Judge orders US Customs to process refunds on illegal Trump tariffs

Highlights:

• Judge orders refunds with interest for illegal Trump tariffs
• Customs faces unprecedented task of reviewing 70 million entries
• Importers seek simple refund process to avoid legal hurdles

A US trade court judge on Wednesday ordered the government to begin paying potentially billions of dollars in refunds to importers who paid tariffs that the Supreme Court ‌said last month were collected illegally.

Judge Richard Eaton of the US Court of International Trade in Manhattan ordered the government to finalize the cost of bringing millions of shipments into the US without assessing a tariff, according to a court filing. He ordered the refunds to be made with interest.

When merchandise is brought into the United States, an importer pays an estimated amount at entry which is then finalized around 314 days later, a process known as liquidation. Eaton directed Customs and Border Protection to finalize the entry cost on shipments without the tariff being assessed, resulting in a refund.

"Customs ⁠knows how to do this," he told a court hearing on Wednesday, according to a recording on the court's website. He said the agency should be able to program its system to issue refunds, which are regularly issued when an importer overpays on an estimated duty.

"They do it every day. They liquidate entries and make refunds," he said.

Eaton also set a hearing for Friday in which he asked for updates on CBP's refund plans. He said in his order that the court's chief judge indicated that Eaton is the only judge who will hear tariff refund cases.

Customs and Border Protection has said in court filings that the task of finalizing entry costs without assessing a tariff was "unprecedented" in scale and could require manual review of more than 70 million entries. The agency had said in other court filings it wanted up to four months to assess its options for paying refunds.

CBP did not respond to a request for comment.

"The ‌language in ⁠this order strongly suggests an across-the-board approach that importers are entitled to IEEPA refunds, full stop," Ryan Majerus, a former senior Commerce official who is now a partner with King & Spalding, said. "The government may challenge the order's scope or, at minimum, ask for more time to enable US Customs to undertake what will undoubtedly be a monumental task here."

The US government collected more than $130 billion in illegal tariff payments, which were central to Trump's trade policy. The Supreme Court did not provide guidance for issuing refunds, creating confusion ⁠over how importers would be reimbursed.

The order by Eaton came in a case brought by Atmus Filtration, which said in court filings it paid about $11 million in the illegal tariffs.

Attorneys for Atmus did not respond to a request for comment.

Atmus' lawsuit is among the roughly 2,000 that have been filed with the trade court seeking a refund of the ⁠tariffs imposed under IEEPA, or the International Emergency Economic Powers Act.

Eaton said he did not want to have to hear each case. "We want to work out a method by which those importers can make a claim for duties that were unlawfully applied."

More than 300,000 importers paid the tariffs. The vast majority of importers ⁠are smaller businesses and they are hoping that Customs officials adopt a simple, low-cost system to pay reimbursements. Many told Reuters they might abandon their refund if they had to sue or go through a cumbersome Customs administrative process.

"There should be no impediment to CBP issuing refunds," said George Tuttle, a trade attorney.