Trump administration refunds $100bn in illegal tariffs after court ruling

The United States government has paid back roughly $100bn after the nation's highest judicial authority ruled that the collections were unlawful, according to reports. The refunded sum accounts for 60% of the total $165bn initially extracted from businesses through Donald Trump's "liberation day" tariffs. Customs officials detailed these repayments in filings submitted to the US Court of International Trade (CIT) on Tuesday, as noted by the Financial Times.

Since returning to office last year, Donald Trump has leaned heavily on these import levies as a central pillar of his economic agenda. The administration has consistently pitched these taxes on imported goods as a mechanism to revitalize domestic production, secure more advantageous trade deals, and close the federal budget deficit.

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Despite the revenue generated by these policies, federal finances have experienced turbulence. The budget deficit widened to $1.37tn during the first nine months of the fiscal year, marking a 2% increase compared with the same timeframe in 2025. This expansion occurred despite a temporary narrowing last year driven by rising tax revenue and tariff income.

The current financial adjustments follow a major legal defeat earlier in the year. In February, the US Supreme Court struck down a significant portion of the additional tariffs enacted by the administration, mandating that the government return money to the companies that had paid the disputed levies.

Rather than abandoning the tariff strategy, the administration introduced a fresh round of duties last month. These new levies were designed to replace an expiring 10% global duty and apply to more than 80 countries. Ranging between 10% and 12.5%, the tariffs impact a broad coalition of major trading partners, including the UK, Mexico, Canada, Australia, India, China, and the 27 member states of the European Union.

To justify the latest wave of duties, the administration turned to Section 301 of the Trade Act of 1974. Officials argued that the targeted countries have failed to do enough to crack down on products made by forced labour within foreign supply chains. According to reports, the states involved in the subsequent legal challenge note that the tariffs on 59 countries and the EU cover 99.4% of US imports.

This justification has triggered an immediate and coordinated backlash from state governments. This week, a coalition of 25 US states filed a lawsuit against the Trump administration in the CIT. The legal challenge asks the court to halt the new tariffs, declare them unlawful, and order refunds of duties that have already been paid.

State leaders allege that the administration is utilizing anti-forced-labour measures merely as a pretext to reinstate the import taxes previously struck down by the Supreme Court. The New York attorney general, Letitia James, said the Trump administration, after losing at the supreme court in February, was “once again trying to illegally raise taxes on families and businesses with a new round of tariffs”.

Key Developments in US Trade Policy and Litigation

• February: The US Supreme Court strikes down a major portion of the additional tariffs imposed by the administration, forcing the government to issue refunds.
• Tuesday: Customs officials report to the US Court of International Trade that $100bn—representing 60% of the $165bn collected—has been paid back to businesses.
• Last Month: A fresh round of tariffs ranging between 10% and 12.5% is levied on more than 80 countries under Section 301 of the Trade Act of 1974.
• This Week: A coalition of 25 US states sues the Trump administration, alleging the new forced-labour justification is a pretext to replace the illegal taxes struck down earlier in the year.