Terence Lau, dean of Syracuse University’s law school and a former Ford international trade attorney, stresses that a company’s tariff refund strategy must begin with documentation rather than policy announcements. His method, shaped by years in trade law, follows a strict order: gather evidence first, then make decisions, and finally communicate those choices. The sequence itself carries more weight than the specific choices made.
A lot of companies announced, then decided, then documented. The defensible sequence is exactly the reverse. Lau argues that this order introduces unnecessary legal exposure. A safer path involves three clear stages: first, compiling all relevant documentation; second, evaluating decisions based on contractual terms and tax implications; and third, announcing the strategy afterward.
For financial officers overseeing refunds under the International Emergency Economic Powers Act, the initial task is to review past communications. If a company previously informed customers in early 2025 that tariffs had increased prices, any subsequent refund distribution must align with those statements- Almost any allocation of this money is defensible. What is hard to defend is an allocation with no contemporaneous record of why, particularly if the company spent 2025 telling customers that tariffs were forcing prices up.
Who actually bears the tariff cost?
The refund follows the customs entry, not the economics. The party named on the entry is frequently not the party that felt the cost. The importer of record might be a U.S. subsidiary, a distributor, a contract manufacturer’s affiliate, or even the foreign seller. The cost may have been pushed down a chain three or four links to a buyer with no relationship to Customs at all. That buyer has no claim against the government. Whatever claim it has is contractual, against its counterparty.
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This disconnect has fueled lawsuits alleging unjust enrichment. Unjust enrichment is an equitable claim, and the elements vary by state, but the common formula is three parts: the defendant received a benefit; the benefit came at the plaintiff’s expense; and the circumstances are such that it would be inequitable for the defendant to keep it without paying for it. Some states add a fourth requirement, that there be no adequate remedy at law. [A] separately itemized surcharge is the strong case and the embedded price increase is the weak one.
If a company billed a customer a specific dollar amount for a specific tariff, and the government has now returned that specific dollar amount, the equities are self-evident. If the company instead raised its prices in a market where freight, labor, currency, and competitive conditions were all moving at once, the plaintiff has to untangle causation and damages before getting anywhere, and it may have to do it on a classwide basis.
How earnings calls create legal pitfalls
Public statements further heighten legal risks. A recent case against Costco referenced remarks made by CFO Gary Millerchip during an earnings call regarding tariffs. Lau cautions that such calls function as voluntary depositions, with transcripts becoming permanent records subject to reinterpretation. He advises companies to focus on describing past actions rather than future intentions. Even casual language about intentions can be misconstrued as binding commitments, potentially exposing companies to allegations of misleading customers.
Lau’s expertise in trade law reveals a recurring pattern: class-action lawsuits often target how refunds are distributed. His primary recommendation centers on procedure—documentation must precede all decisions. Without contemporaneous records, companies weaken their position in disputes over refund allocations. The greatest legal peril, he notes, does not stem from the actions themselves but from inconsistencies between past statements and later refund strategies.