Courts are defining a path that could provide manufacturers and other businesses refunds for billions in IEEPA-based tariffs.
When the U.S. Supreme Court struck down President Trump’s tariffs based on the International Emergency Economic Powers Act on Feb. 20 and invalidated them going forward, the ruling provided some much-desired clarity to manufacturers and other importers.
However, it left the issue of tariff refunds unresolved. With at least one estimate placing the refund potential of IEEPA-based tariffs at $175 billion, the question of how to return that massive sum is significant.
“The key question is timing. We’re talking about well over $100 billion in IEEPA tariff refunds,” said Holland & Knight lawyer Patrick Childress in emailed comments right after the Supreme Court’s ruling. “The Federal Government will not be able to issue refunds of that magnitude overnight. … Then there is the question of how, and whether, those refunds will be shared throughout the supply chain.”
Timing has become slightly clearer. On March 4, the U.S. Court of International Trade “ordered Customs and Border Protection to issue refunds for levies US President Donald Trump introduced last year under the International Emergency Economic Powers Act (IEEPA),” the BBC reported.
“All importers of record whose entries were subject to IEEPA duties," are entitled to benefit from the Supreme Court’s decision,” Judge Richard Eaton wrote in his order (PDF).
Moreover, he added, “I am the only judge who will hear cases pertaining to the refund of IEEPA duties. So there is no danger that another Judge, even one in this Court, will reach any contrary conclusions.”
This ruling follows on the heels of the U.S. Court of Appeals for the Federal Circuit returning jurisdiction to the U.S. Court of International Trade earlier in the week.
“The case is moving quickly back to the CIT … despite the government’s request to delay the mandate up to 90 days,” Holland & Knight lawyer Ashley Akers said in a written comment. “This signals that the courts recognize the urgency of the situation.”
There’s no lack of parties interested in clawing back dollars attached to the tariffs. Dana Automotive Systems, Bumble Bee Foods, Revlon and Chromalloy are among manufacturers that have challenged the IEEPA tariffs, as well as retailers like Costco, according to The Hill.
Moreover, “The Liberty Justice Center, a group representing some of the small businesses challenging the tariffs, estimates that more than 900 claims seeking refunds have been filed in federal court,” wrote Agence France-Presse.
Amber Molyneux, customs and duties senior manager at Crowe, says many of the company’s clients are asking about potential refunds and what path to pursue.
“Our advice is focused on preparation and risk management. Importers should quantify IEEPA exposure separately from other duties, confirm importer-of-record status, review drawback activity, validate classification and origin determinations, and organize complete entry documentation,” Molyneux said in a written comment.
“The legal footing for recovery is stronger than before, but disciplined preparation — rather than passive waiting — remains the most prudent course as the administrative process continues to evolve,” she added.
