NEW YORK (AP) — As the U.S. gears up to address a significant legal and financial dilemma, an official from U.S. Customs and Border Protection (CBP) is poised to testify in federal court regarding the government’s strategy for reimbursing billions in tariffs. These duties were collected before a Supreme Court decision invalidated President Donald Trump’s tariffs on goods from numerous other countries.
Judge Richard Eaton of the Court of International Trade seeks comprehensive information to rule on whether to expedite and broaden the tariff refund process. This follows the Justice Department’s appeal against his previous order, which mandated refunds plus interest for all businesses that paid the now-invalid tariffs.
The Justice Department contends that only companies involved in one of the over 2,500 lawsuits challenging the tariffs should be eligible for refunds.
The U.S. Court of Appeals for the Federal Circuit is now handling this complex issue, and the upcoming hearing is expected to shed light on the next steps in the refund process.
Current Status of Tariff Refunds
In March, Eaton instructed CBP to develop a system allowing “all importers of record” to apply for their share of the $166 billion collected before the Supreme Court’s decision. CBP launched an online platform on April 20, initially focusing on applications from importers with unresolved tax bills.
As of June 1, claims totaling $89.6 billion have been processed, with $20.6 billion in refunds issued, as per CBP’s reports.
The timeline and scope of this process have sparked debate, particularly after Eaton required CBP Commissioner Rodney Scott to appear in court over the agency’s adherence to his directive. The Justice Department’s objection led to an appeal, and the Federal Circuit temporarily suspended Scott’s court appearance.
Instead, Susan Thomas, CBP’s executive assistant commissioner for trade, will provide testimony.
Next Steps in the Tariff Refund Process
The hearing will delve into whether CBP can and will extend the refund process to businesses with the oldest tariff payments. Currently, only companies with unsettled tax bills as of the Supreme Court’s decision or those settled within the prior 80 days are eligible to apply.
Thomas, in a pre-hearing statement, indicated that CBP is devising a method to handle refunds for older cases but will not process them beyond the 80-day window while Eaton’s order is under appeal.
“Should the court’s order become final and require reliquidation of entries of all importers, CBP intends to fully comply with the court’s final decision as expeditiously as possible,” Thomas stated.
The process involves rigorous and time-sensitive evaluations of new import declarations. Importers or their customs brokers estimate tariff amounts and deposit funds toward their final bills. CBP has a window of 314 days, extendable to four years, to finalize these amounts, leading to goods being deemed “liquidated.” Importers then have 180 days to contest CBP’s decisions.
Judge Eaton aims to clarify if the government plans to refund all unlawfully collected duties, either by complying with his directive or through alternative measures.
Legal representatives for the five companies involved in the lawsuit argue that it would violate constitutional principles if they pay fewer tariffs than others who also paid the invalid duties. They seek class action status to include “potentially tens of thousands of identically situated importers.”
Meghann Supino from Ice Miller anticipates CBP will expand its technology to accommodate refunds for all tariffs, but concerns about extending this to non-litigants remain amid ongoing appeals.
