When SCOTUS ruled that President Donald Trump didn’t have the authority to impose global tariffs under the International Emergency Economic Powers Act, it was made clear that Trump’s administration would look to alternative routes to issue similar levies on foreign imports. The president did so under Section 122 of the Trade Act of 1974, issuing new, temporary 10% worldwide tariffs.
- Now, a federal court has ruled against those new tariffs, claiming that they too are illegal, after small businesses sued. The majority wrote that the tariffs are now “invalid” and “unauthorized by law,” The Associated Press reported.
- The two small businesses that successfully took the administration to court were Burlap & Barrel (a spice company) and Basic Fun! (a toy company).
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This is yet another legal blow to the administration’s attempts to issue what have been an unprecedented number of threatened foreign tariffs on trade partners, including typical U.S. allies. It is expected that the administration will appeal the decision, in which case it would first go to the U.S. Court of Appeals for the Federal Circuit and eventually could end up at the Supreme Court.
Refunds Are Issued On Prior Tariffs
It is perhaps fitting that this ruling came down on the same week that refunds were issued for the IEEPA tariffs. As of May 6, some companies have already received money in their bank accounts, Bloomberg News reported. “Daniel Cannistra of Crowell & Moring declined to name his client or the amount they had received but did say that the company’s payment included interest.” Cannistra also told Bloomberg News that more companies had received notice that they’re scheduled to get refund payments starting Thursday.
- Another lawyer, Mollie Sitkowski of Faegre Drinker Biddle & Reath, also told Bloomberg News that some of her importer clients have already received refunds.
Should Distributors Expect Refunds Passed Down To Them From Suppliers?
The answer to that question is quite complicated and context dependent.
It’s important to look at all of this through a wide perspective. The overruling and the unprecedent nature of the tariffs is relevant to the current situation because it calls back to the uncertainty that importers faced throughout 2025. Importers, across all industries, were forced into difficult decisions, any number of which might have had a domino effect on them or their distributor partners and end clients. Presumably, all parties attempted to handle the dynamic in a way that was fair, or at the very least, kept business running through difficult times.
PPAI Media touched base with a few suppliers – on and off the record – in order to get their thoughts and status on the tariff refunds. It may be impossible to set a universal template for what distributors can expect to hear back from suppliers when bringing up the issue but potentially setting more contextualized expectations could help produce productive dialogue.
- One PPAI 100 supplier, who chose to remain anonymous, used the analogy that “product costing is like a stew.”
In this analogy, there are on-hand inventories, inbound inventories and on order inventories. So, when tariffs were presented – which keep in mind were changing or being threatened consistently, sometimes by the week – each supplier that was providing stock imprinted product was averaging their exposure in the moment. Perhaps the most important factor to remember is that many suppliers were choosing to offer pre-tariff prices as they were learning of the developments and then many were absorbing much of the tariff costs once they went into effect.
PPAI 100 Supplier
“The idea that suppliers are in a position to recoup rebates and then distribute rebates is unrealistic,” this supplier said.
In an ideal world, steady communication throughout 2025 and healthy partnerships will have helped offset confusion, allowing suppliers and distributors to be on the same page as this situation has arisen. Chris Anderson, CEO of HPG, PPAI 100’s No. 4 supplier, says this has mostly been the case thus far for the Massachusetts-based company.
- Taking a deliberate approach to pricing from the offset, HPG generally held the line on pricing and didn’t pass along increases to match peak tariff levels, Anderson says.
- Instead, any price increases were commensurate with HPG’s ongoing costs of doing business and not knee-jerk, inflated tariff price hikes.
“The natural consequence of this approach meant that, for a time, HPG sold inventory (which had landed during peak tariff levels) at a reduced profit margin,” Anderson says. “However, our message was consistent throughout: We will be patient, take the long view and adjust prices once a new ‘normal’ has been establish
Chris Anderson
CEO, HPG
PAI Research Data Backs Up Supplier Perspective
How many suppliers absorbed the costs of tariffs and to what degree is not something PPAI can speak to exactly, but PPAI Research has been tracking the growth of both distributors and suppliers throughout 2025 and into 2026.
- From essentially the point tariffs were introduced in 2025, PPAI Research has indicated that distributors have been growing at a higher rate than suppliers, suggesting that the latter are bearing a larger brunt of the tariff burden.
In fact, PPAI’s bi-monthly survey of January and February 2026 showed that distributors and suppliers were still experiencing uneven growth rates (SCOTUS didn’t make its ruling until February 20).
“The data shows that suppliers and distributors are operating in the same market but not experiencing the same level of growth,” said Alok Bhat, market economist and PPAI’s research and public affairs lead. “While overall activity remains stable, performance is not translating evenly across the value chain.”
