This article explains what could happen if the Supreme Court rules that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are unlawful, and — critically — how importers can protect their right to recover duties already paid. Refunds are not automatic. You must preserve your claim now.
While this is all conjecture prior to a supreme court ruling, reviewing these basics and taking tentative steps can prove invaluable. A ruling overturning these tariffs itself could establish clarification for securing a refund. Will there be a workable solution for resource constrained small to medium size companies, for example?
It has been reported that investors are betting that the Supreme Court will strike down IEEPA tariffs. Some Wall Street firms are offering firms around 10 to 20 cents for every dollar they paid in "reciprocal" tariffs. They are also offering settlements for fentanyl related tariffs (although these are considered less likely to survive a legal challenge).
Typical Entry Process Flow regarding updated/ corrected entries
Notes on US Customs Entry, Liquidation and Protests
This information is primarily to encourage importers to discuss with their brokers and attorneys. Our team of resources can assist in this regard.
Keep in mind that the IEEPA tariffs are only one of may likely import fees. They do NOT include such things as:
The reciprocal duties can be identified by their separate Chapter 99 designation. This is distinct from (and in addition to) the MFN/ column 1 tariff classification.
IEEPA gives the President authority to regulate commerce during declared national emergencies. If the Court finds that IEEPA (or its use to impose tariffs) lacked legal authority, duties collected under IEEPA could be declared unlawful. Historically, courts have allowed refunds in similar circumstances, but only for parties that preserved their legal rights. Having said that, this case is historical in both scale and scope so the rules this time may be different.
A liquidated entry is the final determination by U.S. Customs and Border Protection (CBP) of the duty. Once liquidated, the entry is considered legally complete. CBP normally liquidates an entry within one year of release (the entry release date).For certain cases, CBP may extend the liquidation period to 2–3 years.
Importers have 180 days from the date of liquidation to submit a request - or protest- to correct or recover duties.
For e-commerce and parcel imports: The transition to Entry Type 11 and the informal liquidation after duty payment definitely shortens the protest window. The sheer number of entries generated from consolidations is a major concern in presenting a protest.
The primary administrative route is the CBP protest. Importers have 180 days from the date of liquidation to file a protest. A timely protest preserves a refund claim that can be litigated in the Court of International Trade (CIT) if necessary. For liquidated entries, the protest route may be an option. Another options to consider is the CBP reconciliation program which can flag items for future revision.
Likely, many of your IEEPA related entries may already have liquidated. But it can only assist if you file a protest for those still within the 180 days.
Data on the relevant Chapter 99 IEEPA tariff is readily available via Customs ACE Portal to CBP. But it is likely individual importers will have to extract this data for Post Summary Correction of non liquidated entries.
For unliquidated entries, file a PSC and request that CBP not liquidate the entry. This does not guarantee a refund, but it can flag the entry and preserve administrative options. PSC filings are usually resolved within one to several months. Discuss with your customs brokers regarding their charge for these filings. The amount of filings will be unprecedented so there will likely be some automated processes being developed.
If the Supreme Court overturns EEPA tariffs, it may direct importers to file suit in the Court of International Trade (CIT) duty recovery. This process have never been done at this scale. They typically involve lengthy - and costly - legal processes that stretch out over several years.
We are advising importers to take the simple first steps of capturing all data related to IEEPA tariffs and to file a PCS prior to liquidation.
Drawback programs refund duties when imported goods are re-exported or destroyed. Drawback processes do not apply to recover duties unlawfully collected.
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4. Sample protest statement
U.S. Shoe Corp. v. United States — When a tax was found unlawful, exporters who filed protests recovered refunds; those who did not generally did not. The lesson: preserve the right to challenge.
If you did not preserve your claim, recovery becomes harder. Congress or CBP could create a special refund program — but that requires political will and is uncertain. A Supreme Court ruling may also clarify the rights of the importers with some further allowances. Filing a protest when possible never harms your position.
So the time frame to a decision may be within the time that the first entries subject to IEEPA may start liquidating.
Its not to early to start extracting data regarding IEEPA-based tariffs. It is likely this conservative supreme court and their "strict textual reading" of statutes will find these tariffs unconstitutional.
In this event, do not assume refunds will be automatic. At least take the first step of identifying the IEEPA duties already paid and prepare a Post Summary Correction request.
Disclaimer: The information is provided for general information only. It is not intended as legal advice.