Importers Urged to Find Backup to Customs’ Tariff Refund Launch

Customs will start accepting tariff refund requests Monday—but trade attorneys are urging importers to prepare backup options to get their money back.

They’re advising clients to act on multiple fronts: Request a refund using the new Customs and Border Protection process, if eligible; lodge a protest through the typical Customs process; and file suit at the US Court of International Trade.

“We are in one of those scenarios where we’re at the roulette table, and you’ve got to put a chip down on all three numbers,” said Lenny Feldman, managing partner, operating committee, at Sandler, Travis and Rosenberg.

One potential risk: The Department of Justice has until early June to appeal a trade court order that the government refund importers for what they’d paid under the unlawful levies—about $166 billion, according to Customs.

The Supreme Court in February struck down President Donald Trump’s use of the International Emergency Economic Powers Law, or IEEPA, as justification for many of his tariffs.

Customs will process refund requests through a new digital tool it’s launching Monday.

“Certainly it is time to celebrate, but because it’s progress, not because it’s over,” said Ted Murphy, a partner at Sidley Austin.

“It might get you money back,” he added, “but I’ll stress the ‘might,’ or it might not get you all your money back.”

Refund Priorities

Trade court Judge Richard Eaton ordered the agency to administer refunds using the Customs process known as liquidation.

Customs typically finalizes the amount of tariff owed within 314 days after an item is imported, though it may liquidate entries sooner. The trade court told the agency to liquidate entries, taking out the struck-down tariffs, and re-liquidate those that had already been liquidated.

The agency is starting refunds with the easiest cases. While there are some exceptions, that group includes those that haven’t liquidated yet, or were liquidated within the last 80 days.

Importers can file for refunds starting Monday for entries in that “Phase One” group. Customs hasn’t announced the details of how others will be handled.

The first step will be for importers to submit a list of the entries they contend are eligible for IEEPA refunds into the agency’s new system, known as the Consolidated Administration and Processing of Entries, or CAPE.

If everything checks out, Customs said it will pay the importer back, with interest, after the importer’s refund declaration is accepted.

Backup Plans

Attorneys cited numerous refund questions—starting with whether the government will appeal.

The Justice Department’s June deadline to appeal the trade court order falls before the 60-to-90 days Customs said it would take to start sending out money. That means an importer could see their refund request accepted, only to have a legal appeal hold up the funds before they get them.

“With this administration, all options are on the table,” said Christine Sohar Henter, a partner at Barnes & Thornburg, said in an email.

Attorneys cautioned that waiting for the CAPE process to play out without a backup plan can be risky—particularly for entries that already liquidated.

Take the procedural Customs mechanism known as a protest—a way for importers to challenge a Customs decision post-liquidation. Attorneys have been advising importers to file protests on their IEEPA entries, especially as they near 180 days post-liquidation, at which point the protest period closes and it gets much tougher to argue for a change. Lawyers have worried that if importers don’t file a protest on an entry, they could lose out on a refund.

But entries with an outstanding protest aren’t eligible for CAPE’s first phase of refunds. And it’s unclear whether filing a refund request in CAPE stops the clock on liquidation, Feldman said.

As a result, some importers are facing tough choices: Should they count on the CAPE refund to come through and hold off on filing a protest, even if they’re waiting for a refund while the 180-day protest deadline nears? Or should they jettison their chances for a CAPE refund during Phase One, and file a protest to make sure they don’t lose their refund right?

Attorneys said the answer largely depends on timing. Importers should protest entries nearing the 180-day deadline, even if it kicks the entry out of CAPE’s first phase, Murphy said.

Adam Harper, counsel at Bryan Cave Leighton Paisner, said he’s advising clients to drop protests once CAPE is operational if the protest was “exclusively to request a refund of IEEPA tariffs” and the entry would otherwise be eligible for Phase One.

Harper said he’s also advising clients “to be cautious about trusting or taking for granted that refunds will be received within the 60-90-day window.”

Murphy warned, “don’t sleep on your legal rights, because you might find out that you’ve lost your refund.”

“We’re not going to be surprised by anything” that develops as the refund process unfolds, he added.