Insights

On February 20, the Supreme Court struck down the use of the International Emergency Economic Powers Act (IEEPA) to enact tariffs in a landmark case regarding tariffs central to the Trump administration's trade policy. In its opinion, the Court did not dictate how refunds should be dispensed, leaving importers in a difficult situation – legally entitled to refunds for the IEEPA tariffs but forced to navigate an uncertain path to receive them. Neither U.S Customs and Border Protection (CBP) nor the Court of International Trade (CIT) has issued a process specifically for refunds. But there are near-daily updates impacting importers options for potential recovery of payments of unconstitutional tariffs. For details regarding the Supreme Court case, see our previous article, From Courtroom to Compliance: Deeper Dive into IEEPA Tariffs, Refunds, and Potential Next Actions by President Trump After Today’s Supreme Court Decision.

What’s Happened Since the Supreme Court Tariff Ruling?

On March 4, the CIT issued an order in the case Atmus Filtration, Inc. V. United States requiring CBP to liquidate unliquidated entries without the IEEPA tariffs. The Atmus order also required CBP to reliquidate liquidated entries that are not final (i.e., entries liquidated for 90 days or less). This order, taken at face value, would require CBP to issue IEEPA tariff refunds at the time of liquidation or reliquidation.

On March 6, Brandon Lord, Executive Director of the CBP Trade Programs Directorate, filed an affidavit with the CIT in the Atmus case. In the affidavit, Lord claimed, “CBP is confident that it can develop and implement new [Automated Commercial Environment (ACE)] functionality that will streamline and consolidate refunds and interest payments on an importer basis.” Lord clarified that “CBP is making all possible efforts to have this new ACE functionality ready for use in 45 days.”

Based on these claims, CBP is preparing to create an IEEPA refund process in ACE, which is CBP’s online portal for tracking and correcting entries. In response to Lord’s statements regarding the new refund process, the CIT ordered CBP to file a report with CIT by March 12, describing progress made toward the development of the ACE refund process.

What Options Exist for Importers?

The liquidation status of affected entries will determine an importer’s options. Liquidation is the final stage for entries into the U.S. and how CBP concludes its computation of duties. CBP typically takes 314 days to liquidate an entry. The ACE refund process described above will likely only be an option for unliquidated entries and not-yet-final liquidated entries. It will also take time to become operational, and the 45-day timeframe for deployment is not a guarantee. But for importers with entries that qualify, this is good news, if not immediate in effect.

After liquidation, the entry is considered complete. Within 180 days of liquidation, importers may file an administrative protest with CBP, but after 180 days the entry is no longer eligible to be protested. Importers seeking refunds after final liquidation would need to file an administrative protest before 180 days have lapsed since liquidation.

There is a possibility, however, that importers will be barred from protesting CBP’s liquidation of entries with IEEPA. CBP is merely carrying out a function at the direction of the White House and not making its own decision, and protests are generally only allowable against CBP decisions. Under these circumstances, it is possible that an importer may be required to file its own complaint with the CIT to preserve its rights to a refund for finally liquidated entries subject to IEEPA tariffs. We expect more clarity on this issue in the coming weeks.

Recommendations

• Create an ACE account – if the importer does not already have one, which is a compliance best practice – and track the liquidation of entries subject to IEEPA tariffs.

• Enroll in the ACE Automated Clearing House (ACH) to receive electronic refunds. CBP will no longer issue paper checks for refunds in most situations.

• Audit entries for which a refund is expected. Any mistakes or compliance issues – e.g., misclassification, undervaluation, incorrect country of origin – can make the refund process more difficult, including the potential for receiving bills for owed duties or even penalties.

• Gather relevant documentation for entries impacted by IEEPA tariffs. Importers may be required to substantiate the information within ACE and that they are owed a refund.

• Sign up for the Torres Trade Law newsletter for updates: https://www.torrestradelaw.com/.

Conclusion

While the fight over the constitutionality of the tariffs has concluded, a new battleground has opened on the road to refunds. If you have any questions or require assistance with the tariff refund process, please contact the attorneys at Torres Trade Law.