The Trade Court Rules on Tariff Refunds

The Trade Court Rules Companies are Due Tariff Refunds

The U.S. Court of International Trade (the Trade Court) recently ruled that companies who paid tariffs under the 1977 International Emergency Economic Powers Act (IEEPA) are entitled to refunds from U.S. Customs and Border Patrol (CBP). According to the court’s opinion, “All importers of record whose entries were subject to IEEPA duties are entitled to the benefit of the [Supreme Court] decision.”

The Trade Court is the Sole Arbiter of Tariff Refunds

Following the Supreme Court’s decision in the Trump tariff cases, the Trade Court has become the primary authority for resolving tariff refund claims. The U.S. Court of Appeals for the Federal Circuit reinforced this position by withdrawing the question of refunds from its jurisdiction last Monday and leaving it exclusively to the Trade Court.

Judge Richard Eaton declared that he alone will preside over cases relating to IEEPA refunds. This measure is intended to facilitate efficient resolution of claims. Judge Eaton’s order suggests that not all importers will need to file suit in Trade Court to seek relief. He asserted that the Trade Court is not bound by Supreme Court precedent limiting the use of “universal” injunctions, suggesting the Trade Court would not be required to separately hear each one of the more than 2,000 suits currently filed on this issue.

CBP Directives and Proposed Process for Refunds

The procedure for issuing refunds to companies affected by IEEPA tariffs has yet to be finalized, although in a March 6 submission to the Trade Court, CBP stated that it is developing a refund process that could be complete in 45 days. This process would involve submission of a claim to CBP’s import and export processing system (“ACE”). In its Trade Court filing CBP further clarified that the refund process currently under development would include the following:

1. First, an importer files a declaration in ACE that includes a list of entries on which IEEPA duties were paid.
2. Based on the declaration, the ACE system runs a series of validations on each entry within the declaration and automatically re-calculates the duties owed without IEEPA tariffs (with applicable interest).
3. ACE then automatically finalizes (liquidates or reliquidates) the entries and aggregates the refunds with interest by importer and liquidation date.
4. CBP then certifies the refunds, and the Department of the Treasury issues the refunds electronically.

Open Questions and What Happens Next

CBP is required to provide a short report to Judge Eaton on March 12 to provide updates on its progress in developing this process. However, several open questions remain concerning the proposed refund process. While Judge Eaton has expressed initial praise for the process, it is unclear whether CBP will be capable of implementing necessary changes in ACE to accommodate this novel process. It is also unclear how long it will take for refunds to actually be processed, and whether payment prioritization will take place for companies that have filed lawsuits challenging the IEEPA tariffs.

Nevertheless, this marks an important step forward for businesses hoping to obtain refunds. These developments signal that individual companies will not have to litigate in order to obtain refunds and that a standardized administrative process will be available for all impacted companies.