Companies and Governors Sue Trump for $175 Billion in Illegal Tariffs

The Supreme Court of the United States ruled 6-3 on February 20, 2026, that sweeping tariffs imposed by Donald Trump under the International Emergency Economic Powers Act (IEEPA) were illegal. While the court did not mandate a specific refund mechanism, the decision created a potential liability for the U.S. Treasury estimated between $133 billion and $175 billion, with Treasury Secretary Scott Bessent suggesting the total cost of unwinding could reach $1 trillion.

In response, a surge of litigation began in the U.S. Court of International Trade. Federal Express Corporation became the first major company to sue for a full refund, followed by over 1,400 other plaintiffs including L'Oreal, Dyson, Bausch + Lomb, Kohl's, and Milwaukee Electric Tool Corp. Concurrently, Senate Democrats introduced the Tariff Refund Act of 2026 to compel the government to issue refunds with interest within 180 days.

Political pressure has intensified as New York Governor Kathy Hochul, alongside Governors Gavin Newsom and JB Pritzker, demanded refunds for their residents. Hochul specifically requested $13.5 billion for New Yorkers and proposed $30 million in state relief for farmers. The Trump administration has dismissed these demands as political posturing and insisted that refunds must be litigated in lower courts, a process Trump suggested could take up to five years. Following the ruling, Trump signaled his intent to impose new global tariffs of up to 15% using a separate 1974 trade law.