Tariff refunds are already flowing.

Most coverage still frames tariff refunds as a maybe. It is not. The money is already moving. On February 20, 2026, the Supreme Court struck down the IEEPA “Liberation Day” tariffs 6-3, holding flatly that the statute “does not authorize the President to impose tariffs.” Customs opened its refund system in April; the first dollars hit importer accounts in May; and by mid-June roughly $23B of an estimated $166B pool had been approved and sent to Treasury. For DTC brands that paid those duties, this is no longer a legal hypothetical — it is a cash-flow and accounting decision happening right now. But the refund picture is messier than “you overpaid, you get it back,” and the brands handling it well are the ones treating it as upside rather than budget.

What the courts actually did

The legal arc is settled at the top and contested at the edges. The Court of International Trade struck the IEEPA tariffs in May 2025; the Federal Circuit affirmed en banc in August 2025 that they were unlawful; and the Supreme Court closed it on February 20, 2026, 6-3, with Chief Justice Roberts writing that IEEPA “contains no reference to tariffs or duties.” Crucially, the Court said nothing about refunds. It resolved only the President's authority and remanded the remedy. That silence is the source of every remaining fight: the tariffs were illegal, but who gets paid back, how much, and when is being worked out in Customs procedure and a fresh round of appeals.

The refund machine, and its catch

Customs built a system called CAPE inside its existing platform. Importers (or their brokers) file a declaration, CBP strips the IEEPA duty line, reliquidates the entry, and consolidates refunds by importer — with payment roughly 60–90 days after acceptance, plus statutory interest. The catch is timing and standing. Refunds are rolling out in phases: unliquidated and recently-liquidated entries first (no lawsuit required), then reconciliation and AD/CVD entries, and finally the “finally-liquidated” entries older than ~80 days. That last bucket is the contested one. CBP's position is that those refunds go only to importers who actually sued at the Court of International Trade, leaning on a 2025 Supreme Court decision limiting universal injunctions. The DOJ appealed the broader refund orders on June 3. So a brand that paid IEEPA duties on a 2025 shipment that has since finally liquidated may recover nothing unless it filed — which is why customs lawyers are urging protective claims now, before the 180-day protest clock runs out.

How the pros are accounting for it — and the one that broke ranks

This is the operator-relevant heart of it. Under US GAAP, a tariff refund is a gain, and gains generally aren't recognized until realized — cash in hand or an affirmative agreement with Customs. So the dominant posture across earnings calls is: file the claims, recognize nothing, exclude refunds from guidance. Amer Sports (Arc'teryx, Salomon, Wilson) is the textbook example — its CFO told Retail Dive the company recognizes refunds only “as they come in,” has “no visibility at all” on timing, and won't let them move guidance. Nike paid ~$1B and called recovery “not probable,” recognizing nothing — then got hit with a consumer class action alleging it kept its tariff-driven price hikes and claims the refunds. The conspicuous outlier is Steven Madden, which booked a $90.2M refund receivable in Q1 2026 as a reduction of cost of sales, using a more aggressive “probable” recognition standard — legal, margin-flattering, and an invitation to auditor scrutiny. The market is rewarding the conservative camp.

The illegal tariffs are being refunded with interest — but a brand can be collecting IEEPA money back and paying a brand-new Section 122 surcharge in the same quarter. The whiplash is the story.

What actually survives

The single most important thing for an importer to internalize: only the IEEPA tariffs came back. The Section 232 national-security tariffs — steel and aluminum at 50%, autos at 25%, copper, and the furniture and cabinet tariffs at 25% — survive and are not refundable. The Section 301 China tariffs survive. And the administration's replacement, a Section 122 balance-of-payments surcharge of 10%, is its own saga: struck down by the trade court in May, stayed by the Federal Circuit in June (so still being collected), and facing a hard statutory sunset around July 24. The net effective US tariff rate, by the cleaner estimates, sits around 7% realized today and steps down toward ~8.5–9.7% once Section 122 lapses. The point for a sourcing team is that the legal basis shifted from country-blanket (IEEPA, now void) to product-specific (232) and China-specific (301, both durable). Any cost model still built on Liberation Day rates is obsolete.

What a DTC operator should actually do

Four moves. One: file the claims, but don't bank them in your P&L until the cash lands. The market is punishing aggression and rewarding the brands that treat refunds as upside, not budget. Two: preserve the right now. The 180-day protest clock and the “only-if-you-sued” risk on older entries mean large 2025 importers should weigh a protective filing before recovery becomes impossible. Three: mind the passthrough boomerang. If you raised prices to cover a tariff and now collect a refund, you may face a customer-refund liability recognized before the government asset — the asymmetry that powered the Nike suit. Four: re-underwrite sourcing for the durable tariffs. The refunds are a one-time cash event; the Section 232 and 301 duties are the permanent cost structure, and supplier geography is now a balance-sheet decision, not a logistics one.

Sources: SCOTUS slip opinion 24-1287 (Feb 20, 2026); Retail Dive: Amer Sports CFO; Holland & Knight: refund update; Bloomberg Tax: accounting; Steven Madden 10-Q; Penn Wharton: effective rates; Federal Register: ending tariff actions.