In a pivotal development, businesses that paid tariffs under a now-overturned mandate from former President Donald Trump will soon have a way to claim refunds. The U.S. Supreme Court had previously ruled that these tariffs were imposed without the necessary constitutional authority.
Starting Monday, importers and their brokers can initiate refund claims via an online portal managed by U.S. Customs and Border Protection (CBP). The portal will be accessible from 8 a.m., marking the beginning of a potentially lengthy refund process, which might later extend to consumers who were charged tariffs on products imported into the United States.
Businesses seeking refunds must provide detailed declarations of the goods subjected to these tariffs, which the court invalidated. According to CBP, once a claim is approved, it could take between 60 and 90 days for a refund to be processed.
This refund system will operate in phases, prioritizing more recent payments first. Various technical and procedural hurdles could delay the processing of claims, meaning that any potential consumer refunds could take time to materialize.
Background and Legal Context
On February 20, a 6-3 Supreme Court decision determined that Trump had overstepped his authority by setting new import tariffs last April. The tariffs, affecting products from nearly every other country, were justified by citing the U.S. trade deficit as a national emergency under the 1977 International Emergency Economic Powers Act (IEEPA). Although the Supreme Court did not address the issue of refunds, a U.S. Court of International Trade judge later ruled that companies subjected to these tariffs are entitled to refunds.
Eligibility and Registration
The CBP noted in court documents that over 330,000 importers paid approximately $166 billion on more than 53 million shipments. However, not all shipments qualify for immediate refunds. The initial phase of the refund system will cover cases where tariffs were estimated but not finalized, or where a final accounting was completed within the last 80 days. As part of the process, importers must register for CBP’s electronic payment system. To date, 56,497 importers have registered, making them eligible for refunds totaling $127 billion, including interest.
Ensuring Accuracy
Meghann Supino, a partner at Ice Miller, advised businesses to meticulously document all relevant forms and values in their declarations to avoid rejections. “If there is an entry on that file that does not qualify, it may cause the entire entry to be rejected or that line item might be rejected by Customs,” she said. The launch of the portal is expected to face some challenges, and patience is advised. “We think that patience will pay off,” Supino added.
Nghi Huynh of Armanino underscored the importance of tracking submissions accurately to prevent errors. “Each file can include thousands of entries, but accuracy is critical, as submissions can be rejected if formatting or data is incorrect,” she stated.
Impact on Small Businesses and Consumers
Small businesses are keen to access the refunds. Brad Jackson from After Action Cigars in Minnesota is preparing to submit his claims, having paid $34,000 in tariffs last year. “My main concern is the turnaround time,” Jackson remarked, noting that a prolonged refund process might not address immediate cash flow issues.
Tariffs often result in higher prices for consumers as businesses pass on the costs. However, the refund system will reimburse the businesses that paid these tariffs, with no obligation to pass on the refunds to customers. Yet, ongoing class-action lawsuits demand that companies like Costco and Ray-Ban maker Essilor Luxottica provide refunds to consumers. Delivery firms such as FedEx and UPS, which collected tariffs directly from consumers, may issue refunds. FedEx confirmed its commitment to support customers as CBP processes refunds, planning to file claims starting April 20.
