After SCOTUS Tariff Ruling, US Prepares To Process $166 Billion In Refunds

In yet another setback to Trump's tariff powerplay, the US Customs and Border Protection (CBP) is preparing to create a tariff refund system after the United States Supreme Court ruled the duties illegal.

Customs and Border Protection (CBP) official Brandon Lord in a recent court filing noted that the federal agency is developing a process that'll allow importers to recover payments made under the now-invalid tariffs.

The declaration comes before government lawyers met a federal trade judge to work out a broad settlement framework to return about $166 billion in tariff payments to around 330,000 importers, according to a Reuters report.

“This new process will require minimal submission from importers,” Lord penned in his declaration filed with the US Court of International Trade.

Meanwhile, government lawyers also began meeting with Judge Richard Eaton, who is overseeing about 2,000 lawsuits filed by importers such as FedEx and L’Oréal, seeking repayment of the duties.

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On Friday, after concluding the meeting with the government lawyers, he said in a court filing he was amending that order to no longer require "immediate compliance," and appeared to be giving CBP time to carry out the new system. Eaton said he changed his order after considering the "declaration of Brandon Lord."

What's The Tariff Refund Mechanism? 

Under the proposed system, importers would be required to submit a declaration through CBP’s Automated Commercial Environment (ACE) system detailing the tariff payments they made. The agency would then verify the claims before issuing refunds with interest.

Each importer would receive a single payment from the US Treasury Department, regardless of how many separate shipments were involved. The process is designed to allow companies to recover the duties without having to file lawsuits individually.

Lord said in the court filing that the customs agency expects importers to submit a declaration through the ACE system outlining tariff payments, which would then be validated before refunds are processed with interest. Importers would not need to pursue litigation to receive the repayments.

However, Lord noted that the agency cannot immediately comply with Judge Richard Eaton’s earlier order to automatically return the funds using existing systems.

“Its existing administrative procedures and technology are not well-suited to a task of this scale,” he said.

Lord said processing refunds manually under the current system would require more than 4 million hours of labour, as each shipment’s paperwork would need to be reviewed individually.

The declaration also showed that relatively few importers have registered for the CBP’s electronic refund system. Of the 330,000 importers affected, only 21,423 had enrolled in the system as of early February.

The US Chamber of Commerce embraced the proposed 45-day refund plan whilst noting that “this proposal would spare the hundreds of thousands of small businesses who are owed refunds from having to litigate to obtain them.”