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For much of the past year, the principal focus of the IEEPA tariff litigation has been whether the tariffs were lawful and whether importers would ultimately be entitled to refunds. Following the Supreme Court’s February 2026 decision invalidating the tariffs and the subsequent proceedings before the Court of International Trade, those questions have largely been answered. The focus has increasingly shifted from whether refunds should be paid to how those refunds will be processed, administered, and distributed.

As CBP continues implementing refunds through the CAPE process and related reliquidation procedures, however, a new issue is beginning to emerge. For many companies, the most significant disputes associated with IEEPA refunds may no longer involve the government at all. Instead, they may involve customers, suppliers, distributors, shareholders, bankruptcy stakeholders, and other private parties seeking to claim a portion of the resulting recoveries.

At first glance, the answer may appear straightforward. The importer of record paid the duties and therefore receives the refund. From a customs perspective, that is generally correct. CBP’s relationship is with the importer of record, and refund payments are ordinarily made to the party that paid the duties.

The more difficult question is whether other parties may possess contractual, equitable, or commercial claims to some portion of those funds once they are received.

For many companies, that question may prove significantly more complicated than the underlying tariff litigation itself.

Why Refund Ownership May Become the Next Major Dispute

The emerging disputes surrounding IEEPA refunds arise from a fundamental distinction between customs law and commercial reality.

From CBP’s perspective, the analysis is relatively straightforward. The importer of record paid the duties and receives the refund. The customs process generally does not attempt to determine which participant in a supply chain ultimately absorbed the economic burden of those duties.

Commercial relationships, however, often operate very differently.

Over the course of the IEEPA tariffs, many companies took steps to offset the financial impact of the duties. Some imposed tariff surcharges. Others increased product prices. Still others renegotiated supply agreements, implemented cost-sharing arrangements, modified purchasing terms, or otherwise attempted to pass tariff costs through the supply chain. In many industries, the economic burden of the tariffs ultimately moved well beyond the importer of record.

As a result, the party that paid the tariffs to the government may not be the same party that ultimately absorbed those costs. In some situations, the importer may have borne the full burden of the tariffs. In others, the costs may have been passed entirely to customers. In still others, the burden may have been shared among multiple participants throughout the supply chain.

This distinction between paying the tariff and bearing the cost of the tariff lies at the heart of the disputes that are now beginning to emerge. As refunds begin to flow, downstream purchasers, distributors, retailers, consumers, and other commercial counterparties are increasingly asking whether they possess a claim to some portion of those recoveries if they previously reimbursed another party for tariff-related costs.

There is unlikely to be a single answer to that question. Rather, the outcome will often depend on the specific facts surrounding the transaction, including the contractual arrangements between the parties, the manner in which tariff costs were allocated, the existence of tariff pass-through provisions, and the representations that were made when those costs were incorporated into pricing decisions.

Businesses receiving significant IEEPA refunds should therefore begin evaluating not only whether they are entitled to receive the refund from CBP, but also whether other parties may claim an interest in those funds once they are received.

Why Consumer Refund Claims Face Significant Obstacles

A number of consumer class action lawsuits have been filed seeking recovery of tariff-related price increases. Although the legal theories vary, the underlying premise is generally the same: companies allegedly increased prices in response to IEEPA tariffs and therefore should not be permitted to retain tariff refunds if those tariffs are ultimately returned by the government.

At a practical level, this argument has intuitive appeal. Consumers may reasonably ask why a company should be permitted to retain a refund if the economic impact of the tariff was previously reflected in higher prices.

The legal analysis, however, is considerably more complicated.

One of the threshold challenges facing many consumer plaintiffs is establishing that they possess a legal entitlement to any portion of a tariff refund in the first place. Consumers generally purchased products at prevailing market prices, not contractual rights to future tariff recoveries. The fact that a company increased prices while tariffs were in effect does not necessarily create a legal obligation to reduce prices or issue refunds if the company’s costs subsequently decline.

Even if such a theory were recognized, significant evidentiary challenges would remain. During the period in which IEEPA tariffs were in effect, businesses faced numerous factors affecting pricing decisions, including inflation, transportation costs, labor expenses, supply-chain disruptions, inventory management concerns, and broader market conditions. Isolating the precise impact of tariffs on any particular product, transaction, or consumer purchase may prove difficult.

