Businesses to Receive $166B in Tariff Refunds, Triggering Lawsuits Against Costco and FedEx

The Trump administration has begun refunding $166 billion to businesses after the Supreme Court ruled 6-3 on February 20, 2026 that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs — a power reserved for Congress under Article I . The ruling invalidated the "Reciprocal Tariffs" imposed from April 2025 onward, and the U.S. Customs and Border Protection (CBP) launched Phase 1 of the CAPE (Consolidated Administration and Processing of Entries) program on April 20, 2026, making approximately $127 billion immediately claimable . Importers including Costco — which filed a federal lawsuit challenging the tariffs in November 2025 — and customs broker FedEx are among the first to file CAPE declarations.

The refund process unfolds against a paradoxical backdrop: the Trump administration responded to the Supreme Court ruling within hours, signing a new 10% global tariff under Section 122 of the Trade Act of 1974, with plans to raise it to 15%. Treasury Secretary Bessent indicated that combining Section 122, Section 232, and Section 301 tariff authority would maintain "virtually unchanged tariff revenue" in 2026, meaning the net cost burden on importers may barely ease despite the historic court ruling . The U.S. average effective tariff rate has reached approximately 17% — near the highest since the early 1930s — creating continued cost pressure across retail, technology, and industrial supply chains .

For publicly traded importers and retailers, the refund process opens a potential one-time earnings tailwind as companies recover previously expensed tariff costs. However, the persistence of alternative tariff mechanisms means the structural pricing environment remains fundamentally changed. Companies like COST and FDX face both the administrative burden of the claims process and the legal complexity of whether refunded amounts must be returned to end customers — a question plaintiffs' attorneys are already pursuing in federal court.