A federal court in New York took the first official steps this week to start the refund process for the worldwide tariff regime that the Supreme Court said violated the law. Judge Richard K. Eaton of the U.S. Court of International Trade said in an order Wednesday that importers were due refunds for tariffs paid under the International Emergency Economic Powers Act of 1977, or IEEPA. Eaton wrote that a Supreme Court decision last month that invalidated those tariffs, Learning Resources Inc. v. Trump and Trump v. V.O.S. Selections, meant that Customs and Border Protection should stop charging tariffs and initiate refunds. “All importers of record whose entries were subject to IEEPA duties are entitled to the benefit of the Learning Resources decision,” Eaton wrote. That may not happen immediately, though. The Trump administration said in a filing Friday that it is not equipped to immediately refund the more than $166 billion importers have paid or even stop charging the tariffs this week. The filing, including a declaration from a CBP official, said it would require time and resources to stop payments, process refunds and calculate the interest importers are owed. Tens of thousands of importers brought in tens of millions of items subject to the tariffs, the government filing said, using a mix of computerized entries and paper declarations. The government said it stopped collecting new deposits on IEEPA tariffs last month but does not have the capacity to stop automated processing without millions of man-hours of work. “CBP has never been ordered to, nor has it attempted to, process a volume of refunds anywhere near the volume of total entries and Entry Summary lines on which IEEPA duties have been deposited,” the filing said. The government said it may be able to spin up a refund process by sometime in April. Eaton has called for a private conference Friday between the importer who brought the case and the government. Experts said that Eaton’s order would cover a large portion of the importers who have paid the tariffs, although the order was still subject to an appeal. “I’m still wrapping my head around how clear and positive this order is,” Jason Waite, the leader of Alston & Bird’s international trade practice, said. Waite said the order would effectively have CBP process the refunds in the same way it handles adjustments of the final bill in the normal process. Normally, importers pay an estimated tariff duty when their goods arrive in the country, Waite said. Then CBP finalizes, or “liquidates” the tariffs owed and can either send a bill or a refund, he said. That CBP process can take months, and many importers who paid initial deposits may still have unliquidated accounts that could be covered by Eaton’s order, Waite said. Additionally, the hundreds of companies that have filed lawsuits for refunds may be covered as well, he said. “To me it shouldn’t be that difficult other than the volume,” Waite said. Marshall Olney, an attorney at Buchalter, noted that there are still several steps to take before companies start seeing money return to their accounts under Wednesday’s ruling. “This is good news for everyone. It is the first step on a long road to getting these refunds,” Olney said. Olney noted the order didn’t cover every single person or entity that has paid the tariffs, particularly those whose imports had been finalized at CBP. Smaller importers or individuals who have not filed lawsuits yet may have to wait for further court action, he said. “The Court of International Trade sort of piecemealed this, this is sort of the easiest thing to fix,” Olney said. Last year, the Trump administration sought to use the law to impose tariffs on Mexico, Canada, China and much of the rest of the world. To justify the tariffs, Trump declared emergencies ranging from the importation of fentanyl to perceived security concerns due to trade deficits and reciprocal tariffs. Last month, the Supreme Court ruled those tariffs violated the law, saying that Congress did not give the president the authority to impose tariffs under IEEPA. Earlier this week the U.S. Court of Appeals for the Federal Circuit kick-started the refund fight when it refused a Trump administration request to delay sending the case back to the Court of International Trade. The Cato Institute, a libertarian think tank, estimated last week that each month of delay would cost about $700 million in interest on the collected tariffs. Sen. Mark Warner, D-Va., and other Democrats praised the ruling on social media Wednesday, saying the administration should move forward with refunds quickly. “The Trump administration must move quickly to reimburse the thousands of small businesses in Virginia and across the country that bore the brunt of President Trump’s harmful and illegal tariffs,” Warner said.
