After being judged as an overreach in taxation: How does the White House calculate the customs refund?

On February 22nd, local time, U.S. Treasury Secretary Janet Yellen was asked during an interview with CNN by host Dana Bash about a seemingly straightforward but actually difficult-to-answer question: Since the Supreme Court has ruled that the broad “emergency tariffs” imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA) lacked authorization, should the previously collected huge tariffs be refunded, and if so, how?

Coincidentally, in the two days following the ruling, more and more companies and industry organizations have quickly shifted to the “second battlefield,” that is, demanding refunds through litigation and procedural filings, trying to get ahead of the legal process.

Although the Supreme Court clarified whether tariffs could be imposed, it did not specify how the refunds should be handled, making this issue the most sensitive and closely watched focus in Washington and Wall Street at the moment.

Yellen’s evasive “playing tai chi” response

During the CNN interview, Yellen emphasized two points: First, the Supreme Court interpreted the President’s authority under IEEPA very narrowly, but did not address the issue of refunds; second, the case has been remanded to lower courts, so the decision on refunds “is not made by the government but by the lower courts.” Taken at face value, both statements have some truth. However, in the overall context, they seem more like a skillful shift of responsibility.

Looking at the part where Yellen “speaks correctly,” she repeatedly emphasized that the Supreme Court did not provide a specific plan for “how to process refunds,” and that the issue of refunds will depend more on subsequent procedures by lower courts and enforcement agencies. Legally, this is indeed reasonable. The Supreme Court only addressed a core issue: whether the President could impose such broad, high-rate tariffs under IEEPA. The answer is no. But the ruling did not specify “how much money the Treasury must refund within a certain deadline” nor did it design any specific refund process. Therefore, Yellen’s statement on this point is not wrong.

However, the problem lies in Yellen framing the absence of detailed refund procedures as “the Supreme Court did not touch the core issue, only provided a narrow interpretation, and we still have to wait weeks or even months for lower courts,” which is a form of “tai chi.” First, this approach can mislead the audience into thinking that the Supreme Court merely kicked the ball back, leaving the legality of IEEPA tariffs unresolved. In fact, the Court’s conclusion was very clear: IEEPA does not authorize the President to impose tariffs. Second, although the ruling remanded the refund issue to lower courts, the entities responsible for executing refunds will definitely be customs and Treasury departments, with courts only issuing orders and setting principles, not making payments on behalf of the government. Finally, in judicial practice, administrative agencies can proactively develop refund plans, negotiate settlements with companies, or, conversely, delay or appeal through procedural tactics, dragging the process out for years. These are real policy tools, not decisions solely made by courts.

Another more pragmatic “evasion point” is that Yellen downplayed the refund issue as “not a key problem,” effectively pushing political and fiscal risks further away. Once it is acknowledged that refunds should happen, three sharper questions immediately arise: who should receive the refunds? how much should be refunded (including interest)? and where will the money come from? These cannot be simply dismissed with a “wait for the courts.” On that day, multiple media outlets quoted Yellen as saying that “refunds will be handled by lower courts,” which is more a political posture than a legal judgment—leaving the initiative to time without making commitments.

In fact, Yellen had already called large-scale refunds the “ultimate corporate benefit” in an earlier interview, hinting at a policy stance unwilling to return money. Today, responding to media inquiries with “court decisions” can hardly be seen as anything but a deliberate downplaying of administrative responsibility and a political tactic to pressure companies and Congress. For markets and businesses, this signals: legally, refunds are possible, but politically, they are very unpopular. Do not expect the Treasury to open its wallet in the short term.

The Supreme Court’s stance on refunds

This IEEPA tariff case can be summarized as: first, defining the issue, then delegating.

The “first definition” means clarifying whether IEEPA can serve as a legal basis for tariffs. The Supreme Court’s answer is no. Chief Justice Roberts pointed out in the majority opinion that IEEPA is fundamentally a sanctions law designed to address emergency national security threats, authorized to regulate financial transactions and trade, not to rewrite the entire tariff schedule for the President. If the government’s interpretation were accepted, any declaration of a “national emergency” could allow the President to bypass Congress and impose tariffs indefinitely on all countries and all goods, which clearly conflicts with the constitutional framework.

The “delegation” aspect is reflected in the “remedies” and enforcement. Here, remedies mainly refer to whether and within what scope tariffs should be refunded after being found illegal. The Supreme Court confirmed that “tariffs are unlawful” and remanded the case of how to refund importers to the Court of International Trade, requiring it to decide on “appropriate relief” based on the established facts. In other words, the Court did not specify how much to refund or how to do it, intentionally leaving blanks. Legal experts generally interpret this as the Court acknowledging that, in principle, IEEPA tariffs can be recovered, opening the door for importers to claim compensation; meanwhile, it deliberately avoided detailed operational procedures to prevent itself from becoming entangled in complex technical disputes, leaving room for administrative agencies and lower courts to maneuver.

