WASHINGTON – The day before the Supreme Court decided that many of President Donald Trump’s tariffs were unconstitutional, Austin-based Hormel Foods sued to get back the money it paid for those import levies.
With its lawsuit in New York’s Court of International Trade, Hormel joined about 2,000 American companies that have sued to recuperate their share of the billions of dollars paid when the tariffs sharply increased the cost of goods they imported.
The Trump administration estimates that it has collected about $166 billion from more than 330,000 businesses in tariffs that the Supreme Court has found unconstitutional.
But there are plenty of questions about the return of the levies, which is unprecedented. And the method the Trump administration would use to make those payments is murky.
But the biggest issue might be that the Trump administration is resistant to reimbursing all American companies impacted by the levies.
The Supreme Court ruled on Feb. 20 that President Donald Trump did not have the authority under a 1977 emergency economic powers law to impose import tariffs on all U.S. trading partners.
Hormel’s lawsuit, filed on Feb. 19, made that same argument. It asked the court to have the U.S. Customs and Border Protection “return all duties collected from (Hormel) with interest as provided by law.”
Hormel is an exporter and importer
While Hormel is primarily an exporter, it also imports many products, including Brazilian-made corned beef and various Mexican food products. Hormel also owns a global network of facilities and suppliers with subsidiaries in China, Australia, Singapore, the Netherlands and other countries.
Hormel declined to comment on the lawsuit and efforts to claw back the tariffs it paid, saying it does not comment on pending litigation.
On March 4, the Court of International Trade ordered the Trump administration to refund money collected from the types of tariffs invalidated by the Supreme Court.
“The law is clear,” said Judge Richard Eaton. “The duties were unlawful from the moment they were imposed. And that means that every single cent must be returned to the importer.”
U.S. Customs and Border Patrol, the agency that collected the tariffs, told Eaton it needed time to set up a new computer system to be able to refund tariff money. Eaton set an April 20 deadline.
Alan Sykes, a Stanford University law professor who specializes in international economic laws, said Eaton’s order “may be appealed, but there is not much basis for it.”
Irina Vodenska, director of finance programs at Boston University’s Metropolitan College, said the lawsuits filed by Hormel and hundreds of other U.S. businesses were considered almost like a class action suit by Eaton, who ruled that all U.S. companies, and not just the ones who filed lawsuits, were due refunds of the tariffs they paid.
“Even if you didn’t sue, you get to file a claim,” she said.
Still, the Trump administration’s threat to continue to litigate the issue has caused uncertainty.
Consumers left out in the cold
Many small business owners are worried that they would have to file individual lawsuits to get their refunds. Their fears may not be unfounded.
Ashley Akers, a partner at the Holland & Knight law firm who specializes in trade litigation, said the Trump administration is expected to challenge Eaton’s order to refund all tariffs.
“So far, the position of the federal government is that only those who filed claims at the Court of International Trade will be compensated,” Akers said.
Akers said cutting off thousands of American businesses who did not file a lawsuit at the Court of International Trade is “unjust,” especially since many small businesses can’t afford the legal fees that Hormel and other large companies – including Costco, FedEx and Revlon – have paid to make their claims.
“(The Trump administration) is trying to limit refunds,” Akers said. “They want to keep as much money as possible. It’s so mind-blowing.”
While reimbursements to some U.S. importers are in doubt, one thing is certain – consumers who paid higher prices as companies raised the cost of goods to help pay for the tariffs won’t get a refund.
“Only the importer of record gets a refund, consumers no,” said Sykes of Stanford University.
Vodenska said “there is no legal requirement that importers have to reimburse consumers.”
“And prices are not going to be reduced,” she said. “It’s a can of worms.”
Robbie Soskin, who owns yum! Kitchen and Bakery in Minnetonka and three other locations, held an event Tuesday at his eatery with Rep. Kelly Morrison, D-3rd District, to highlight the impact of tariffs.
Soskin, who said his kitchen prepares all recipes “from scratch,” said he uses imported foods to prepare the dishes on his menus, including avocados and limes from Mexico and coconut milk from Indonesia. Paper products used by his restaurant were also imported.
While Soskin said he has “great supply partners,” costs rose for the goods he needed. And he said there were few alternatives.
“The domestic sources were not necessarily cheaper because there was more demand for them,” Soskin said. “There were very few things that we couldn’t get but everything got more expensive.”
So the restaurateur said he reluctantly raised the price of some of his dishes and baked goods.
He said he hoped his suppliers, if they are refunded for the cost of the tariffs they paid, will “pass along” some of the savings “in good faith.”
Morrison, who sits on the House Small Business Committee and has introduced legislation that would exempt small businesses from tariffs, acknowledged the return of tariff money will be convoluted.
“The unwinding of the tariffs sounds like a complicated, tall order,” she said.
And even if the Supreme Court invalidated some of Trump’s tariffs, others are still standing and the president has said he may increase one of them, a 10% global tariff, to 15%.
On Monday, two small businesses sued the Trump administration over its latest round of tariffs, saying that the president cannot simply use a different law to reimpose a global 10% tax on imported goods after the Supreme Court struck down the administration’s previous tariffs.
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