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U.S. Customs and Border Protection (CBP) began processing refunds on April 20 for the approximately $170 billion in International Emergency Economic Powers Act (IEEPA) tariffs collected before the Supreme Court ruled against the Trump administration’s use of that sanctions law to collect import taxes.
The refunds are being processed through a new electronic portal within the CBP’s standard system, in accordance with an order from the U.S. Court of International Trade, which the Supreme Court tasked with providing remedy after ruling against the legality of the tariffs. (See this article for more details on the refund process.)
The Court of International Trade also heard arguments on April 10 in a lawsuit brought by 24 states and multiple businesses to halt the 10% worldwide tariff President Donald Trump imposed almost immediately after the IEEPA tariffs were struck down.
In his order imposing the broad 10% tariff — which replaced a similar 10% global tariff on imports put in place citing IEEPA as the legal authority — Trump became the first president to invoke Section 122 of the Trade Act of 1974, which Congress passed to allow the president to combat emergencies around balance-of-payments to other countries or rapid dollar devaluation.
The tariffs are temporary in nature, with a maximum window of 150 days. Attorneys for the Trump administration argued during legal proceedings around IEEPA duties last year that those duties were necessary because the administration could not use Section 122.
Multiple members of the administration have said that the short-term Section 122 tariffs are intended to bridge the gap between the overturned IEEPA tariffs and new tariffs expected to result from investigations under Section 301 of the Trade Act of 1974. Those new tariffs, expected to replace many of the country-by-country tariffs previously imposed under IEEPA and now subject to refund, are likely to go into effect this summer.
Grant Thornton insight:
If the lawsuit against Section 122 is successful, it could lead to billions more dollars in tariffs being refunded to businesses, in a similar manner to the electronic refunds being issued to importers of record for the IEEPA tariffs. However, the lawsuit almost certainly will not see a conclusion before the July 24 expiration of the temporary duties.
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