June Newsletter | Who Gets the IEEPA Refund?

TOP NEWS: 

The DOJ’s Appeal Could Change Everything

The Department of Justice (DOJ) filed a notice on May 29th that it intends to appeal the Court of International Trade’s (CIT) injunction requiring refunds of all IEEPA tariffs. 

Specifically, the DOJ argues that:

• The CIT exceeded its jurisdiction by issuing what it characterizes as a nationwide or "universal" injunction. 
• Courts generally should provide relief only to the plaintiffs who brought the case, not to all similarly situated importers. 
• Requiring CBP to refund duties nationwide before the appeals process is completed could create significant administrative and financial consequences.
• Once billions of dollars in refunds are issued, it could be difficult or impossible for the government to recover those funds if a higher court later narrows or overturns the CIT's ruling. 

The appeal also appears intended to protect the government from the immediate obligation to refund what Judge Eaton has estimated could be as much as $166 billion in duties. The DOJ is seeking a stay of the injunction so that refunds would not have to be issued to non-plaintiff importers while the appeal is pending.

This matters to importers because the appeal creates some uncertainty. Will all importers ultimately qualify for refunds or only litigants. Will the CAPE refund process remain available to non-litigants and how will CBP treat drawback claims and other refund mechanisms if nationwide refunds are upheld. 

For importers and drawback claimants, the DOJ's filing is best viewed as an effort to narrow the potential refund obligation and delay implementation while the courts determine the proper scope of relief. The underlying question of whether the government can retain unlawfully collected IEEPA duties appears increasingly difficult for the government to defend. The major legal battle now is over who gets the refunds and how they will be administered.

OTHER TARIFF NEWS: 

The 10% Tariff Is Expiring July 24. Don’t Wait for What Replaces It.

On May 7th, the U.S. Court of International Trade (CIT) ruled that the administration exceeded its authority under Section 122 when it imposed the 10% global tariff. The court concluded that the economic conditions cited by the administration did not meet the specific "balance-of-payments" requirements Congress intended when it enacted Section 122. 

While the government appealed the decision, and the U.S. Court of Appeals for the Federal Circuit issued a stay while it considers the appeal. As a result, CBP continues to collect the Section 122 duties from most importers. 

Unlike the IEEPA litigation, the CIT did not issue a nationwide injunction. Relief was limited to the specific plaintiffs. All other importers remain subject to the tariff unless they file their own legal challenge or a future court order expands relief. 

Currently, there is no CAPE refund process for Section 122 tariffs. Importers seeking potential Section 122 refunds should carefully monitor liquidation dates and preserve protest and litigation rights. 

Section 122 only authorizes tariffs for 150 days, so unless Congress acts, the current 10% tariff is scheduled to expire on July 24, 2026. 

Many trade attorneys expect the administration to rely on other tariff authorities before the July expiration date, particularly the Section 301 investigations already underway and the existing and expanded Section 232 actions. 

Several investigations are expected to conclude before July 24, potentially allowing replacement tariffs to take effect as the Section 122 tariff expires. 

The key difference between the IEEPA and Section 122 cases is that the Section 122 ruling currently benefits only the plaintiffs. Unless the Federal Circuit affirms the CIT and expands the remedy—or additional importers file successful lawsuits—most importers should assume they will continue paying the 10% tariff through at least the appellate process. 

For clients with substantial Section 122 exposure, now is the time to:

• Identify affected entries. 
• Track liquidation status. 
• Evaluate whether protests, test cases, or litigation are warranted. 
• Preserve documentation supporting future refund claims if the tariffs are ultimately overturned. 

ITM is paying very close attention to all of these developments and will continue to relay information as it becomes available.