The US government today opened an online portal for submitting tariff refund requests, two months after the Supreme Court ruled that President Trump illegally imposed the International Emergency Economic Powers Act (IEEPA) tariffs. The refunds will be paid to importers and customs brokers, while consumers who paid higher prices because of the tariffs won’t necessarily get anything back.
US Customs and Border Protection (CBP) opened the Consolidated Administration and Processing of Entries (CAPE) portal for IEEPA refunds. “Importers and authorized customs brokers can now file their CAPE Declarations,” said a CBP bulletin issued today.
Over 330,000 importers paid a total of $166 billion in IEEPA duties as of March 4, a March 6 court filing by a CBP trade office official said. Despite moving ahead with the portal to comply with the Supreme Court ruling, it appears the Trump administration is looking into how it can avoid paying back the entire $166 billion.
“There’s alternative authorities that perhaps could reduce that number quite a bit, but it’s a work in progress,” National Economic Council Director Kevin Hassett told Fox Business this month when asked if the government will refund the entire amount. Hassett said reducing the refunds is something that US Trade Representative Jamieson Greer “is studying very carefully.”
A long process and glitches expected
This is the first phase of the CAPE process, which “is designed to consolidate refunds of IEEPA duties including interest rather than processing refunds on an entry-by-entry basis,” today’s CBP bulletin said. The government says refunds will generally be issued 60 to 90 days after acceptance of a CAPE declaration.
As The New York Times wrote today, it would not be surprising if the brand-new refund process suffers from delays in processing refunds:
Katie Hilferty, who oversees the trade practice at the Washington law firm Morgan Lewis, described the refund process as novel and complex, adding that she would be “pleasantly surprised” if refunds were paid as quickly as the government said. But, she added, given the scale of the operation, “I would not be surprised if there are technical glitches or other processing errors that occur.”
CBP said the first phase of CAPE refunds is “limited to certain unliquidated entries and certain entries that are no more than 80 days past liquidation.” It’s not clear when the remaining refunds will be issued as the CBP says it is still working out how to implement future phases.
The government has been required to provide updates to the US Court of International Trade. “CBP continues to identify and evaluate more complex refund scenarios and determine what additional CAPE capabilities are necessary to address those scenarios,” the agency said in a March 31 court filing. Phase 1 “will be capable of processing approximately 63 percent of entries for which IEEPA duties were paid or have been deposited,” it said.
Trump imposed new tariffs under Trade Act
The CBP told the court on April 14 that 56,497 importers had completed the process to receive electronic refunds, and that more importers “continue to complete the process to receive electronic refunds daily.” The importers were asked to complete that process before submitting the CAPE declarations needed to obtain refunds.
Even if the government pays back all the tariffs that were ruled to be illegal, Trump hasn’t given up on imposing new tariffs. He reacted to the Supreme Court ruling by immediately imposing a 10 percent tariff, citing authority under the Trade Act of 1974. As we previously wrote, it has been speculated that businesses required to pay the Trade Act tariff “may instead get a gross refund, possibly subtracting Trump’s latest 10 percent global tariffs from the total of IEEPA tariffs owed.”
A coalition of US states sued Trump in response to the 10 percent tariff. “Having lost the battle on IEEPA, the President now dusts off a separate statute: Section 122 of the Trade Act of 1974, 19 U.S.C. § 2132, which is another statute that has never been used to impose tariffs. Indeed, it has never been used at all,” the states’ lawsuit said.
The Trump administration also “opened investigations into dozens of other countries’ trade practices” under another provision of the Trade Act, and these “inquiries are expected to result in tariffs similar in magnitude to those that the Supreme Court struck down,” The New York Times article said.
Trade group sees problem in refund system
There is a separate dispute over who should receive refunds in cases where surety bonds were issued for imports but the importer or broker failed to pay the tariff. A trade group that represents surety and insurance professionals told the court on Friday that its members have paid millions of dollars to CBP “on entries where importers (or their brokers) have failed to pay estimated or liquidated tariffs issued under the authority of the International Emergency Economic Powers Act.”
“Customs has not included (or even mentioned) sureties in its development of CAPE and its reports to this Court, despite the fact that limiting refunds to importers and brokers will inevitably lead to IEEPA tariff refunds being issued to importers, instead of to the sureties who actually paid the IEEPA tariffs directly to Customs,” the International Trade Surety Association said in the court filing.
The group said it “advised Customs of the need to include sureties in Phase One of CAPE. While Customs has acknowledged our concerns, they have not indicated to us that the omission will be corrected, nor has Customs mentioned sureties or this issue in its presentations to the Court.”
