Tariff Turmoil: What Happens If the Supreme Court Orders Refunds?

Imagine this: the Supreme Court rules that billions of dollars in tariffs must be returned to U.S. businesses. Sounds like a windfall, right? Not so fast. As Boyd Evert, CEO of HRG, explained on a recent episode of The Savvy Supplier, the fallout could be—well—chaos.

Why? Because in retail, costs aren’t carried by just one player. Sometimes the supplier shoulders them. Sometimes the retailer does. Often, it’s a mix. If tariffs are suddenly rolled back, untangling who paid what (and who deserves refunds) becomes a high-stakes game of tug-of-war.

The Inventory Yo-Yo

Here’s the kicker: when retailers take price increases, they usually set them based on the order date. When prices decrease? They want that applied immediately.

That means suppliers could be forced to “buy down” the cost of inventory far beyond what they actually charged. Picture this fictional—but very possible—scenario:

A supplier raised prices by $10 per unit because of tariffs. A retailer bought 5,000 units at the old cost, but their system recorded the new, higher price. When the tariff is overturned, auditors demand the supplier refund the $10 difference—on all 5,000 units. Even though the retailer never paid that inflated amount in the first place.

Multiply that across categories, SKUs, and chains, and you’ve got a deduction nightmare.

Lawsuits, Leverage, and Lost Margins

If refunds are ordered, expect lawsuits—lots of them. But here’s the hard truth: suppliers rarely sue their biggest retail customers. The power imbalance is real. Instead, suppliers often get stuck honoring master service agreements that ignore fairness in favor of rigid system math.

And it’s not just about retroactive pain. Even if tariffs aren’t overturned, suppliers face uphill battles in passing on costs. Delayed approvals, compliance fines for refusing POs, and endless back-and-forth over implementation dates all erode margins. Either way—chaos now, or chaos later.

Tariffs: The Long Tail of Risk

Tariffs don’t disappear when the headlines fade. Auditors revisit claims years down the road. That means suppliers could face post-audit deductions tied to today’s tariffs well into 2027, 2028, or even 2029.

The only defense? Documentation. Every email, every invoice, every cost justification needs to be saved. Because when auditors come knocking, missing paperwork is the fastest way to lose six—or seven—figures.

What Suppliers Should Do Right Now

Boyd put it simply: document, document, document. But that’s not enough. Suppliers also need a clear-eyed view of:

1. Risk exposure – Which SKUs, categories, or customers are most vulnerable?

2. Financial impact – What do refunds, deductions, or delayed price increases mean to your P&L?

3. Mitigation strategies – How can you prepare for both the “refund chaos” and the “no-refund chaos” scenarios?

That’s where HRG’s Tariff Risk Analysis comes in. It’s a free assessment that helps suppliers see the whole board: what’s at risk, what it could cost, and how to guard against deductions before they snowball.

Final Thought

The tariff ruling—whichever way it goes—won’t bring clarity. It will bring complexity. And in that complexity, retailers will protect themselves first. Suppliers that document relentlessly, analyze their exposure, and build proactive strategies will weather the storm. Those who don’t may discover too late that what looked like a refund was really a trapdoor under their margins.

Ready to see where you stand? Contact HRG today for your free Tariff Risk Analysis at hrg-audit.com/contact-us.