Federal Judge Orders Refunds For Companies That Paid Trump Tariffs

As XBIZ reported last year, the Trump administration’s sharp escalation of import taxes, especially on goods from China, had strong negative effects on the sex toy business and related sectors.

Last month, the U.S. Supreme Court ruled against the sweeping tariffs, rejecting Trump’s claim that the International Emergency Economic Powers Act (IEEPA) of 1977 granted him the authority to impose the broad regimen of import levies. In the wake of that decision, hundreds of companies impacted by the tariffs filed lawsuits with the Court of International Trade, seeking refunds.

Among the companies that have filed complaints are a number of adult retail and sexual wellness brands. Beacon Wellness Brands and International Intimates both filed suits in December, prior to the Supreme Court’s ruling overturning the IEEPA tariffs. Kheper Games filed a suit shortly after that ruling.

The Kheper complaint notes, “This separate action is necessary because, although the IEEPA duties and underlying executive orders have been held unlawful by the Supreme Court, it is uncertain whether Defendants will issue refunds to importers that have paid IEEPA duties, including Plaintiff, in the absence of their own judgment and judicial relief.”

Near-identical language appears in the Beacon Wellness and International Intimates complaints.

Wednesday's ruling by Judge Richard K. Eaton, however, requires the Trump administration to issue refunds to all affected importers, whether or not they have filed suits.

The administration is likely to appeal or seek a stay of this latest ruling.

Trump responded to the SCOTUS ruling overturning the tariffs by announcing a workaround, invoking the Trade Act of 1974. Under that law, the president can levy tariffs for up to 150 days without congressional approval. The administration has imposed a 10% global tariff, but has floated a plan to increase that to 15%. On Wednesday, Treasury Secretary Scott Bessent told CNBC that the additional 5% increase would likely happen this week.

On Thursday, 24 U.S. states sued the Trump administration in an effort to block that workaround.   

Impact on Adult Companies

Kheper Games CEO Brian Pellham told XBIZ that the tariffs took most of the company’s profits for 2025.

“We had a hard hit when we could not stop two containers from leaving China when the 135% tariffs were sprung on us, and it took until Q4 for us to recover,” Pellham said.

The experience motivated Kheper to engage an attorney, in hopes of recouping a potential six-figure total in unlawfully charged tariffs.

“Ethically, we strongly feel that we are owed the money back,” Pellham affirmed.

According to Beacon CEO Maria Warrington, the tariffs also had a significant impact on Beacon and its customers.

“The company has incurred substantial tariff costs over the past year, with continued exposure expected going forward,” Warrington told XBIZ. “These costs have placed meaningful pressure on margins and overall financial performance.”

Because sexual wellness devices are heavily regulated and manufacturing capabilities are highly concentrated in China, Warrington added, her company does not currently have viable alternatives to relocate production without significant regulatory hurdles and materially higher costs.

“As a result, Beacon has had limited options to mitigate tariffs other than negotiating cost reductions with our manufacturing partners, implementing price increases and making strategic reductions in operating expenses,” Warrington explained. “In several cases — particularly for higher-priced products — elevated retail price points negatively impacted consumption and sales velocity.”

Meanwhile, sexual wellness brand Dame has announced that whether or not it receives a refund, it will automatically refund customers who paid its "Trump Tariff Surcharge" due to tariffs that have now been ruled unlawful.

“We paid over $100,000 in customs costs as a result of those tariffs (approximately three times what we paid last year),” Dame posted on its website. “And there’s a real chance we may never recover that money. The administration is already working its way around the ruling, and any rebate process could take years (if it happens at all).”