CFOs considering how to gain reimbursement for U.S. tariffs or defending their approach to tariffs need to keep in mind a few simple rules, according to Terence Lau, dean of the law school at Syracuse University.
Indeed, one of his key suggestions for steps to take when setting a strategy for any refunds received seems suitable for a grade school math class.
“The order of operations matters more than the decision,” Lau told CFO Dive in an email. “A lot of companies announced, then decided, then documented. The defensible sequence is exactly the reverse.”
A simple three-word reminder provides a guide for companies to follow: document, decide and then announce strategy. Digging further into the nitty gritty, Lau said companies need to find out what they already said about tariffs and pricing beginning from early 2025, check contracts to determine if the money is theirs to allocate, review tax impacts and then make a decision.
Although currently an academic, Lau began his law career in the auto industry. He served in the office of the general counsel at Ford Motors in its international trade and transactions practice group where he focused on distribution, M&A and compliance before transferring to Bangkok, Thailand to work as Ford’s director for ASEAN government affairs.
With many companies nationwide currently fending off proposed class action lawsuits from customers opposing tariff refund allocation plans, Lau answered CFO Dive’s email questions focused on legal considerations companies should keep in mind around tariffs. He said he shared his insights in his role as dean and as general commentary on legal structure, not as advice to company executives.
Editor’s note: This Q&A has been edited for brevity and clarity.
CFO Dive: What are the main legal considerations you suggest CFOs consider regarding tariff refund strategy?
Terence Lau: The documentation point is the one I would emphasize to CFOs. 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.
CFO Dive: If it's the importer of record that gets the money for any International Emergency Economic Powers Act tariffs paid, what contractual and legal issues complicate whether or how that needs to be shared?
Terence Lau: The central problem is a mismatch: 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.
CFO Dive: What constitutes ‘unjust enrichment’ and what steps can companies take to avoid being sued for it?
Terence Lau: 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.
CFO Dive: A suit against Costco cited CFO Gary Millerchip talking about tariffs on an earnings call. Do you have any advice about public announcements that companies make with regards to their plans?
Terence Lau: I would not comment on the merits of any pending case. But the general lesson from what we have seen so far is worth stating, and it is somewhat counterintuitive: the exposure is being built less out of what companies did than out of what they said.
An earnings call is a voluntary deposition. The difference is that nobody objects, and the transcript is free. It is also notable that where companies have pushed back on these claims, one of the recurring arguments is that an executive's remark was pulled out of its surrounding context. Whether or not that is right in any given case, context does not travel. Describe what you have done, not what you intend to do. Intentions get read as promises, and promises get read as contract terms and as representations.
