrative investigation before the president just announced the tariff. No requirement for congressional approval either at the onset or sort of after a certain period of time.

And under the administrations position, you know, the president could change the tariffs like at will, and what the Supreme Court found… 

JOHN QUINN: I mean, before we do that, you say these, it only address these IEEPA tariffs. I’d like you to tell us what IEEPA is, what the basis for that was. But you also said that was the only category of tariffs affected.

Now, did these IEEPA tariffs, were those of the tariffs that the Trump administration imposed in terms of magnitude or significance, how important was this? So kind of two questions there. 

DENNIS HRANITZKY: No, I’ll take the second one. Maybe Fritz, do you wanna take the first one? But, the IEEPA, but tariffs were definitely the centerpiece of this administration’s tariff policy.

Right. And I think it’s accurate to say that the overwhelming majority in terms of the amount of revenue that was raised, it raised of the tariffs, IEEPA tariffs. I’ve seen estimates that the tariff revenues raised under IEEPA and which now the government is likely gonna have to pay back is on the order of $170 billion.

JOHN QUINN: Big number. Yeah. 

DENNIS HRANITZKY: Big number. 

JOHN QUINN: Fritz, what is IEEPA? What was the government’s theory for invoking that statute and what did the United States Supreme Court say about that? 

FRITZ SCANLON: Sure. So IEEPA is a, it’s a statute that was enacted in 1977 and it gave gifts still on the books. The president brought authority to regulate a variety of economic transactions, and it has to be following the declaration of a national emergency.

And a lot of these emergency IEEPA have been used for many things over the years, typically sanctions. In the beginning of the second Trump administration, IEEA started being used as a basis for enacting tariffs, and that was the first time IEEPA had ever been used for that purpose. 

JOHN QUINN: For tariffs?

FRITZ SCANLON: For a tariff. That’s correct. 

JOHN QUINN: And, what was the emergency that was invoked? 

FRITZ SCANLON: The emergency? There were probably, people will probably remember there were two rounds. So the first one, the declared emergency was from fentanyl trafficking, basically. So the very first one was in February of last year, and it targeted mainly three countries.

It put the IEEPA tariffs, put a 25% tariff on Canada and Mexico and 10% on China based on a declaration of emergency around fentanyl and synthetic drugs. And then the next big one, which became larger is the Liberation Day tariffs. Okay? And that was announced at the beginning of April of last year.

And these were these, the sweeping reciprocal tariffs on imports from almost every country. I would guess most people remember the big board, the President Trump was holding and talking about the different tariffs that were going on, different countries with a baseline 10% applied globally.

The emergency for that was large and persistent US trade deficits as the emergency itself. So, an interesting thing is that, is that the actual, like whether or not there was an emergency was not the basis of the Supreme Court’s ruling, the basis of the Supreme Court’s ruling was actually this statute, IEEPA, it doesn’t give the president the power to impose tariffs because unlike other statutes, it doesn’t use the word tariff or duties. And ultimately that was the basis of the majority opinion. 

JOHN QUINN: That’s interesting. I think that’s a common misconception because people think of IEEPA, you know, about this relates to emergencies and people were scratching their head, is a current account deficit really an emergency? And I think a lot of people kind of assume, well, that’s the ground the Supreme Court would go off on, and the ground it did go off on.

But you’re saying that’s not true at all? 

FRITZ SCANLON: No. So the Supreme Court, the majority opinion basically looked at the statutes text, right? So we’ve already gotten there that it doesn’t use the words duties or tariffs. And then in interpreting whether or not other words within the statute could encompass tariffs, they really brought it back.

Sort of like basics, right? That article one of the Constitution gives Congress the power to lay and collect taxes, duties, imposes exercises, which is all just… 

DENNIS HRANITZKY: The power that Alexander Hamilton referred to as the very most important power and the one that shows up at the very beginning of that section.

JOHN QUINN: Yeah. Only Congress can do that. 

DENNIS HRANITZKY: Only congress can do that, ’cause the power to tax is the power to destroy. 

JOHN QUINN: That’s not for the president to do. Okay, so A is out the window. The board as a source of authority for imposing tariffs you know, people always, you know, ever since the argument, which I think everybody thought did not go well for the administration.

People were predicting that Supreme Court one way or another would strike down the tariffs as they now have. But everybody said, well, look, there’s other avenues. The president has to impose tariffs. Things aren’t really gonna change. We’re never going back to the pre-Trump era. And it seems that’s how it’s played out.

