The Supreme Court's February 20 ruling in Learning Resources, Inc. v. Trump was supposed to be the final word: the International Emergency Economic Powers Act does not authorize the president to impose tariffs. The 6-3 decision struck down the "fentanyl" tariffs on Canada, Mexico, and China along with the broader "reciprocal" tariffs that had been applied to dozens of trading partners since early 2025.

What the ruling did not resolve is the staggering practical question that followed: how do you return $166 billion in duties that were never lawfully collected?

Six weeks later, the answer appears to be: slowly, painfully, and not without significant bureaucratic dysfunction.

The Scale of the Problem

According to a declaration filed by U.S. Customs and Border Protection with the Court of International Trade, the invalidated IEEPA tariffs generated approximately $166 billion in revenue across roughly 53 million individual import entries filed by more than 333,000 businesses. Those businesses range from multinational retailers to small manufacturers who import components — and every one of them is now owed money by the federal government.

CBP told the court it cannot comply with the directive to process refunds because its primary trade processing system — the Automated Commercial Environment, or ACE — was not designed to separate IEEPA-specific duties from other tariff categories. The tariffs were layered on top of existing Section 232 duties, MFN rates, and anti-dumping orders, creating what trade lawyers describe as a tangled knot of overlapping assessments that the system recorded as single line items.

The Automated Fix That Doesn't Exist Yet

CBP has announced it is developing a new automated refund tool that it expects to go live by late April 2026. The tool would allow importers to file claims through ACE and receive refunds without requiring individual manual review of each entry — a process that, at current staffing levels, CBP estimated would take years.

But trade compliance attorneys are skeptical. The tool has not been tested, the specifications have not been published, and CBP has offered no timeline for when refunds would actually reach importers' accounts after the tool goes live. Several law firms advising clients have recommended filing protective claims immediately rather than waiting for the automated system.

Who Bears the Cost

While the federal government holds $166 billion it collected without legal authority, the businesses that paid those duties have been absorbing the financial impact for months. Many passed the costs on to consumers through higher prices. Others, particularly small and mid-size importers, took the hit directly — paying duties that compressed margins, delayed investments, and in some cases forced layoffs.

Penn Wharton's Budget Model estimated that the IEEPA tariffs reduced U.S. GDP by approximately 0.4 percent during the period they were in effect and contributed to a measurable increase in consumer prices across categories from electronics to household goods. Those economic effects do not reverse simply because the Supreme Court has ruled the tariffs unlawful. The damage to supply chains, the renegotiated contracts, and the lost business opportunities are sunk costs.

A Constitutional Reckoning on Trade Authority

The Learning Resources decision has implications far beyond the refund logistics. By ruling that IEEPA — a statute designed to address genuine national emergencies like sanctions and asset freezes — cannot be used as a backdoor tariff authority, the Court reasserted a principle that had been eroding for decades: the power to regulate commerce with foreign nations belongs to Congress.

The administration has responded by pivoting to Section 232 of the Trade Expansion Act of 1962, which authorizes tariffs based on national security findings by the Department of Commerce. The April 2 proclamations on steel, aluminum, copper, and pharmaceuticals all rely on this authority. But legal scholars have noted that Section 232 was designed for targeted actions on specific commodities — not as a replacement for the broad-based tariff regime the Court just struck down.

Whether the Section 232 expansion will face its own legal challenge remains to be seen. For now, the immediate question is whether the government can return what it owes — and whether 333,000 American businesses will have to wait months or years to get their money back from a system that was never supposed to take it in the first place.