The federal government began accepting tariff refund requests April 20, a relief for companies that struggled under the weight of the Trump administration’s import policies. But for some small businesses, the refund won’t make up for a decline in sales and lost customers.
The new refund system only reimburses reciprocal tariffs enacted last year by Trump under the International Emergency Economic Powers Act, which placed duties across -the-board on nearly all imported products. In February, the Supreme Court of the U.S. ruled that the statute does not authorize the president to impose the tariffs. Other tariffs approved by Congress or named in various trade acts remain in effect.
While the refund program is a welcome development, small companies like Princess Awesome remain concerned about the future. The Silver Spring, Maryland company imports colorful children’s clothing from a factory in Bangladesh. A potential refund for the tariffs it paid doesn’t necessarily mean the company is out of the woods.
While Princess Awesome is on track to get its money back, the timeline is murky and the owners worry the business could be financially drained months before it sees even a partial refund.
“We can limp along at this level for another year, maybe 18 months,” said co-founder Eva St. Clair. “I don’t know if we’ll ever get the full amount back. That seems like more to hope for.”
The company said it has paid over $32,000 in tariff duties since President Donald Trump’s “Liberation Day” tariffs went into effect in February 2025.
St. Clair and co-owner Rebecca Melsky took out loans and cut their salaries multiple times to keep product flowing amid the tariffs. Higher production costs also meant less inventory, limiting the availability of certain sizes and styles, reducing sales.
The company’s average inventory dropped from 30,000 items to around 15,000 once the tariffs kicked in, St. Clair said. Lost sales won’t be factored into refunds.
“The uncertainty of when we’re going to pay tariffs and how much they’re going to cost was nightmarish. We just didn’t know where the money was going to come from or if we had had it,” St. Clair said. “It was hard.”
The company, whose only full-time employees are St. Clair and co-founder Rebecca Melsky, was the lead plaintiff in a lawsuit with 11 companies through the Pacific Legal Foundation and became a national figure in small businesses’ fight for refunds.
Their case, one of the first filed against the IEEPA tariffs, was cited in subsequent lawsuits by large companies, including CVS Health Corp., Hasbro Inc., Goya Foods Inc. and dozens more.
Tariffs were a core component of Trump’s efforts to reinvigorate struggling American industries. But Melsky explains that in the fabric printing and clothing manufacturing businesses, American plants haven’t kept pace with the newer, more innovative factories overseas, which are also far less expensive.
Moreover, the process from design to production is more streamlined in Asia, where factories can provide a full range of services from start to finish with more experienced employees. In the U.S., each step in the process requires a different contractor.
“It’s just not possible to make the range of products that we want to make … at a price point that people will buy in the United States,” Melsky said. “Our choices are to raise our prices, find other countries to produce in or close. There isn’t an option that’s, Oh, just bring everything back to the United States, because it doesn’t exist. … It’s not helping American businesses, and it’s really frustrating to see.”
Other Maryland companies that sued the Trump administration include Chesapeake Spice Co., a Belcamp, Maryland company that produces seasoning blends and spices, and Raymond Geddes & Co., a school supply company headquartered in Baltimore.
Raymond Geddes alleged in its suit that U.S. Customs and Border Protection wrongfully assessed antidumping duties on pencils manufactured in the Philippines using wood from China. The lawsuit is seeking repayment for the difference between the Filipino and Chinese tariffs.
Chesapeake Spice and Raymond Geddes did not respond to requests for comment.
The Trump administration’s new electronic tariff refund system, known as the Consolidated Administration and Processing of Entries (CAPE), will process $166 billion worth of tariffs across 53 million shipments.