WASHINGTON (AP) — In a setback for the Trump administration, a federal judge in New York ruled Wednesday that businesses which paid tariffs invalidated last month by the Supreme Court are entitled to refunds.

Judge Richard Eaton of the U.S. Court of International Trade stated that “all importers of record” should “benefit” from the Supreme Court’s decision striking down the broad, double-digit import duties President Donald Trump imposed last year under the 1977 International Emergency Economic Powers Act (IEEPA).

The Supreme Court determined that the tariffs were unconstitutional under the emergency powers statute, including the wide-ranging “reciprocal” tariffs applied to nearly every country. The majority concluded that the president does not have the authority to independently impose or adjust tariffs, emphasizing that the power to levy taxes rests with Congress.

In his opinion, Eaton clarified that he alone “will hear cases pertaining to the refund of IEEPA duties.” His decision provides direction on how the refund process should proceed, an issue the Supreme Court did not address in its Feb. 20 ruling. Trade attorney Ryan Majerus, a partner at King & Spalding and former U.S. trade official, said he anticipates the government will appeal the decision or “seek a stay to buy more time for U.S. Customs to comply.”

Through mid-December, the federal government had collected over $130 billion from the now-invalidated tariffs, and total refunds could eventually reach $175 billion, according to estimates from the Penn Wharton Budget Model.

Eaton’s ruling specifically addressed a lawsuit filed by Atmus Filtration, a Nashville, Tennessee-based manufacturer of filters and related products, which argued it was entitled to recover tariff payments.

Goods entering the United States through Customs and Border Protection are subject to a procedure known as “liquidation,” during which the agency makes a final determination of the duties owed. After liquidation, importers have 180 days to challenge the assessed duties. Once that period expires, the assessment becomes legally final.

The judge directed Customs to cease collecting the IEEPA tariffs invalidated by the Supreme Court on goods still in the liquidation phase. For goods that had already moved beyond that stage, the agency must recalculate the duties without including the struck-down tariffs.

“This is a significant outcome for importers and consumers who bore the cost,” said Barry Appleton, a law professor and co-director of New York Law School’s Center for International Law. “It will keep customs brokers busy, streamline matters for the courts, and set the process in motion for those who paid within the last 180 days.”

Earlier in the week, another federal court declined the Trump administration’s request to delay the refund process. The U.S. Court of Appeals for the Federal Circuit advanced the next stage by returning the matter to the New York trade court for further handling.

The responsibility now falls to U.S. Customs and Border Protection to establish a workable system for issuing refunds. While the agency regularly processes refunds when errors occur, trade attorney Alexis Early, a partner at Bryan Cave Leighton Paisner, noted that its infrastructure “was not designed for a mass refund.” She added, “The devil will be in the details of the administrative process.”

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Anderson reported from New York.

AP Writer Lindsay Whitehurst contributed to this report.