How much to refund? How to do it?

Public opinion is focused on the amount involved. During the interview, CNN host Bash mentioned approximately $134 billion, which Yellen did not respond to directly. This figure mainly comes from the U.S. Customs and Border Protection’s tariff collection data as of mid-December 2025, compiled and widely cited by media and research institutions. However, research models from institutions like the University of Pennsylvania’s Wharton School, based on tariff codes, product categories, and country data, suggest that when considering subsequent periods and adjustments, the potential refund amount could exceed $1.75 trillion. In other words, the $133 billion is more like a confirmed partial amount, while $1.75 trillion represents a possible upper limit of recoverable funds.

Regarding the path forward for implementing refunds, public analysis suggests a likely parallel process involving courts, customs, and administrative agencies.

On one hand, the White House has signed an executive order requiring agencies to terminate additional tariffs imposed under IEEPA and to push for amendments to the Harmonized Tariff Schedule; but the same order also clearly states that ending the IEEPA-based tariffs does not affect tariffs imposed under other laws such as Section 232 or Section 301. In other words, stopping further collection and issuing refunds are two different matters. The former can be ordered by the White House, but the latter will largely depend on claims and litigation.

On the other hand, the recent surge in lawsuits from companies is driven by the fact that refunds depend heavily on procedural windows. Industry insiders understand that once imported goods are liquidated, importers typically have a limited period—generally around 180 days—to file protests and request refunds with Customs and Border Protection. Simultaneously, lawsuits demanding refunds in the Court of International Trade also have timing constraints, and the case volume may continue to rise. This explains why many companies prefer to file cases early—not necessarily to get refunds immediately, but to secure their eligibility and priority.

Another practical variable is that to prevent courts from being overwhelmed with cases, the Court of International Trade is likely to adopt a “test case + batch application” approach—selecting representative cases to clarify issues like eligibility, amount calculation, and interest, then requiring customs to apply the same standards across similar importers. In this process, courts set the boundaries and rules, while agencies design specific procedures and systems. The interaction between the two determines the pace and scope of refunds. This is why Yellen’s statement that “it’s entirely a court matter” can be misleading.

White House’s “bypassing” strategy

Historically, the U.S. has faced large-scale tariff refunds before, but this time, the scope spans multiple industries and involves extensive customs records, with significant technical and legal complexities. Experts generally believe that even if litigation proceeds smoothly and administrative cooperation is effective, it could still take about 12 to 18 months for the rules to be implemented and the first sizable refunds to be issued. Trump himself has publicly said that refund disputes could drag on for years in court. These statements are not contradictory: if the government simplifies procedures and processes refunds in bulk, over a year is feasible; but if it resists, opts for a tough stance, and pursues a gradual litigation and strict procedural review, a prolonged stalemate is entirely possible.

In essence, Yellen’s “tai chi” approach in the interview reflects the current White House stance on refunds: legally passive, politically resistant, and strategically evasive. On one hand, the government has already promised in previous lawsuits that once there is a “final and unappealable refund judgment,” it will refund IEEPA tariffs to all similarly situated plaintiffs. This means that at the case level, as long as companies win their lawsuits, the Treasury will find it hard to refuse payment. But without a unified administrative plan, many companies will still have to pursue litigation or case-by-case claims. Coupled with Yellen’s characterization of refunds as the “ultimate corporate benefit,” the market receives a clear signal: refunds are legally possible but politically unpopular, and short-term expectations should be cautious.

What’s more, recent actions show that the White House’s top priority is not “getting the money back quickly,” but “continuing to use tariffs as leverage.” On one side, the White House has issued an executive order to terminate the additional tariffs under IEEPA; on the other, it has swiftly imposed a 15% temporary global tariff for 150 days under the Trade Act of 1974, and is increasing the use of Section 301 and Section 232 tools to build new tariff barriers. The message is clear: tariff leverage will continue to be used, and how to refund the collected taxes will be left to litigation and procedural battles. Even if courts force the government to pay, the White House is trying to recover cash flow through new tariffs authorized under other laws.

This “refund war” around IEEPA tariffs involves, from a legal perspective, the Supreme Court pulling tax authority back to Congress and specialized trade courts; from a fiscal perspective, a tug-of-war between companies and the Treasury over hundreds of billions of dollars; and from a political angle, the Trump team’s effort to mask legal defeat with rhetoric and new tariffs, maintaining a tough stance domestically. Under this framework, Yellen’s “not a key issue” response exposes the core: whether tariffs are refunded has become the most sensitive and unavoidable question the current U.S. government is reluctant to answer directly.