I mean, immediately Trump, the president announced that he had a backup plan and he announced it. And, what was that? What’s happening now? 

DENNIS HRANITZKY: Well, there are several other statutes that actually do empower the president to impose tariffs if certain conditions are met. You know, either there has to be a sort of administrative investigation, sort of finding the existence of circumstances that warrant imposition of the tariff or in the case of, they’re calling the section 1 22 tariffs under the Trade Act of 1974. 

The president has the power to impose the tariff on an interim basis up to 150 days, but then in order for the and, there’s a 15% cap on those tariffs, but if in order for them to stay in place after 150 days, Congress has to approve that, which, I think just given the state of, or the lack of popularity among, in some quarters in Congress of the tariff regime, I think it’s questionable whether the Congress would do that. So it’s accurate to say that the president does have plenty of other tools in his toolbox to pursue a tariff policy.

Right. But, I may make no mistake, I mean, the IEEPA tariffs gave him all of this max, this flexibility to act without a congressional oversight to change his position essentially on a dime, which he did multiple times to create, negotiating, leverage and these other tariff schemes.

They just don’t give him that kind of power. So I don’t think it’s, I mean, I think the landscape has changed meaningfully, even if it’s true that, you know, tariffs are like tariffs are still around and they’re gonna be around as long as Trump is president. 

JOHN QUINN: Well, I mean before he was overnight announcing 50% tariffs, a hundred percent tariffs, well, 35% tariffs.

What I’m hearing from you now is under, on a temporary basis, at least under this one authority for a hundred and what is it, 50 days? 

DENNIS HRANITZKY: 50 days. 

JOHN QUINN: 50 days, he can only impose a 15% tariff. And then Congress has to give it, its impromptu. And is that where we are now? Is is that the state of play right now, he’s imposed a global 15% tariff under this authority?

DENNIS HRANITZKY: The tariffs that he imposed sort of the day after the decision we’re under section 1 22. So they’re subject to that limitation. 

JOHN QUINN: What? What’s that? Is that what you were talking about, the 15% and 115? 

DENNIS HRANITZKY: Yes. 

JOHN QUINN: Okay. Yes. 

DENNIS HRANITZKY: Yes. 

JOHN QUINN: So that’s where we are now. 

FRITZ SCANLON: So, right. So, we’re sort of, now we’re like in a little bit of a combination.

So the same day as the Supreme Court ruling, President Trump announced and, took executive action to impose a 10% tariff under Section 1 22 of the Trade Act of 1974. So, interestingly, section 1 22, like IEEPA, had never been, had actually never been invoked. A little bit different, had never been invoked by a president before.

So again, we’re, you know, we’re kind of getting out into uncharted waters and Section 1 22 is authorized for the president to impose a temporary import surcharge to deal with large and serious US balance of payment deficits. So I suspect there will be many challenges to that coming almost immediately.

In addition to just these, to the IEEPA tariffs, which are out, they were canceled by executive order just after the Supreme Court ruling, the imposition of new section 1 22 tariffs. But there are other tariffs that have been in existence that continue to be in existence. So for example, there are tariffs that were imposed under something called Section 2 32 of the Trade Expansion Act of, of 1962 for the scholars out there and these are just, these are different, right? So they, they’re more targeted, right? 

DENNIS HRANITZKY: They focused on national security.

FRITZ SCANLON: Right.

So you have things like steel, lumber, auto parts, aluminum, things like that, instead of country specific tariffs like they were under IEEPA. So there is, I suspect there will be a push by the administration, which has already started with section 1 22 and an announcement about other ones to try to recreate the IEEPA tariff regime using other tools.

JOHN QUINN: Can you do that, for example? Are there any limits to the tariff? First off, without congressional authorization, can he impose tariffs on those things you just mentioned, like steel and the like, on particular products rather than countries. Hey, can he do that? And there are the limits to how large a tariffs he can impose?

DENNIS HRANITZKY: Exactly. So there are limits. The Trade Expansion Act, that statute is in place to deal with national threats to national security but they’re has to be an exhaustive investigation, administrative investigation, before the tariff can be imposed. 

JOHN QUINN: They have to go through some hoops. They have to make a determination, 

DENNIS HRANITZKY: Right.

They have to find that this product, like at this product represents a national security emergency which is why, as Fritz said before, the tariffs under the Trade Expansion Act are targeted at individual products and source countries, unlike IEEPA or the section 1 22 tariffs.