Additional complications arise where tariff costs were incorporated into broader pricing decisions rather than separately identified as a distinct surcharge. In many cases, tariffs became only one of many factors influencing overall pricing decisions. Determining whether a particular consumer paid more as a result of tariffs, and if so by how much, may therefore require a highly fact-intensive analysis.

For these reasons, while consumer litigation is likely to continue, many of these cases may face substantial hurdles long before a court reaches the ultimate question of whether any refund should be passed through to consumers. The central issue may not be whether tariffs affected prices. Rather, it may be whether consumers possess a legally enforceable right to recover funds that were refunded to the importer years after the original purchase occurred.

Why Business-to-Business Claims May Present the Greater Risk

While consumer lawsuits have received significant attention, the more consequential disputes for many companies may arise within commercial supply chains.

Unlike consumer transactions, business-to-business relationships are frequently governed by detailed contracts addressing pricing, tariff allocation, cost-adjustment mechanisms, reimbursement obligations, and other commercial matters. As a result, commercial counterparties often possess legal theories that are considerably stronger than generalized claims of unfairness or unjust enrichment.

Indeed, the key distinction is that consumer plaintiffs frequently rely on broad equitable arguments, while commercial counterparties may possess express contractual rights. As IEEPA refunds begin to flow, reports are already emerging of downstream purchasers asserting that they are entitled to all or a portion of those recoveries because they previously reimbursed suppliers for tariff-related costs.

For many companies, the central question will be whether the parties merely agreed that tariff costs would be passed through to the purchaser, or whether they also addressed what would happen if those tariff costs were subsequently refunded. Unfortunately, many agreements were drafted when the possibility of a large-scale judicial invalidation of tariffs seemed remote, leaving little guidance regarding how future refunds should be allocated.

As a result, companies may find themselves revisiting provisions that were originally drafted to address tariff increases rather than tariff refunds.

Among other things, parties may need to evaluate:

• Whether tariffs were expressly addressed in the contract.
• Whether tariff costs were separately identified and passed through.
• Whether the agreement contained change-in-law provisions.
• Whether tariff surcharges were temporary, permanent, or subject to adjustment.
• Whether the parties addressed the possibility of future tariff refunds.
• Whether pricing adjustments were intended to reimburse actual tariff costs or merely reflect changing market conditions.
• Whether the purchaser agreed to bear the tariff burden permanently or only while the tariffs remained in effect.

The answers to these questions may vary significantly from one contract to another.

Why Cascading Claims Increase Litigation Risks

The complexity increases further because these disputes may not remain confined to a single contractual relationship.

In many industries, tariff costs moved through multiple levels of the supply chain before ultimately reaching the end customer. Manufacturers passed costs to distributors. Distributors passed costs to wholesalers. Wholesalers passed costs to retailers. Retailers passed costs to consumers. If refunds are later paid to an importer near the beginning of that chain, multiple parties may argue that they bore some portion of the economic burden and therefore possess a claim to the resulting recovery.

This creates the possibility of cascading claims throughout the supply chain. A downstream purchaser may seek recovery from its supplier. That supplier may then seek reimbursement from another entity further upstream. Additional parties may in turn attempt to pursue recovery from other participants in the chain.

In complex supply chains involving multiple intermediaries, determining who ultimately absorbed tariff costs may become extraordinarily fact-intensive. The analysis may require reviewing years of pricing decisions, contract amendments, surcharge programs, customer communications, and cost-allocation practices. Matters become even more complicated where products were sourced from multiple countries, tariff costs fluctuated over time, or pricing changes were driven by a combination of tariffs and broader market conditions.

As a result, future disputes may involve a wide range of legal theories, including breach of contract, unjust enrichment, indemnification, contribution, declaratory judgment actions, and other commercial claims. What initially appears to be a straightforward customs refund may therefore evolve into a much broader dispute concerning how tariff costs were allocated throughout the supply chain and who ultimately bore the economic burden of those costs.

