Beth Benike has seen her baby product business wither in the months since President Donald Trump announced steep tariffs that strangled her transpacific supply chain.
In April, Benike paused shipments from her supplier in China for two months until Trump lowered his 145 percent tariffs on Chinese goods to 30 percent, which still saddled her with extra import fees of more than $40,000.
The supply interruption cost Busy Baby in Oronoco, Minnesota, its spot on Target store shelves and slashed its $4 million in annual sales by more than half. Benike, 48, has tried to fill the financial hole by retooling her baby play mats, travel bibs and related products to meet European regulatory standards, and by entering new markets such as South Korea. But her hopes for immediate relief rest with the Supreme Court, which could rule as soon as this month that Trump’s emergency tariffs are invalid.
If the justices find that the president exceeded his authority by imposing the sweeping import taxes, companies like Busy Baby — and giant retailer Costco, which recently sued the federal government over the tariffs — could be entitled to big refunds. Unwinding almost a year of Trump’s core economic policy would have serious consequences for the government’s finances and the bottom lines of companies throughout the U.S. economy.
“I would hope that I’d be able to get my money back,” said Benike. “I am hanging on by a thread.”
The refund outlook, however, is deeply uncertain. Benike plans to petition U.S. Customs and Border Protection next week even before the court rules, in case the government eventually handles refunds on a “first come, first served” basis.
No one knows how an eventual court-ordered refund might work. As the Supreme Court deliberates over a pair of tariff challenges filed by two small businesses, some larger companies are filing their own court cases.
Costco, one of the nation’s largest retailers, sued customs officials Nov. 28, saying separate legal action was needed to guarantee its refund rights.
Some Costco customs invoices will be “liquidated” or finalized as soon as Dec. 15, which might bar refunds, the company told the Court of International Trade in New York.
Importers pay estimated tariff charges when their goods enter the country. Customs officials determine the final amount and “liquidate” the entry within 314 days.
Customs officials on Nov. 18 denied the company’s request for an extension, Costco said.
In recent weeks, several other large companies, including Bumble Bee Foods and Revlon, have filed similar lawsuits with the specialized trade court. But only a handful of the nation’s 150,000-plus importers have directly challenged the White House.
“There are multiple avenues to pursue refunds. We don’t know which ones will exactly work and which ones will be quicker. But the point is it’s a little bit uncertain right now as to what are all of the steps companies should take to preserve their right to a refund,” said Ted Murphy, a trade attorney with Sidley Austin in Washington. “Nothing is going to be automatic.”
At issue in the pair of combined cases before the Supreme Court is whether the president exceeded his authority by relying on a 1977 law, the International Emergency Economic Powers Act (IEEPA,) to impose the tariffs. Presidents typically use that law to impose financial sanctions on nations such as Iran, China, Russia and North Korea, as well as on individual terrorists and criminals.
No previous president has used the law to levy tariffs, and three lower courts already have ruled against Trump to varying degrees. The Trump administration argues that the IEEPA tariffs are “plainly lawful,” since the law authorizes the president to “regulate” imports.
Several of the justices seemed skeptical of that claim during last month’s oral arguments, which were held on an expedited basis. Some legal experts said the speedy hearing means that a decision could come before year’s end, though the justices set their own schedule.
Either way, it is not clear how refunds would be processed if the court requires the president to give back the IEEPA tariffs.
Trump has mused publicly about spending tariff revenue on competing priorities such as $2,000 taxpayer rebates and aid to farmers hurt by trade war retaliation. He also has described a potential Supreme Court loss as “catastrophic.”
The government this year has collected $89 billion in IEEPA levies through Oct. 31, according to CBP data. More than $5 million of that amount came from Bogg, maker of the waterproof Bogg Bag. The Secaucus, New Jersey, company lost money on several shipments from its Chinese factory this year, but kept them coming to maintain its relationships with large retailers such as Dick’s Sporting Goods, said Kim Vaccarella, Bogg’s founder.
Vaccarella, 55, got a fresh scare in October, when Trump threatened to hit Chinese goods with an additional 100 percent tariff after Beijing tightened restrictions on its export of rare-earth minerals. Tariffs that high “would put us out of business,” Vaccarella said.
“I had to make a decision to sit there and watch the news every day and panic over it, or just continue to move forward the best way we knew how under the circumstances,” she said.
An eventual refund would be “fantastic,” she said, adding: “I don’t know how much I believe it’s going to happen.”
Bogg is among several companies that have filed friend-of-the-court briefs in the Supreme Court case.
Another, Crutchfield Corp., an electronics retailer in Charlottesville, said that it was unable to make routine business decisions with import fees changing so often.
To mail its holiday catalogues, for example, it must decide its product and pricing mix long in advance, it said. Constantly changing tariffs make that impossible.
“Crutchfield wants to avoid the economic harm not only of the tariffs, but also of the chaos and uncertainty resulting from wild gyrations in the tariffs,” the company said.
A Supreme Court defeat would eliminate the IEEPA tariffs. But it would not eliminate tariffs as a central part of Trump’s economic agenda.
Trump employs tariffs for multiple purposes, including to promote the reshoring of manufacturing, to punish other countries for permitting illicit drug shipments to the United States and to raise revenue. The Congressional Budget Office said last month that the tariffs would cut the federal deficit through 2035 by $3 trillion.
The president could use other legal authorities to replace the invalidated tariffs with new import taxes. Speaking after last month’s oral arguments, Trump told reporters his team would “develop a ‘game two’ plan.”
Relying on a 1930 law, the president could impose tariffs of up to 50 percent on goods from countries that he concludes are discriminating against U.S. products. He also could introduce 15 percent levies in response to a balance of payments deficit, but those would expire after 150 days unless Congress voted to extend them.
“Tariffs are not going away,” said Murphy, the trade attorney. “Even if the [IEEPA] tariffs get struck down, the administration will replace them basically immediately.”
At Busy Baby, meanwhile, Benike is struggling to revive her eight-year-old business. She needs an outside investor. But before she can choose one, she must settle on a new growth strategy. And she can’t decide whether to resume her original U.S. focus or switch to foreign markets until she knows what tariffs will apply.
As money dried up this summer, Benike stopped drawing a salary. Her business partner and brother, Eric Fynbo, quit to return to his previous job managing a retail outlet to support his wife and four kids.
The two-month interruption of shipments halted the company’s marketing momentum. Benike is down to just two full-time employees.
“We’re starting from scratch,” she said.
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