The US Treasury refunded nearly $22 billion in customs duties in May after a Supreme Court ruling invalidated tariffs imposed under the International Emergency Economic Powers Act.

Customs duty refunds reached $21.97 billion during the month, slightly exceeding gross collections of $21.93 billion. That pushed net customs collections to a $42 million outflow, marking the first time customs revenue turned negative.

The refunds stem from the Supreme Court’s Feb. 20 decision that IEEPA does not give the president authority to impose broad tariffs. The 6 to 3 ruling opened the door for importers to seek repayment on duties collected under the invalidated measures.

The refund process has accelerated quickly. CBP cash withdrawals tied to tariff refunds reached about $17 billion by May 20, compared with roughly $3 billion for all of April.

The broader liability is still large. Estimates for total potential refunds range from about $165 billion to $175 billion, depending on the scope of eligible entries and how remaining legal challenges are resolved.

The Court of International Trade has been overseeing the refund process, while CBP has been building a phased system to process claims. Larger importers with customs brokers have generally moved faster through the system, while smaller businesses may face more friction.

For companies, the refunds represent a direct cash injection. Importers that paid duties later ruled unlawful are recovering capital that had been locked up in tariff costs, potentially improving working capital and margins.

For the federal government, the issue is fiscal. A refund obligation of this scale reduces tariff revenue and could pressure Treasury cash management if processing continues to accelerate through the year.

The market impact is not limited to importers. Large refunds can affect deficit math, Treasury issuance expectations, and corporate earnings for companies with heavy exposure to imported goods.

For investors, the key question is timing. If refund processing keeps ramping, the fiscal impact could become more visible in monthly Treasury statements. If appeals or administrative bottlenecks slow the process, the cash benefit for importers may arrive more gradually.