For many companies, this may prove to be the most significant unresolved issue arising from the IEEPA refund process. The litigation over whether refunds would be paid may be winding down. The litigation over who ultimately owns those refunds may only be beginning.

Litigation Is Not the Only Risk

Even where no lawsuit is filed, companies should not assume that the receipt of a significant IEEPA refund will be free from scrutiny.

Many organizations spent months or years explaining the impact of IEEPA tariffs to customers, suppliers, investors, lenders, and other stakeholders. In some cases, companies imposed tariff surcharges, implemented price increases, renegotiated contracts, or otherwise communicated that tariffs were increasing costs and affecting commercial decisions. As refunds begin to flow, those same stakeholders may naturally ask what happens next.

Organizations that publicly attributed price increases to IEEPA tariffs may face questions from customers, suppliers, investors, regulators, and the media regarding how refund proceeds are ultimately used. Even where no legal obligation exists to pass refunds through to downstream parties, companies may nevertheless confront commercial pressure to explain why they are retaining recoveries associated with costs that were previously passed through the supply chain.

Conversely, companies that elect not to pursue available refunds may face a different set of challenges. Shareholders, lenders, bankruptcy stakeholders, private equity sponsors, and other interested parties may question whether management exercised appropriate diligence in protecting corporate assets. For some organizations, particularly those facing financial pressure or operating in distressed situations, decisions regarding whether and how to pursue refunds may themselves become the subject of scrutiny.

The result is that many companies may face difficult questions regardless of which path they choose. Pursuing refunds may create expectations among customers, suppliers, or other counterparties regarding how those funds should be allocated. Declining to pursue refunds may generate concerns regarding corporate stewardship and the preservation of value.

As a result, businesses should view IEEPA refunds not merely as a customs issue, but as a broader legal, commercial, financial, and reputational issue. The companies best positioned to navigate this next phase will be those that evaluate refund-related decisions holistically, considering not only what they are legally entitled to receive, but also how those decisions may be viewed by the various stakeholders affected by the original tariff costs.

What Companies Should Be Doing Now

Companies expecting substantial IEEPA refunds should consider undertaking a proactive review of their contractual and commercial arrangements before refunds are received.

Areas warranting particular attention include:

• Tariff pass-through provisions.
• Price-adjustment mechanisms.
• Change-in-law clauses.
• Reimbursement obligations.
• Indemnification provisions.
• Settlement agreements.
• Customer communications regarding tariffs.
• Public statements concerning pricing decisions.
• Internal analyses regarding tariff cost allocation.

Companies should also consider preserving documentation demonstrating how tariff costs were allocated throughout the supply chain and whether those costs were ultimately absorbed, shared, or passed through to other parties.

Organizations that wait until a demand letter arrives may find themselves reconstructing decisions that were made years earlier under very different business conditions.

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The litigation surrounding IEEPA tariffs continues to evolve. The initial disputes focused on whether the tariffs were lawful and whether importers would ultimately be entitled to refunds. More recent proceedings have focused on the mechanics of obtaining those refunds, including the scope of CBP’s refund obligations and the procedures for returning unlawfully collected duties.

As those issues move closer to resolution, attention is increasingly shifting to a different set of questions. For many companies, the most significant remaining disputes may no longer involve the government at all. Instead, they may involve customers, suppliers, distributors, shareholders, bankruptcy stakeholders, and other private parties asserting competing claims to the resulting recoveries.

The fact that a refund is paid to the importer of record does not necessarily resolve who ultimately bears the economic benefits or burdens associated with that refund. Those questions may depend on contractual arrangements, tariff pass-through provisions, pricing decisions, commercial communications, and the specific manner in which tariff costs were allocated throughout the supply chain.

As a result, companies receiving substantial IEEPA refunds should view those recoveries not simply as customs matters, but as potential sources of broader legal, commercial, financial, and reputational risk. Organizations that proactively evaluate these issues before refunds are received will generally be better positioned to manage the disputes and stakeholder expectations that may follow.

The principal legal question surrounding IEEPA tariffs was once whether refunds would be paid. Increasingly, the more important question may be who ultimately has the right to keep them.