The idea of getting a refund for mischaracterized tariffs is actually fairly common (it's called a duty drawback and there's a cottage industry around this). It's generally used when an importer incorrectly categorized their import under an HS code that has a higher duty than the correctly categorized HS code.

The difference this time is the scale is orders of magnitude larger. Will be interesting to see how they (importers and CBP) work through this.

I think the tax is basically on the profit made when you add up costs and expenses. Say:

Before: Importer pays China $10 for widget, pays $2 duty, sells to shop for $12 - profit zero, tax on that zero.

Now: Paid $10 for widget. Paid $2 duty, sold for $12, $2 refunded - profit $2, pays tax on the $2.

At least that's the normal way of doing accounting. There can be odd exceptions and complications in local laws.

I got charged a $600 tariff from UPS to ship a $30 25-pound sandbag into the US from Canada.

UPS didn't even deliver the product.

I'm suing them in small claims.

We'll see what happens.

I imagine that even after the ruling, our ass backwards legal system will somehow say this makes sense, even though the tariff rate was never near high enough for that bill to make any sense.

Further, they're going to get refunded the $10 it MIGHT have cost them.

Related question, unanswerable except maybe as a rough estimate: how much will it cost, in accountant/bookkeeper time, to do all the administrivia required to process all these refunds?

That's a great question. I would also love to know that answer. I agree with you that they're not going to share the refund if the importer was the middleman in the supply chain, and same thing if the importer was also the seller.