JOHN QUINN: Alright. Okay. Well, so you told us that like $160 billion has been collected on these tariffs that have now been struck down. I mean, in the commercial world people would think, wait a second, I paid this money to you and I’m now told that it wasn’t legal for you to collect it from me. People will be taking steps to try to get their money back.

DENNIS HRANITZKY: And that’s definitely happening. That’s definitely happening. 

JOHN QUINN: Tell us about that. Can people get their money back and is there some risk or some potential or opportunity, however you look at it, that some $160 billion will be paid back to people who pay these tariffs. 

DENNIS HRANITZKY: There’s both risk and opportunity, I would say.

And it depends on who you are as well. I mean, there the clearest path to a refund is if you’re, what they call the importer of record, you’re actually the importer who paid the tariff. If you’re the importer of record, you can bring a lawsuit of international trade to New York, and as long as you can substantiate that you made the payments that you’re claiming on, the litigation should be pretty straightforward. I mean, liability has already been decided and, you know, damage is really… 

JOHN QUINN: Look, somehow, I think this is not gonna be straightforward. I gotta think the administration is gonna boil the ocean to come up with ways they don’t have to pay this money back.

DENNIS HRANITZKY: I don’t know about ways that this administration doesn’t have to pay the money back. I think everybody who’s close to the situation agrees that, you know, the entitlement to the refunds is pretty unassailable. I think the administration’s gonna do some things to delay the progress of the litigation, and in fact, the president’s already said so.

And there’s a lot of things the president could do. I mean, the administration can say they should be entitled to a bunch of discovery to prove that you actually paid the tariffs. I think Fritz and I have been like imagined speculating that administration might say, oh, well there’s some kind of unclean hands defense that is like, if you engaged in some other behavior that the administration doesn’t like, then that’s somehow a defense.

They’ll, they may take that position. I don’t think the defense is going to, it’s gonna go anywhere, but it’ll burn up some time. I think that the administration may say that any entitlement to refunds should be offset against future tariff obligations. Nobody’s ever made that argument before. It would be uncharted territory, but I mean, our preliminary sense at least, is that that argument probably won’t carry the day either, but the court of international trades is gonna have to wrestle with all of these questions of first impression.

It’s gonna slow things down, and if the administration’s objective is to just kick the actual of checks off to the next administration’s watch. I think that there’s a meaningful chance that that’s gonna happen. 

JOHN QUINN: Yeah. But what I hear you saying is that there, this is a very strong claim.

If somebody’s actually paid these tariffs, which have now been struck down, that there’s a very high likelihood that there may be delay, but there’s a very high likelihood they’re gonna be able to get that money back. 

DENNIS HRANITZKY: That’s exactly right. I mean, I’ve been practicing for over 30 years and you know, it’s not often that you see a claim that’s quite this clear in my experience.

JOHN QUINN: So have you, I know, Dennis and Fritz, I know that you’ve been looking into these claims that you’ve been besieged with potential clients, people who wanna learn about this, wanna learn about how they can bring those claims. First let me say, is it fair to say if listeners to this podcast have questions, you’ll do your best to answer them, and that you’re still available to talk to people about potentially bringing claims?

DENNIS HRANITZKY: A hundred percent accurate. And we’re gonna do a, we’re gonna record. It’s not a webinar because it’s recording, but we’re gonna record a program that we’ll make available to everybody that answers a lot of the basic questions, just so that, you know, people can get access to that information immediately.

But, you know, Fritz and I, and many of our other colleagues have been, you know, taking calls from clients and, you know, potential clients like, I mean, continuously over the course of the last week. And we will continue to do that as long as people have questions for us. 

JOHN QUINN: So let me, is there anything else that, if somebody’s listening to this and has a question about whether they have a claim or what they should be thinking about doing, is there anything else that you can tell ’em just in terms of basics?

Is there a statute of limitation running they should be thinking about? Do they need a lawyer? Can they bring the claim themself? Where does the claim have to be brought if there’s one place that it has to, I mean, any sort of off the top of your head, sort of, kind of basic questions that a listener might have about how to at least start bringing one of these claims or think about it. Anything else they should know? 

FRITZ SCANLON: Yeah, I mean, the most comprehensive way to preserve your rights and where this is ultimately going to get fought out is in the court of international trade. And the reason is the court of international trade.

JOHN QUINN: That’s his court in New York that you referred to, which I’ve never heard of. 

