If your business imports goods through third-party importers, wholesalers, or manufacturers, there is a significant financial question you need to be asking right now: when the importer of record receives a refund of the International Emergency Economic Powers Act (IEEPA) tariffs it paid to the US government, are you entitled to a portion of that refund?

This alert is aimed at retailers, distributors, and other buyers who sit downstream of the importer of record in the US supply chain. We explain what is happening with IEEPA tariff refunds, why the refund process matters to you even though you never paid Customs directly, and what legal and contractual tools you can use to recover the share of those refunds that reflects the tariff costs you already absorbed through inflated purchase prices.

Important Caveat: The process by which the US 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.

Background: The IEEPA Tariff Pass-Through Problem

Over the past year, importers of record paid substantial tariffs imposed under the IEEPA. Importers did not simply absorb these costs. In many cases, they passed them downstream. Purchase prices to retailers and other buyers increased, sometimes with explicit line-item tariff surcharges and sometimes embedded in general price increases. Either way, the economic burden of the tariff was transferred from the importer to the buyer.

Now, with the prospect of those tariffs being refunded, following the Supreme Court’s finding in Learning Resources, Inc. v. Trump , the importer of record stands to receive a cash refund for costs it already recovered from its customers. Without action by downstream buyers, that windfall stays with the importer.

How Importers Are Pursuing Their Refunds

Importers who want to recover IEEPA tariffs they paid have several procedural avenues depending on the status of their customs entries:

• Protest: For entries that have already been liquidated by Customs, importers can file a protest under 19 U.S.C. § 1514, challenging the tariff classification or legal basis for the duty. The protest window is 180 days from liquidation.
• Post Summary Correction: For entries that are unliquidated, importers can request a Post Summary Correction (PSC) through the Automated Broker Interface to amend the entry and seek a lower duty assessment.
• Court of International Trade: Where administrative remedies are exhausted or unavailable, importers may file suit at the US Court of International Trade (CIT), which has exclusive jurisdiction over civil actions arising from federal laws governing import transactions.

Importers with significant tariff exposure are already pursuing these channels. The downstream buyer's clock starts ticking the moment the importer receives its refund.

Review your Supply Chain Relationships to Identify if You Have a Potential For Recovery 

Not every company downstream from its importer will have recoverable claims. Companies looking to recover will need to consider the strength of the following factors: 

1. The Supplier Explicitly Cited Tariffs in Price Increase Notices

If your supplier sent written notices (via emails, letters, and updated price lists) that expressly attributed price increases to IEEPA tariffs, you have direct evidence that the tariff cost was passed through. This is the strongest fact pattern. The causal link between the government tariff and your higher purchase price is documented in the ordinary course of business.

2. Cost-Plus or Open-Book Pricing Arrangements

Some supply agreements, particularly in longer-term vendor relationships, are structured on a cost-plus basis where the importer's documented costs, including duties, flow directly into the invoice price. In these arrangements, a tariff refund is almost automatically a pricing adjustment event. Through a refund, the cost basis has been retroactively reduced, and the contract pricing should follow.

3. Prices Moved in Lockstep With Tariff Imposition and Removal

Even without explicit notices, statistical correlation can tell a story. If purchase prices from a supplier increased substantially when IEEPA tariffs were imposed on the relevant product category and then decreased (or are expected to decrease) as tariffs are lifted, that pattern supports the inference that tariff costs were being passed through. This is circumstantial but could be helpful when combined with other evidence.

4. Itemized Tariff Surcharges on Invoices

Some importers listed tariff surcharges as a separate line item on invoices or purchase order confirmations. This documentation is highly favorable and traces the economic flow of the payment of the duties.

5. Industry or Market Evidence of Across-the-Board Pass-Through

In some product categories, tariff pass-through was so widespread and well-documented, through industry association reports, trade press coverage, or government pricing studies, that it could support the inference of pass-through even in individual supplier relationships that lack explicit documentation.

