WASHINGTON – A legal challenge to former President Donald Trump’s trade policies is gaining momentum, with 24 U.S. States suing his administration over recently imposed tariffs. The legal action comes as a federal judge ordered the U.S. Customs and Border Protection to refund tariffs collected under the International Emergency Economic Powers Act (IEEPA), marking a significant setback for the former president. The core of the dispute centers on the legality of tariffs and their economic impact, sparking debate over who ultimately bears the cost of these trade measures.
The lawsuit filed by the states aims to halt the implementation of recent tariffs proposed by Trump, while the court order regarding refunds potentially opens the door for thousands of businesses to recoup billions of dollars in previously paid duties. This legal battle over Trump’s trade policies is unfolding against a backdrop of economic uncertainty and shifting trade strategies.
Court Orders Tariff Refunds
U.S. District Judge Richard Eaton ruled on Wednesday that all formal importers subject to tariffs imposed under IEEPA are entitled to benefit from the Supreme Court’s recent decision on the matter. The BBC reported that the judge’s order compels the U.S. Customs and Border Protection to issue refunds. The case originated with a lawsuit filed by Atmus Filtration, a Tennessee-based filtration equipment company, but the judge indicated he would be the sole authority to oversee related refund cases.
The ruling follows a Supreme Court decision that challenged the legal basis for tariffs imposed under IEEPA. Trump’s administration had utilized IEEPA to levy taxes on most goods imported into the United States, generating an estimated $130 billion (approximately £97 billion) in revenue. Companies like FedEx have also filed lawsuits seeking full refunds of these tariffs. The exact procedure for processing these refunds remains unclear, but the court’s decision represents a clear legal challenge to the former president’s trade policies.
New Tariffs and State Opposition
Despite the court order, the Trump administration has attempted to implement new tariffs, aiming to replace the measures struck down by the Supreme Court. Treasury Secretary Scott Bessent indicated that the U.S. “very likely” will implement a 15% global tariff this week, an increase from the previous 10%. This move is intended to supersede the IEEPA-based tariffs invalidated by the court. However, this attempt to circumvent the ruling has prompted legal action from 24 U.S. States, who are seeking to block the new tariffs.
The states’ lawsuit, as reported by The Nikkei Asian Review, underscores growing opposition to the former president’s trade strategies. The legal challenge highlights concerns about the economic consequences of these tariffs and their potential impact on state economies.
Who Bears the Cost of Tariffs?
The debate over who ultimately pays for tariffs has been a central economic argument this year. Trump has consistently maintained that tariffs force foreign companies to lower their prices for U.S. Businesses, effectively making foreign entities bear the cost. However, economists generally agree that U.S. Businesses and consumers are the primary bearers of the burden.
According to a New York Times report from September 2025, many U.S. Companies have absorbed some of the costs of import taxes, squeezing their profit margins and reducing investment in other areas. If the courts invalidate Trump’s tariffs, it could result in hundreds of billions of dollars being returned to businesses, effectively acting as a tax cut. Some analysts suggest this could provide a boost to the economy, while others remain cautious about the long-term effects.
One example of a company directly impacted by the tariffs is a toy manufacturer who successfully sued the government, receiving a $11 million refund, as reported by Daily Economic News.
The legal battles surrounding Trump’s tariffs are far from over. The states’ lawsuit challenging the new tariffs is expected to proceed, and the implementation of the court-ordered refunds will likely be a complex process. The outcome of these legal challenges will have significant implications for U.S. Trade policy and the broader economy.
The next key date to watch is the hearing scheduled for the states’ lawsuit against the new tariffs, which is expected to accept place in the coming weeks. Further updates on the refund process for previously paid tariffs are also anticipated from the U.S. Customs and Border Protection.
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