U.S. Customs and Border Protection cannot currently comply with a federal court order to begin issuing some refunds for Trump administration tariffs that were invalidated last month, the agency stated in a filing Friday.
Earlier this week, the Court of International Trade directed CBP to disregard tariffs President Donald Trump installed using the International Emergency Economic Powers Act when finalizing liquidation for goods entering the country. CBP stopped collecting those tariffs on Feb. 24 following a Supreme Court ruling that deemed them illegal.
In Friday’s filing, CBP said it was unable to comply with the order because its technology and operations were not well suited to the task, particularly given the scale of such an undertaking. However, the agency confirmed that it aims to develop a process to streamline refunds, targeting an implementation date in 45 days.
Under the process, CBP expects to require importers to detail entries subject to IEEPA tariffs to the agency. From there, the agency’s Automated Commercial Environment, a portal that assesses and finalizes entries, would validate each submission and recalculate tariffs owed while removing the IEEPA levies. The system would still require CBP personnel to verify and certify the refunds, with ACE aggregating the total amounts by importer and liquidation date, according to the filing.
“In other words: the court ordered refunds — but the operational mechanics of actually issuing them are still being built,” James Kim, an international trade partner at ArentFox Schiff, said in a LinkedIn post Friday.
The agency estimates that there have been roughly 53 million entries subject to IEEPA tariffs as of March 4, accounting for roughly $166 billion in deposits. The agency further said because CBP personnel must validate all refund requests, it would take over 4 million labor hours to complete returns for all IEEPA tariffs.
Meanwhile, due to its use of an automated process to liquidate entries, which locks in the tariff amount owed on shipments roughly 300 days after entry, “it is not possible for CBP to immediately prevent additional entries from liquidating with IEEPA duties,” the filing says.
According to Friday’s filing, ACE liquidates entries automatically each Friday morning, with more than 700,000 scheduled to undergo the process earlier today. Of those, CBP said that roughly 339,000 were subject to IEEPA tariffs.
“To stop the liquidation of formal entries with IEEPA duties that are already scheduled to liquidate, CBP would need to manually extend the liquidation date or would need to reprogram ACE to stop the liquidation of all entries scheduled to liquidate,” the filing says, noting that the agency cannot quickly or efficiently isolate entries charged with IEEPA tariffs.
CBP said separating entries facing IEEPA tariffs is made particularly difficult because some importers calculate their total duty amount by combining all applicable levies, including those that remain in place. The agency also said that many shippers have yet to register for electronic refunds even after it ceased issuing paper-based returns in February. Since the change, CBP estimates that it has been unable to process 7,700 refunds, according to the filing.
“For importers that paid IEEPA duties, the key takeaway is that the refund process is likely coming, but not immediately,” Kim said. “Much will depend on how the court responds to CBP’s inability to comply and whether this proposed ACE mechanism becomes the pathway for issuing refunds.”
