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Tariff Refund Appeal Centers on $10 Billion Dispute
Government Says Final Payments Need Court Orders Before Customs Can Repay Importers
Key Takeaways:
- Judge Richard Eaton urged Trump administration lawyers June 9 to withdraw an appeal of his order requiring $166 billion in tariff refunds.
- Customs officials said about $10 billion to $11.4 billion remains disputed, while nearly $100 billion has been accepted through a new portal.
- Customs is preparing to repay affected importers if required, as the appeal focuses on Phase 3 refund claims.
A judge urged the Trump administration to back off its appeal of his order to fully refund $166 billion in tariffs overturned by the Supreme Court, saying it was unnecessary and would only create more delays for importers to get their money back.
Customs and Border Protection has been processing billions of dollars in refund claims through a new online portal for more than a month, yet a sticking point has emerged over how to handle tariff payments that the government contends are final and can’t be reimbursed without a court order for each affected importer.
At a hearing June 9 in the U.S. Court of International Trade, a customs official confirmed for the first time that the government believes about $11.4 billion is at issue. A Justice Department lawyer later put the figure at about $10 billion, suggesting the dispute is narrow.
“Even I think that’s real money,” Judge Richard Eaton shot back in his packed Manhattan courtroom as many laughed.
Eaton heard arguments for more than an hour on whether he should lift a freeze on his March order requiring that Customs repay all affected importers — a freeze he put in place with the understanding that the government intended to repay all importers but needed time to develop the portal, particularly for processing more complex entries.
Yet the Trump administration earlier this month appealed Eaton’s order, even as it continued the refund process. At the heart of the dispute is whether a judge has authority to order refunds nationwide, even if importers did not sue in the trade court. The U.S. argues Eaton cannot do so because the Supreme Court struck down the use of so-called universal injunctions.
“My appeal to you is to withdraw your appeal,” Eaton told the government lawyers at the hearing. “You win nothing if the Court of Appeals says my order is unlawful.”
The government also argues it can’t refund final tariff payments without a court order because there is no statutory authority for CBP to reopen final tariffs. The lawyer for the plaintiffs argued that theory is an incorrect interpretation of the law.
The dispute is the latest fallout over the Supreme Court’s ruling that President Donald Trump did not have authority to issue tariffs under the International Emergency Economic Powers Act. The legal fight over refunds prompted Customs to create the new online portal.
CBP Executive Assistant Commissioner Susan Thomas took the witness stand to answer Eaton’s questions at the hearing. Eaton said he wanted to question her since he believed that lawyers — in this case the Justice Department — sometimes push their legal posture “beyond what is useful for the client” and that he believes Customs wants to repay every penny.
Thomas testified that nearly $100 billion in IEEPA tariff refunds have been accepted for processing through the online portal as Phase 1 wraps up, with almost $29 billion in tariffs eligible for refunds in Phase 2. The appeal is focused on Phase 3.
Thomas said that Customs is preparing to repay importers affected by the appeal, should doing so become necessary. She testified that about $23 billion in refunds have been sent to Treasury to be paid out, with another $480 million coming this week. She said the refund issue is a “historic, unprecedented challenge” for the agency.
Justice Department attorney Claudia Burke argued the appeal is necessary in part because there could “very soon” be a repeat of the refund process if the Supreme Court also overturns the 10% global tariffs Trump issued after his IEEPA levies were blocked.
Sara Albrecht, CEO of Liberty Justice Center, one of the groups involved in the litigation, said after the hearing that she’s pleased with how Customs has addressed the “seriousness of these issues” but said all of the money needs to be returned.
“Most of these entries are from small businesses that are the backbone of our country,” she said. “They’ve effectively had to loan this money to the government for the last year. They just want it back, and they want to get back to running their businesses.”
The case is V.O.S. Selections v. United States, 25-cv-66, U.S. Court of International Trade (New York).
