Customs says US$11.4 billion is tied up in US tariff refund appeal
CBP has been processing billions of US dollars in refund claims through a new online portal for more than a month
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[NEW YORK] A judge urged the Trump administration to back off its appeal of his order to fully refund US$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 (CBP) has been processing billions of US 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 therefore cannot be reimbursed without a court order for each affected importer.
At a packed hearing on Tuesday in the US Court of International Trade, a customs official confirmed for the first time that the government believes about US$11.4 billion is at issue. A Justice Department lawyer later put the figure at about US$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 in attendance laughed.
Eaton heard arguments for more than an hour on whether he should lift a freeze he placed 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 the authority to order refunds nationwide, even if importers did not file suit in the trade court. The government argues that Eaton cannot do so because the Supreme Court struck down the use of so-called universal injunctions.
The government also argues it cannot 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 the theory is an incorrect interpretation of the law.
The dispute is the latest fallout over the Supreme Court’s ruling that US President Donald Trump did not have authority to issue tariffs under the International Emergency Economic Powers Act, or Ieepa. The resulting 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 that he wanted to question her directly 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.
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Thomas said that CBP is preparing to repay the importers affected by the appeal, should doing so become necessary. She testified that about US$23 billion in refunds have been sent to the Treasury to be paid out so far, with another US$480 million coming this week. She said that the refund issue is a “historic, unprecedented challenge” for the agency.
Eaton repeatedly suggested that the Trump administration should drop its appeal, arguing it got in the way of the government’s plan to repay all importers. He suggested some members of the public might think the government was trying to keep some of the money it collected improperly.
“My appeal to you is to withdraw your appeal,” Eaton told the government lawyers. “You win nothing if the Court of Appeals says my order is unlawful.”
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 have 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.” BLOOMBERG
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