Companies Get Tariff Refunds—Here's How They'll Use the Money

Companies Receiving Tariff Refunds Begin Deciding How to Use the Money

Several companies that were affected by President Trump’s global tariffs are now starting to receive refunds. This development raises an important question: what should these businesses do with the money they get back?

Some businesses are considering passing the refunds on to their customers, although this process can be complex. Others are planning to use the funds to offset the costs of tariffs they had to absorb or to invest in their operations. For example, an art supply company is looking to pay down a credit line, while a flowerpot importer expects to replenish its inventory.

The refund payments from the tariffs, which were declared unlawful by the Supreme Court in February, have started arriving in importers’ accounts this week. This is earlier than the Trump administration had initially predicted.

Victor Owen Schwartz, a small wine importer and distributor, and the lead plaintiff in one of the tariff lawsuits that reached the Supreme Court, said, “That money, as soon as it comes in, will go out.” He plans to use most of the $100,000 he expects to get back to pay off suppliers, with the rest helping to cover the cost of future tariffs.

More than 3,000 lawsuits have been filed at the Court of International Trade against the federal government by importers seeking to recoup their share of the $166 billion collected in illegal tariffs. The Supreme Court left it to the trade court to determine how companies would get their money back when it ruled the tariffs unlawful in February. A trade court judge then ordered the Trump administration in early March to begin the refund process.

Customs began accepting its first refund claims on April 20 and expected refund payments to start hitting importers’ online accounts on or around May 11. The process is being rolled out in phases, starting with the simplest claims, which account for about 63% of the shipments subject to Trump’s tariffs.

Larry Friedman, a trade lawyer who has several refund cases, said at least one of his clients already had money in their account as of Friday morning. Other lawyers and some business owners reported seeing evidence that transfers were on the way.

CMCBrands, a St. Louis-based apparel company with roughly 40 employees, saw an update on its account with Customs on Friday indicating that its first tariff refund had been approved for payment. The refund amounts to roughly $42,000, including interest, of the more than $500,000 it had claimed, and was dated May 6. The company hadn’t received the money as of Friday afternoon.

“I was shocked,” said Chief Executive Ellen Brin, who expected the process to take longer. “I was pleasantly surprised that was all it took.”

The notice the company received means that Customs has fully reviewed the claim and that the company will likely receive a payment next week, said Sara Albrecht, chair of the Liberty Justice Center, which represented Schwartz and other small businesses before the Supreme Court.

“Clearly they’ve moved faster than their initial guidance,” she said. “These are all the easy entries to deal with.”

Schwartz’s wine-importing company, VOS Selections, raised prices by an average of 6% to 8% to cover some of its tariff costs. It absorbed the remainder. The refund, he said, looks like it will land at just the right time.

“It’s a lifeline to keep functioning as normally as possible,” he said, explaining that the business lost money last year due to tariffs and has been discounting some existing inventory to boost cash flow.

Gary Gillespie, founder of Leda Art Supply, plans to use part of his $18,000 refund to pay down a credit line used to invest in new products. The Oak Harbor, Wash., company is working on a new line of sketchbooks with bleedproof paper and sets of acrylic markers and fine-line pens.

“It’s going to enhance our business,” said Gillespie, who has sold 200,000 sketchbooks since starting Leda a decade ago. “It means our new products will go online soon.”

Mike Roll, a California-based trade lawyer, said whether a company legally owes its customers refunds is an open question and may depend on whether it passed on the tariff costs directly and is contractually required to repay them. If they just raised product prices, he said it’s up to the business to decide whether to make their customers happy and if so, by how much.

“It’s a messy question only the business can answer,” he said.

Jeff Duperon, CEO of TNE International in Rochester Hills, Mich., expects to receive about $205,000 in tariff refunds. He plans to pay back his customers, but the process will be difficult.

“I will have to break it down by entry, by part number, by customer,” said Duperon, who sells customer-designed metal, plastic and industrial components to industrial manufacturers. Last week, Duperon told his customers that it would be 30 days from the time he receives a refund to when he can put checks in the mail.

As the first payments roll out, some companies are still trying to get in line. Ceramo Company, a flowerpot importer and distributor in Jackson, Mo., is still struggling to complete its refund requests after multiple tries. “We are running into dead ends on their website,” said CEO Vernon Kasten Jr., who expects to receive about $150,000 in tariff refunds.

Kasten, who has 30 employees, plans to use some of the money to cover the cost of a two-week trip to Vietnam to find new suppliers and the rest on inventory.

“We will spend it on things to grow the business,” he said.