Yes, judge tells Trump: you have to refund all the companies that you charged with illegal tariffs

In a defeat for the Trump administration, a federal judge in New York ruled Wednesday that companies that paid tariffs struck down last month by Supreme Court are due refunds.

Judge Richard Eaton of the U.S. Court of International Trade wrote that “all importers of record’’ were “entitled to benefit’’ from the Supreme Court ruling that struck down sweeping double-digit import taxes President Donald Trump imposed last year under the 1977 International Emergency Economic Powers Act (IEEPA).

The Supreme Court found tariffs that Trump imposed under the emergency powers law were unconstitutional, including the sweeping “reciprocal” tariffs he levied on nearly every other country.

In his ruling, Eaton wrote that he alone “will hear cases pertaining to the refund of IEEPA duties.’’ The ruling offers some clarity about the tariff refund process, something the Supreme Court did not even mention in its Feb. 20 decision. Trade lawyer Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, said he expects the government to appeal or “seek a stay to buy more time for U.S. Customs to comply.″

The federal government collected more than $130 billion in the now-defunct tariffs through mid-December and could ultimately be on the hook for refunds worth $175 billion, according to calculations by the Penn Wharton Budget Model.

Eaton was ruling specifically on a case brought by Atmus Filtration, a Nashville, Tennessee, company that makes filters and other filtration products, claiming a right to a tariff refund.

All goods that go through U.S. Customs and Border Protections enter a process called “liquidation,” when the agency issues its final accounting of what is owed. Once liquidated, importers have 180 days to formally contest the duties. After that window closes, the liquidation is legally final.

The judge ordered customs to stop collecting the IEEPA tariffs the Supreme Court struck down last month on goods going through the liquidation process. And if the goods were past that part of the process, the agency would have to recalculate them without the tariffs.

“This is a great decision for importers and consumers who paid,” said Barry Appleton, a law professor and co-director New York Law School’s Center for International Law. “It will make customs brokers busy. It should make things easier for the courts — and get a process underway for those importers who paid within the last 180 days.”

On Monday, another federal court rejected the Trump administration’s attempt to slow the refund process. The U.S. Court of Appeals for the Federal Circuit started the next phase in the refund process by sending it to New York trade court to sort out.

Now the U.S. Customs and Border Protection agency must come up with a way to process the refunds. Customs routinely refunds tariffs when there’s been some kind of error, but its system was “not designed for a mass refund,″ said trade lawyer Alexis Early, a partner at Bryan Cave Leighton Paisner. “The devil will be in the details of the administrative process.″

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Anderson reported from New York.

AP Writer Lindsay Whitehurst contributed to this story.

This story was originally featured on Fortune.com