FRITZ SCANLON: Smallish sport. Yeah. In New York. It’s called the Court of International Trade. Most people suggest refer to it by acronym, CIT. And it is the court that has exclusive jurisdiction to deal with disputes over tariffs and in fact, sort of overlooks, but there’s a footnote in the Supreme Court opinion.

Footnote one that talks about how the case got up to the Supreme Court, from two different places. There was a lawsuit filed here in Washington, DC, federal court, and one filed in, filed in the Court of International Trade, and the Supreme Court actually ended up dismissing appeal from the District of Columbia Court saying that the Court of international trade has exclusive jurisdiction and it’s not the only place to look.

These are like disputes over the proper amount of tariffs. Happens all the time with all tariffs, right? There are other administrative remedies, so for tariffs that were paid more recently, there’s administrative remedy called a post summary correction, and then for the older ones that have become sort of final, you, there’s an ability potentially to file protests.

But the court of international trade is really where it’s out to make sure that you cover all your bases because they have the ability to rule on, on all of them. They’ve already ruled that they can decide on what refunds are due either from the more recent or the older, sort of like finalized ones that might not be able to be recovered administratively.

And also, you know, the administrative remedies, they weren’t, they’re not really geared to something of this magnitude. And in fact, a quarter of international trade isn’t either. I mean, the only other sort of historical precedent that is even similar was over something in the nineties called a Harbor Maintenance Tax.

That was years of litigation. Eventually it was the harbor maintenance tax was struck down as unconstitutional by the Supreme Court, but it was years of litigation and the magnitude of the entire refunds, there was about $700 million. It was a congressional appropriation. 

JOHN QUINN: That’s nothing compared to what we’re talking about now.

FRITZ SCANLON: That could be less than what is owed to one single pay 

JOHN QUINN: Right. So are there actual limitations people need to be thinking about? 

FRITZ SCANLON: Two years, basically the most conservative. 

DENNIS HRANITZKY: Two years. Two years from when you paid the tariff. 

FRITZ SCANLON: Exactly. 

DENNIS HRANITZKY: Okay. There’s just one other, like some of the listeners may be interested in this as well.

So what Fritz is talking about is, you know, when I said before, if you were the importer of record, if you paid the tariff, then you know, you, your best course is to sue in the court of international trade, and there’s two your statute of limitations, there’s a lot of people though now who are asking, well, I didn’t pay the tariff directly, but the tariff was passed on to me, the person who, or the company who paid the tariff.

JOHN QUINN: Okay. 

DENNIS HRANITZKY: Then past that. Obligation. 

JOHN QUINN: I paid a price for something that was inflated by the amount of the tariff. And, do those people have a claim? 

DENNIS HRANITZKY: It depends. The answer is like it a lot. Some of ’em do. Some of ’em probably don’t. And we’re, that’s something that we’re working on too, because there’s a lot of different sort of permutations of that.

But, you know, we’re learning from the clients we’re talking to about this in real time, that in many cases there’s a contract that allocates responsibility for those kinds of costs. In that instance, you got a pretty straightforward claim, but you’re suing the importer of record, and you’re not gonna sue ’em in the accord of international trade.

You’re gonna sue ’em someplace else where they can be sued and maybe the contract specifies that, so that’s a, that’s one category. Then there are plenty of people. Who like paid more because the economics were passed on to them, but they don’t have a contract with the importer of record. And, you know, we’re getting a lot of questions from people about like, well, is there some other kind of claim that we can bring, you know, to recover on a non-contractual theory?

And that’s a lot tougher, and I, as I sit here now, I don’t sort of have an answer yet. I think it’s just gonna depend on the facts of the case, but that’s a, I mean, those claims are at least as interesting as the refund claims, and I think a lot of the most, you know, complicated legal questions that will end up kind of springing out of this wave of litigation are gonna be in those cases.

JOHN QUINN: Well, I know you guys have given a lot of thoughts to this. I know there’s a lot of nuances and complexities to it more than we can cover in this podcast. But if anybody listening wants to follow up, dennishranitzky@quinemanuel.com, fritzscanlon@quinemanuel.com, they’re on standby to talk to you and answer questions.

Fritz, Dennis, thanks so much for being with us. This is John Quinn and this has been Law, disrupted.

Thank you for listening to Law, disrupted with me, John Quinn. If you enjoyed the show, please subscribe and leave a rating and review on your chosen podcast app to stay up to date with the latest episodes. You can sign up for email alerts at our Law-disrupted fm or follow me on X at JB Q Law or at Quinn Emanuel.

Thank you for tuning in.

---

Published: Mar 2 2026