Hartford Business Journal

HARTFORDBUSINESS.COM | APRIL 6, 2026 17 Congratulations! To all the Power 50 Honorees Your recognition is well deserved! Largest Connecticut-Based Accounting Firm For over 60 years, Whittlesey's team of professionals has provided superior service and value-added advice, with specialization in Assurance, Advisory, Tax and Technology. Learn more at WAdvising.com Holyoke 413.536.3970 Hamden 203.397.2525 Hartford 860.522.3111 ASSURANCE | ADVISORY | TAX | TECHNOLOGY ruling and take a simpler approach, citing the February Supreme Court decision directly without making constitutional arguments. B. United's complaint stands out for disclosing a precise dollar figure and for arguing that its specialty products — small batch beers, ciders, sakes and meads — have no domestic substitutes. Beyond the legal fight, tariffs have weighed on companies' finances and business decisions. In its most recently completed fiscal year, which ended Feb. 1, publicly traded furniture manufac- turer Lovesac said higher tariff and shipping costs contributed to a 2.1 percentage-point decline in its gross margin. The company said it tried to offset those costs through price increases and expense reductions, but heavier discounting limited those gains. For the full year, Lovesac's net income fell to $4.1 million from $11.6 million a year earlier — a roughly 65% decline. Lovesac said it's also in the process of onshoring its manu- facturing, including its Sactionals product line — part of a broader shift among some U.S. companies seeking to reduce tariff exposure. Trade duties are affecting more companies than just those that have filed suit. Danbury-based Ethan Allen Interiors said tariffs have cut into its profits, while New Britain-based Stanley Black & Decker is shifting manufacturing out of China. Who gets the money? Even for businesses entitled to refunds, determining who receives the money can be complicated. Under customs law, only the importer of record — the company listed on the customs paperwork — can file a claim. In many supply chains, however, tariff costs were passed along to buyers, embedded in contract prices or added as fees, creating additional complexity. Hofherr said client questions have shifted over the past year, from how to pass tariff costs on to customers to how to recover those costs — including how to claim refunds and negotiate with supply chain partners. Refunds, when they come, are also expected to carry interest. "We're not only talking about a dollar-for-dollar refund of the tariffs that were paid," Hofherr said. "We're also talking about interest, which can really add up." Matt Gaieski, a principal at national accounting firm CLA (CliftonLarson- Allen), said companies generally cannot record expected tariff refunds as income under current accounting rules. Instead, companies can only recog- nize the income once the money is received or legally secured, he said. Companies that deducted tariff costs as business expenses may also face tax implications if those costs are later refunded. "Businesses should consider how to treat legal fees incurred to recover the tariffs, including whether those costs can be deducted right away or must be spread out over time," Gaieski added. Connecticut businesses with the largest tariff exposure — and there- fore the largest potential refunds — tend to be manufacturers and distributors sourcing goods from China, India and Brazil, Gaieski said. The Supreme Court ruling applies only to tariffs imposed under IEEPA. Steel and aluminum tariffs imposed under separate authority remain in effect. That means Connecticut manufac- turers in the defense and aerospace sectors, which rely heavily on those materials, have received little tariff relief, Gaieski added. New tariff fight Even as businesses seek refunds from past tariffs, a new round of trade measures is already taking shape. On the same day as the Supreme Court ruling, the Trump administra- tion imposed a 10% across-the-board tariff on most imports under Section 122 of the Trade Act of 1974, citing trade imbalances. The tariff took effect Feb. 24 and is set to expire around July 24, unless Congress extends it. The measure is already facing legal challenges. Connecticut is among 24 states that have sued, arguing the administration has not met the law's requirement that the tariff be tied to a "large and serious" balance-of-payments deficit. In March, Attorney General William Tong sought a court order to block the tariff, calling it "just as irrational, just as lawless" as the first round. A three-judge panel of the Court of International Trade has scheduled oral arguments for April 10. Planning ahead has become diffi- cult for businesses amid the uncer- tain legal landscape, experts said. "It's a challenge, certainly," Daly said. "Companies look at their contracts and their agreements with their suppliers and their customers, and try to examine how they can allocate and plan for that risk." The environment is likely to keep shifting, Daly added, noting that "what's in place now may not be what's in place three months from now." Advisers say preparation should be the focus. Businesses should work with customs brokers to compile entry records — what was paid, when and under which tariff classification — so a claim can be submitted as soon as the CBP refund system opens. "There's a lot in this process that businesses cannot control," Hofherr said. "The one thing they can control is getting everything in order and being ready to file once the system goes live." Matt Gaieski

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