The Trump administration’s recent appeal of a Court of International Trade order granting relief to importers over invalidated levies is adding fresh uncertainty to the federal process for handling refund claims.
The Department of Justice on June 2 formally appealed CIT’s April order directing the federal government to universally issue refunds for now-defunct tariffs enacted under the International Emergency Economic Powers Act.
The move could set up new hurdles for certain companies seeking to recover funds and potentially disrupt the overall program, according to Michael Lowell, chair of the Global Regulatory Enforcement Group at law firm Reed Smith.
The appeal, filed with the U.S. Court of Appeals for the Federal Circuit, followed a May 29 court filing from DOJ arguing that CIT exceeded its authority by extending relief to “finally liquidated” entries and importers that have not filed cases in the court.
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Billions already in motion
As of May 22, CBP had accepted roughly $85 billion in potential and certified tariff refunds for processing through the agency’s Consolidated Administration and Processing of Entries system. About $20.6 billion had already been approved and sent to the Treasury Department for disbursement, according to a May 26 court filing.
At the outset of the program, the government estimated that total refunds could ultimately reach as much as $166 billion.
Lowell weighed in on the impact of the new legal development in written responses to emailed questions.
What the appeal actually changes
For companies that have already received refunds under the first phase of the CAPE program, the appeal shouldn’t matter much. “CAPE Phase 1 refund requests won’t be impacted by the government’s recently announced position,” he said.
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But the picture looks different for companies still waiting. “For companies with remaining refund requests still to be submitted under a future phase of CAPE, there may be risk that they can’t recover without bringing suit in the Court of International Trade,” he said.
The government’s argument focuses on entries that “liquidated” — meaning the duty calculation became final — more than 80 days before the importer filed a refund request. DOJ contends those entries require an individual court order, which would effectively force an importer-by-importer approach rather than a blanket refund.
Delays and barriers ahead
That position “may delay further CAPE functionality from being deployed, which would, in turn, delay the remaining refund process for importers,” Lowell said.
When asked about the administration’s ultimate strategy, he was blunt. “The government has already refunded over $20 billion in IEEPA tariffs. The end game is clear: the government is trying to keep as much of the remaining money as possible.”
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Lowell added that the government is likely to create “barriers for importers trying to recover funds,” though he noted it’s too early to say whether that strategy will work.
What companies should do now
He said the immediate calculus for affected businesses hasn’t changed. Companies should keep preserving their legal right to a refund on any entries that weren’t eligible for processing under CAPE Phase 1.
They should also track the appeal closely, so they can “make an informed decision on whether to bring suit in the CIT.”
The appeal is now before the Federal Circuit. No timeline has been set for oral arguments or a ruling. The case adds another layer of difficulty to what was already the largest tariff refund process in U.S. history — one that importers hoped would be straightforward but is proving anything but.