Review Your Agreement to Identify the Strength of Your Claim 

Here is what to look for in existing contracts to identify your potential to recover: 

• Duty drawback sharing clauses: These provisions expressly require the importer to share any customs duty refund, drawback, or remission with downstream buyers in proportion to the economic burden each party bore. If your agreement has one, your path to recovery is significantly clearer.
• Price adjustment or true-up clauses: Some agreements include mechanisms for retroactive price adjustment if underlying cost components change. A tariff refund may qualify as a triggering event under these provisions.
• Cost-plus pricing definitions: Review how 'cost' is defined. If it includes duties as a line item, a duty refund directly reduces the cost basis and creates an obligation to adjust pricing.
• Most Favored Pricing (MFP) clauses: If the agreement gives the buyer the benefit of the supplier's most favorable pricing conditions and the supplier's costs have now been retroactively reduced, an MFP clause may require a credit or refund.
• Material Adverse Change or renegotiation triggers: Some agreements require good-faith renegotiation upon significant changes in cost structure. A substantial tariff refund could qualify.

Provisions to Negotiate in Future Agreements

Going forward, every supply agreement for imported goods should include explicit tariff refund sharing language. At a minimum, negotiate for:

• An express obligation on the supplier to notify the buyer within a defined period (e.g., 30 days) of receiving any tariff refund, drawback, or remission on goods sold to the buyer.
• A formula for calculating the buyer's proportionate share of the refund, tied to the documented tariff component in the purchase price.
• A crediting or remittance timeline, with interest provisions if payment is delayed.
• An audit right allowing the buyer to review the importer's Customs entries, liquidation records, and refund documentation.

Identify Which Legal Theories Match Your Supply Chain 

Even where a contract is silent on tariff refunds, retailers are not without legal options. Multiple legal theories may support recovery:

• Breach of Contract (Express Provisions): Where the supply agreement contains relevant provisions, such as duty drawback sharing, price adjustment, cost-plus mechanics, or good faith obligations, breach of contract is the most direct claim. It benefits from the clearest damages calculation and typically the most favorable standard of proof.
• Unjust Enrichment: Under this theory, the importer received a financial benefit—the tariff refund—that corresponds directly to a cost your company absorbed. Allowing the importer to retain the full refund without accounting to your company would unjustly enrich the importer at your company’s expense. Courts in most US jurisdictions recognize unjust enrichment as a viable claim even where there is a contract between the parties, though some states require the contract to be silent or ambiguous on the specific issue.
• Breach of Implied Covenant of Good Faith and Fair Dealing: Every contract for the sale of goods in the US is subject to UCC Article 2, which imposes an implied covenant of good faith and fair dealing. Where the parties' course of dealing reflects transparent tariff pass-through and the importer knowingly retains a refund of costs the buyer paid, there is a compelling argument that retaining the refund without disclosure or credit violates this implied obligation.

What You Should Be Doing Now

Retailers and other downstream buyers should take the following steps immediately:

• Audit your supply agreements for any tariff-related pricing provisions, drawback sharing clauses, price adjustment mechanisms, or good faith obligations.
• Preserve your documentation. Gather all supplier price increase notices, invoices with tariff surcharges, purchase order histories, and any correspondence that references IEEPA tariffs as a reason for price changes.
• Monitor your importers' customs activity. Track whether your key suppliers are filing protests, requesting PSCs, or pursuing CIT litigation to recover IEEPA tariffs. This is a signal that refunds may be coming.
• Send a written demand or preservation of rights to key suppliers now, asserting your position that you are entitled to a share of any IEEPA tariff refund attributable to goods purchased by you.
• Consult counsel with combined customs law and commercial litigation expertise. The intersection of Customs regulations, UCC Article 2, and state common law is nuanced, and the evidentiary tracing burden is real.

Remember: A claim against your importer depends on the importer first receiving the tariff refund. The refund process is still being finalized at the government level, and the legal landscape is evolving. But early preparation is the key to protecting your rights.

Conclusion

The IEEPA tariff decision has created a substantial financial recovery opportunity for downstream buyers of imported goods. Importers who passed tariff costs through to their customers—and who are now positioned to receive government refunds of those very costs—have a windfall coming at their customers' expense, unless those customers act.

Our international trade and supply chain team is actively advising clients on IEEPA tariff refund recovery strategies. If you would like to discuss your specific situation, please contact us.