US Tariff Refunds Begin; Mexico Supply Chains React

US courts have invalidated US$166 billion in IEEPA tariffs, including a 25% levy on Mexican imports active from March 2025 to February 2026, triggering a federal refund process that directly affects US buyers in Mexico's automotive, electric equipment and consumer goods export sectors. A subsequent Court of International Trade ruling striking down the replacement Section 122 tariff further constrains the administration's trade enforcement tools, increasing legal uncertainty for cross-border supply chains. Mexican exporters operating under USMCA retain tariff-free access, while Section 301 investigations against 60 countries signal the next phase of US trade pressure.

The first wave of tariff refunds reached US businesses' bank accounts on May 12, US Customs and Border Protection (CBP) confirmed, as the Trump administration faces mounting legal setbacks over its trade policy. More than 330,000 importers paid US$166 billion in tariffs collected under the International Emergency Economic Powers Act (IEEPA) before the Supreme Court ruled 6-3 in February that the administration had exceeded its authority. As of April 26, at least 75,000 businesses had applied for refunds through CBP's online portal, which launched last month. 

The government owes importers an estimated US$175 billion in refunds, plus interest. A CBP spokesperson told ABC News that about 15% of submitted claims were rejected, typically due to incorrect information or ineligible shipments. The IEEPA tariffs alone cost the typical American household US$700 last year, according to the nonpartisan Tax Foundation.

Major corporations stand to recover significant sums. An analysis by Citi found Walmart is due US$10 billion, Target is owed US$2 billion, Nike is due US$1 billion and Macy's is owed US$320 million. General Motors has said it expects hundreds of millions of dollars in refunds.

More than 3,000 businesses, including FedEx, Costco, Skechers, Revlon, Toyota and Nintendo of America, had pre-emptively filed lawsuits to preserve their refund eligibility before the portal launched. Shipping companies UPS, FedEx and DHL have said they will refund customers directly for packages subject to IEEPA tariffs.

Consumers should not expect direct refunds. Many companies have said they will use the money to pay down debt, rehire employees, restock inventory or potentially lower prices. Trump railed against the Supreme Court ruling, including against two justices he appointed in his first term, Neil Gorsuch and Amy Coney Barrett. In April, he said he would "remember" companies that did not seek a refund.

Second Blow: Court Strikes Down Section 122 Tariff

The Court of International Trade (CIT) ruled that a 10% global tariff Trump imposed in February under Section 122 of the Trade Act of 1974 was "unlawful" and harmful to businesses. The ruling applies to a narrow subset of plaintiffs, two businesses and the state of Washington, and leaves the average effective U..tariff rate on imports at 7.2%, according to Capital Economics.

"Given the narrow nature of the CIT's ruling and the fact that Section 122 tariffs are due to expire at the end of July anyway, none of this has any immediate implication for the US tariff rate," said Stephen Brown, Chief North America Economist, Capital Economics.

"They have to keep doing what they have been doing. If I am a business today, for practical purposes, nothing changes today compared to yesterday," said Ernst & Young trade policy expert Blake Harden, who expects the Trump administration to appeal "very swiftly."

Fox Rothschild Trade Attorney Lizbeth Levinson said the ruling could open the door for more businesses to pursue refunds. "They could come forward, depending on how much they have paid in duties, if it is economical for them to try to get their money back," she told CBS News.

White House spokesman Kush Desai defended the administration. "President Trump has lawfully used the tariff authorities granted to him by Congress to address our balance of payments crisis. The Trump administration is reviewing legal options and maintains confidence in ultimately prevailing."

Mexico Trade and What Comes Next

The rulings carry particular weight for US-Mexico trade. The invalidated IEEPA tariffs included a 25% levy on Mexican imports in effect from March 2025 to February 2026. Manufacturers that paid those duties are entitled to refunds under a March 4 CIT order. USMCA-compliant goods from Mexico remain tariff-free, and the formal USMCA joint review is set for July 1, 2026.

Because refunds go to the US importer of record, not the Mexican exporter, Mexican manufacturers cannot apply directly. Their US buyers in sectors like automotive, electric equipment and consumer goods are among the largest claimants.

Looking ahead, Harden said Section 301 of the Trade Act of 1974 is likely to become the administration's primary tariff tool, as it requires a formal investigation before tariffs can be imposed, giving it stronger legal standing. "This decision reinforces that 301 is the tool they are most likely to rely upon and have the best chance at a durable tariff regime. I think 301 is the name of the game for them moving forward," she said.

Brown cautioned that judicial momentum could complicate even that path. The ruling "once again highlights the judicial pushback that the administration is likely to face when it tries to follow through with tariffs under its more recent Section 301 investigations against 60 countries. That raises the risk that the Trump administration will eventually fail in its efforts to fully replace the lost revenue from IEEPA tariffs."

US importers should continue tracking any Section 122 duties paid in the event they become eligible for future refunds. "They want to be prepared in case they do wind up with the ability to file for refunds," Harden said.