Key facts
- A federal judge questioned U.S. Customs and Border Protection regarding the process for refunding billions in illegally imposed tariffs.
- The Justice Department argues only companies involved in lawsuits challenging the tariffs should receive refunds.
- CBP has accepted $90 billion in refund claims and directed $23 billion to the Treasury.
- The agency currently limits refunds to businesses with recently finalized tax bills.
- CBP is working on a system for older shipments, expected by the end of July.
- Plaintiff companies are seeking class certification to simplify the refund process for all affected importers.
A federal judge questioned a U.S. Customs and Border Protection official on Tuesday regarding the government's process for refunding billions of dollars in tariffs that importers paid before the Supreme Court ruled President Donald Trump illegally imposed higher duties.
Judge Richard Eaton of the U.S. Court of International Trade expressed a desire for details to decide whether to order the government to expedite and broaden its tariff refund system. He acknowledged the online system developed by CBP was functioning well but noted that a Justice Department appeal of his order to refund all companies, not just those that sued, threatened the process.
The Justice Department contends that only companies involved in the over 4,000 lawsuits challenging the tariffs are eligible for refunds, a question currently before the U.S. Court of Appeals for the Federal Circuit.
In March, Eaton ordered CBP to establish a system for "all importers of record" to apply for their share of the $166 billion collected before the Supreme Court invalidated the tariffs. The agency launched an online system on April 20, initially prioritizing applications from importers whose tax bills had not been finalized.
The pace and scope of the refund process became contentious, leading Eaton to direct CBP Commissioner Rodney Scott to appear in court. However, the Justice Department appealed this mandate, and the Federal Circuit temporarily suspended the requirement for Scott to testify, with CBP's executive assistant commissioner for trade, Susan Thomas, appearing instead.
During the hearing, Thomas informed the judge that claims totaling $90 billion had been accepted for processing, and $23 billion had been directed to the Treasury for refunds. CBP has thus far limited applications to businesses with recently finalized tax bills. Thomas stated that a system for older shipments was expected by the end of July, but the agency would not process cases beyond the 80-day window while the appeal is ongoing.
Government lawyers argued that the appeal involved only 6.9% of the collected funds and that most eligible imports could be processed through the existing system or pending lawsuits. Lawyers for the plaintiff companies countered that $11 billion was substantial and that it would be unconstitutional to pay less tariffs than other companies that also paid the invalidated duties. They proposed certifying their case as a class action.
Eaton deferred ruling on the class action possibility, expressing a preference for CBP to manage the refund process directly to achieve the goal of his broad order.