For some small businesses, a tariff refund isn't worth the pain of pursuing it
For some small businesses, a tariff refund isn't worth the pain of pursuing it
By Nicholas P. Brown and Tom HalsWed, March 4, 2026 at 11:06 AM UTC
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FILE PHOTO: Shipping containers are stacked up at the port of Oakland, in Oakland, California, U.S., February 24, 2026. REUTERS/Carlos Barria/File Photo
By Nicholas P. Brown and Tom Hals
NEW YORK, March 4 (Reuters) - The day the U.S. Supreme Court struck down the tariffs that had cost Ian Rosenberger's backpack company Day Owl tens of thousands of dollars, friends started texting him their congratulations. He didn't share their elation.
"I don't see any possible way to get that money back," said Rosenberger, whose Pittsburgh-based company, with just a few million dollars in sales, likely could not afford attorneys' fees.
About 2,000 companies, including FedEx, Costco, and L'Oreal, have sued for refunds in the U.S. Court of International Trade, with more litigants likely. The Supreme Court ruled on February 20 that the use of emergency tariffs exceeded President Donald Trump's authority, and many businesses are now girding for a months- to years-long fight to get their money back.
But numerous small company owners are coming to the conclusion that, while the ruling is a win on paper, recouping tariff expenses won't be easy - if it happens at all.
Lawyers and business owners interviewed by Reuters say suing for refunds would divert their time, money or both from the need to keep operations running. "The number of conversations and analyses we've done ... the time suck on our team has been monumental," said Cassie Abel, CEO of Idaho-based outerwear company Wild Rye.
SMALL BUSINESSES PAID ONE-THIRD OF TARIFFS
Roughly 97% of U.S. importers are small businesses, according to the U.S. Chamber of Commerce, and the tariffs they paid were a big headwind in 2025. Of the $175 billion in tariffs paid to the U.S. government, small businesses paid about $55 billion, according to researchers at the University of Pennsylvania’s Penn Wharton Budget Model.
Some cash-strapped small businesses "will just have to eat the loss," said Oliver Dunford, an attorney at public interest law firm Pacific Legal Foundation (PLF), who represented kids' clothing maker Princess Awesome, a lead plaintiff in the case against the tariffs.
For smaller companies grappling with renewed global uncertainty, the legal considerations represent an added cost that larger corporations need not worry about.
Even small businesses that can afford to litigate are taking a wait-and-see approach.
ECR4Kids, which makes child-focused fixtures and learning products like toy boxes and cubbies, has roughly $70 million in annual revenue. Still, for now, founder and managing partner Lee Siegel is holding off on litigation, citing a lack of clarity on the court process, and no guarantee of the outcome.
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"I want to see when the dust settles in a few weeks," said Siegel, whose company has paid about $2 million in the since-rescinded tariffs.
Siegel wants to use refunds to lower prices on ECR4Kids' unsold U.S. inventory, so a long, expensive court process could render them less valuable. "The refund is important," he said, "but it's more important if it's done sooner, because it allows us to stabilize pricing."
'NOT NOVEL OR DIFFICULT'
Small business advocates say the government has the infrastructure to refund tariffs easily, and has done so before. "This is not novel or difficult," said Dan Anthony, executive director of We Pay the Tariffs, a small-business coalition formed to advocate for refunds.
However, in a post-ruling press conference, Trump predicted "we'll end up being in court for the next five years" over refunds. The government could wind up keeping some of the disputed money if claimants can't afford to fight for it, said George Tuttle, a lawyer and international trade expert.
Eva St. Clair, co-founder of Princess Awesome, says she is "hoping that (the government) will simply refund us" without more litigation - but hasn't ruled out going to court to recover around $30,000 in tariff payments.
Cost, though, is an obstacle. Her company - which survived tariffs in part by collecting $8,000 from customers through a virtual tip jar - was represented for free by PLF's Dunford in the case that reached the Supreme Court. "I can't imagine what it would take to pay a lawyer," St. Clair said.
Banks and hedge funds are buying refund claims at roughly 40 cents on the dollar, enabling some businesses to recoup a portion of their claim while avoiding the legal headache. Some, though, refuse to sell out of principle.
"I’m not the type who’d trade two dollars for one," said Michael O’Shaughnessy, president of television supplier Element Electronics. His company has sued for a refund, but he isn't getting his hopes up. "Once the government gets your money, you never get it back."
Rosenberger shrunk Day Owl's scope and laid off the head of a lucrative sales channel after tariffs took effect. Sacrificing a refund could mean saving his business, he said.
"If I'm spending all my time with lawyers, that's time I'm not spending selling backpacks."
(Reporting by Nicholas P. Brown in New York and Tom Hals in Delaware; Additional reporting by Helen Reid in London and Timothy Aeppel in New York; editing by Peter Henderson, Lisa Jucca and David Gaffen)
Source: “AOL Money”
