Friday, March 13, 2026 from Floor Covering Weekly

SCOTUS ruling brings questions & concern
By Sharyn Bernard

Following last month’s Supreme Court of the United States (SCOTUS) ruling, as previously reported here in FCW, that President Donald Trump exceeded his authority when he imposed sweeping tariffs using a law reserved for a national emergency, many companies have scrambled to potentially file for refunds of billions of dollars in tariffs they paid.

The justices ruled 6-3 that Trump’s approach to tariffs was not permitted under a 1977 law called the International Emergency Powers Act (IEEPA).

Harlan Stone, executive chairman of HMTX Industries, applauded the ruling and is exploring options. “We feel that SCOTUS made an excellent decision as a lot of hard work went into this process — seven different judges wrote opinions on this important matter, many of which addressed other justices comments and views. They have shown a clear commitment to the Constitution and the basic premise of the separation of powers. I think here in the year of the 250th anniversary of the Declaration of Independence we should all celebrate the foresight of our Founding Fathers.”

Indeed, Alexander N. Breckenridge, partner at Jones Walker told FCW that he expected this ruling. “We were not surprised by the SCOTUS ruling,” he said. “The lower courts tied the reasoning on their opinions closely to recent Supreme Court precedent and many of the justices seemed skeptical of the government’s arguments during oral argument. This really was an unprecedented use of the statue at issue on which to levy tariffs.”

The court essentially ruled that, “no president has ever used the IEEPA to enforce or impose tariffs,” explained Ronald Ciotti, partner at Hinckley Allen who specializes in the construction industry and works with several flooring suppliers. “And so, as a result of that, the ruling was that President Trump had overstepped his authority and they invalidated all of the IEEPA tariffs.”

The ruling did not address how companies could seek recourse, or even if that would be an option. However, earlier this month, the Court of International Trade (CIT) directed the U.S. Customs and Border Protection (CBP) to issue refunds for tariffs that had already been collected. In addition, a federal court rejected the Justice Department’s efforts to pause consideration of the issue for 90 days and reaffirmed the CIT as the clearinghouse for refund lawsuits.

While experts expect the Administration to seek alternative ways to implement tariffs, the rulings open an avenue for importers to try to seek refunds on IEEPA tariffs they paid. As of December 2025, CBP reported that it collected $133.5 billion in IEEPA tariffs, but a study by Penn-Wharton Budget Model estimates that as of January, tariff revenue neared $168 billion.

What remains unclear is who is eligible to apply for refunds and how that process will play out. In fact, Ciotti noted that the refund point was central to the dissenting justices’ argument, citing “chaos” that would result from the refund process.

What’s more, Ciotti said that while he and others were doing some preparation in case the ruling came out the way it did, it was impossible to prepare enough, particularly when the ruling was somewhat of a surprise. “I did not expect them to make the ruling that they made. I thought there was no way the [SCOTUS] was going to step in the mud and create absolute chaos with their decision, but they did.”

Breckenridge said his firm has been, “advising our clients for months on what current refund procedures within federal regulations provide for refunds and prepare to seek refunds that way if the courts order refunds to proceed in the ordinary course. We also, though, told our importer clients that the government might institute an entirely new procedure for obtaining refunds, and indeed based on rulings in the last few days from the [CIT] that appears to be where things are heading.”

Ciotti said the ruling left a lot of questions without providing answers. For one thing, he said there is no clear indication, “how far downstream,” refunds could go. Importers directly paid tariffs — which should be refunded. But if those importers added tariff fees to the next entity on the supply chain, and that entity added tariff fees to their next transaction, the process is less clear. The key, he stressed is if an invoice or any paperwork clearly states a tariff fee.

“The gray area is who gets to keep this money because somebody along the line is going to make a lot of money after this,” he explained, noting some suppliers could get a refund while also having charged their customers a tariff fee.

As well, he said, “It’s going to be very difficult to actually sprinkle down to the end user because where does it become just a price increase versus a tariff line item? If there’s no line item to show what the amount of the tariff would have been to you. And so that’s where the difficulty starts to come in is if you’re buying your product from a supplier.”

The World Floor Covering Association (WFCA) is working with its legal partner, Jones Walker to address this topic and answer its members’ questions. First, the WFCA noted it’s important to ascertain who is entitled to refunds, since the “importer of record” is the entity that will receive recompence. “Retailers, distributors, and other buyers positioned downstream of the importer of record may have a direct financial stake in these refunds,” the WFCA said in an email to its members. “As IEEPA tariff refund claims move forward, the process raises important questions for businesses that never paid such tariffs directly but nonetheless bore the economic burden of them through higher purchase prices. Understanding how these refunds work — and the legal and contractual mechanisms available to claim a fair share — can be critical in recovering costs already absorbed within the supply chain.”

Still, the WFCA stressed that there is still no clarity on who will receive refunds or how they will be processed. “The process by which the U.S. government will refund IEEPA tariffs is still being finalized. Before a downstream buyer can pursue a claim against its importer, the importer must first actually receive the refund. Importers are actively pursuing those refunds now — and retailers should be paying close attention.”

As Breckenridge explained, “for downstream clients we have told them to review their supply contracts, invoices, and other records to identify clear instances where tariffs were passed down or where they can identify price increases that were connected to the tariffs so that they are prepared to work with their suppliers show they are entitled to refunds. How [the refund process] impacts players down the supply chain really depends on if and how the tariffs were passed down the supply chain.” For example, he added, “if importers had contractual arrangements whereby the importer passed some or all of the tariff downstream then it should be fairly straightforward for the companies or individuals downstream to see their own refunds as a matter of contract. If, however, the tariffs were passed down by other means either by separately invoicing downstream the tariff payment or by importers raising their prices then the process could get more complicated.”

Lawyers and law firms that are well-versed in tariffs, are working through the issues. “Take a look at your contracts and determine if there’s any hope whatsoever,” Ciotti said. “If it’s a significant cost, if you think you’ve purchased several million dollars in products over the past year, and you think you might have even hundreds of thousands of dollars in a refund, then you should be talking with counsel and have them look at your to see if there’s any type of language that you could sort of attach the tariff to.” He added that if private counsel is out of reach, there are numerous class action suits that have already been filed.

“If folks downstream cannot work out an arrangement with importers to recoup some or all of the costs passed down by the importers, then they may need to file lawsuits asserting such claims as breach of contract or unjust enrichment,” Breckenridge said. “I think we will see this run the gamut. Some refunds will be relatively straightforward as a matter of contract, others may come because importers wish to maintain goodwill with their customers down the supply chain, but others may end up in lengthy litigation.”

The process should become clearer in the near term, Breckenridge added. “The government is under order by the [CIT] to construct a system to process refund requests and they have represented to the Court that they can do so in the next 45 days or so,” he said.” “So currently we advise clients to prepare and possibly reach out to the importer that those companies downstream have a relationship with to begin discussions on how those companies might receive refunds to which they are entitled once the importer has received its refund from the government.”

HMTX’s Stone noted that the company is working with a law firm to work through the process. “The opportunity for importers to receive refunds is rapidly evolving and we will see where the CIT ends up on this; therefore, the best strategy right now is ‘wait and see.’”

He added that while the issue is complicated for many executives in the trenches, he expects the courts and experts to navigate the process more easily. “Complicated, much like beauty, is in the eye of beholder. If you saw 100 lines of computational code written by a freshman engineering student, it might seem complicated to you, but to his professor it would look quite different. Now that the Supreme Court has overturned the tariffs, the lower courts will provide specific guidance on the next steps to obtain refunds.”