Federal Judge Takes First Step Toward Refund Process For IEEPA Tariffs
A federal court has taken a first step in the refund case regarding President Donald Trump’s International Emergency Economic Powers Act (IEEPA) tariffs. (As Connecting the Dots reported last month, the U.S. Supreme Court ruled President Trump did not have the constitutional authority to impose these penalties.)
More than 1,000 companies have sued for refunds.
Last Wednesday, March 4, Richard Eaton, a senior judge on the U.S. Court of International Trade, ordered the U.S. government to finalize paperwork for imported goods without charging companies for the invalidated levies. More specifically, as Supply Chain Dive explained, Judge Eaton ordered U.S. Customs and Border Protection (CBP) to liquidate unprocessed entries on U.S. imports and reliquidate those that have been processed, but not finalized “without regard” to the IEEPA levies.
“The court’s order means that CBP must issue refunds to shippers who paid IEEPA tariffs on imports that have not been finalized via liquidation,” Supply Chain Dive noted. “Meanwhile, for goods for which the tariff amount was estimated upon entry but not yet paid, CBP will simply remove the IEEPA charge upon liquidation.”
According to the National Association of Manufacturers (NAM), Judge Eaton’s order, which suggests the Supreme Court’s decision should apply broadly to all importers of record, could significantly simplify the refund process for manufacturers affected by the tariffs. “Typically, once CBP finalizes a duty calculation, importers must pursue additional administrative steps, which can include litigation, to obtain refunds,” NAM said. “By ordering CBP to make adjustments before entries are final, the court’s ruling could help companies avoid a complicated recovery process.”
Last week’s decision will hardly be the last step in the refund process, however.
Judge Eaton originally ordered immediate compliance his orders, but yesterday, Monday, March 9, he pushed back the timeline after fielding concerns from CBP, which argued it needed at least 45 days to set up an automated system to issue refunds. “CBP estimates that the automated controls described above will save CBP over 4 million hours compared with the manual processes it would otherwise have to complete,” Brandon Lord, a top trade official at CBP, wrote to the judge. That 45-day estimate would mean the system would be ready on or around April 20, 2026.
More generally, the Trump administration opposes the tariff refunds and still could appeal the decision to a federal circuit court, meaning the refund issue could eventually land before the U.S. Supreme Court, which, in its decision last month, was silent on the refund issue. Additionally, as Pete Mento, director of global trade advisory services at Baker Tilly, has written, “The real complexity — and where the real money sits — is with entries that already liquidated with IEEPA duties. That’s where protests, court orders, and whatever refund mechanism ultimately emerges will matter.”
Want to learn more? BDO offers more information how the potential refund process at this link. Holland and Knight has information here.