A federal judge in New York ruled Wednesday that companies that paid tariffs invalidated by the Supreme Court last month are entitled to refunds, dealing a setback to the Trump administration.

Judge Richard Eaton of the U.S. Court of International Trade wrote that "all importers of record" were "entitled to benefit" from the Supreme Court's February 20 decision that struck down import taxes President Donald Trump imposed under the 1977 International Emergency Economic Powers Act. Eaton also designated himself to oversee all cases related to the tariff refund process.

The ruling provides clarity on the refund process, which the Supreme Court did not address in its decision striking down the tariffs. The federal government collected more than $130 billion through the now-invalidated tariffs through mid-December, and could face refunds totaling up to $175 billion according to Penn Wharton Budget Model calculations.

Eaton's decision came in a case brought by Atmus Filtration, a Nashville-based company that makes filters and filtration products. The judge ordered customs officials to finalize paperwork for imported goods without charging the invalidated tariffs, and directed that refunds be paid with interest.

Trade lawyers expect the government to appeal the ruling or seek delays to give U.S. Customs and Border Protection more time to develop a system for processing the refunds. The customs agency routinely handles individual tariff refunds but was "not designed for a mass refund," according to trade attorney Alexis Early.

On Monday, the U.S. Court of Appeals for the Federal Circuit had already rejected the Trump administration's attempt to delay the refund process, sending the matter to the New York trade court for resolution.