BREAKINGVIEWS-Corporate America will harry trade warriors

By Gabriel Rubin

WASHINGTON, Feb 23 (Reuters Breakingviews) - Last April, corporate America was blindsided by President Donald Trump’s unprecedented tariff barrage. Now, the fight over trade policy has moved onto their natural terrain: the courtroom. A $175 billion brawl over whether to refund levies nixed by the Supreme Court is already a mess, as the justices warned it would be. Even before their ruling, over a thousand businesses had lined up to sue. Keen hedge funds have purchased some of their claims; lawyers stand at the ready. Consumers who bore much of the costs are lost in the shuffle. It’s a poisonous dynamic for a White House already pushing new tolls.

A feeding frenzy is already underway. Law firms, customs brokers, and Washington lobbyists are raking in fees for their services, while ensuring their clients are ready for replacement tariffs, which Trump took only a day to raise from their originally announced rate. Some companies have entered contracts brokered by firms — including Jefferies — that paid pennies on the dollar to swap once-uncertain claims for immediate cash. Prior to the ruling, such deals were frequently worth maybe 20% to 30% of the value of potential refunds. Selling claims now, as legal battles continue, may command higher prices.

In an ideal world, this secondary market wouldn’t exist, because claims would be paid out quickly and with a minimum of onerous paperwork. The problem is that the Supreme Court left the question of refunds undecided. Disputes will now proceed through the narrow funnel of the U.S. Court of International Trade, where lawyers warn resolutions to even small claims could take 12 to 18 months. Top law firms including Crowell & Moring and Sidley Austin have loaded up on clients seeking to file customs claims and get expedited resolutions.

This sets up a difficult political situation. Opposition Democrats in Congress say they plan to force votes to refund the money — including, importantly, to consumers — over the coming months. Ahead of midterm elections in November, Republicans face the prospect of voting against returning money to their constituents as hedge funds continue to fight for their share. It’s effectively the opposite of the “rebate checks” Trump proposed sending to taxpayers from toll revenue, all while the administration tries to impose new levies, inflation remains above-target, and, according to the New York Federal Reserve, consumers are paying over 90% of the tariff burden. It may not bring the United States’ protectionist turn to a crashing stop, but it could usher in politicians ready to push back more forcefully.

Follow Gabriel Rubin on Bluesky and LinkedIn.

CONTEXT NEWS

The U.S. Supreme Court said on February 20 that tariffs imposed by President Donald Trump under an economic emergency law were illegal.

The court did not say how the government should refund the estimated $175 billion in illegally collected tariffs. When asked about refunds, Trump said at a press conference that "we'll end up being in court for the next five years."