Potential Process for Duty Refunds if IEEPA Based Reciprocal Tariffs Are Struck Down by the Courts

Written by: James Min, Managing Partner and Chelsea Ellis, Counsel

August 21, 2025

I. Introduction

This year has been eventful for importers and practitioners alike. The use of the International Emergency Economic Powers Act (“IEEPA”) for “reciprocal” tariffs has been novel. As a result, we have seen a burst of litigation challenging these new tariff measures. In the cases of V.O.S. Selections, Inc. v. Trump and Oregon v. Trump, plaintiffs have challenged the President’s authority to base increased tariffs on emergency powers provided by IEEPA, which allows the regulation of imports but not explicitly imposition of tariffs.[1] On May 28, 2025, the U.S. Court of International Trade (“USCIT”) held in the affirmative for the V.O.S. plaintiffs, which is now pending appeal.

This article is not about the merits of the lawsuits, but rather, on the hypothetical case if the plaintiffs prevail. What will happen to all the importers who were required to pay the “reciprocal” tariffs and how can they recover those potentially unlawful duties? Customs and Border Protection (CBP) collected over $28.5 billion in duties in July 2025, a 273% increase year-over-year. Given the large amount of money at issue, what are the mechanisms that importers could potentially use to recover those duties? Based on past cases, there may be a bifurcated duty refund process – court ordered and an administrative process – but as with many trade related issues these days, the potential process is not crystal clear.

II. A Bifurcated Refund Process?

If the courts ultimately strike down the IEEPA-based tariffs, the mechanism for refunding duties would likely proceed along two parallel tracks: (1) Importers who were plaintiffs in the litigation could obtain refunds directly via court order; and (2) Non-plaintiff importers may be able to seek refunds through CBP-administered procedures.

A.   Track One — Court-Ordered Refund Process

For the plaintiffs in the IEEPA cases, the USCIT can both “enter a money judgment”[2] and “order any other form of relief that is appropriate,”[3] including directing CBP to reliquidate the plaintiffs’ covered entries and return unlawfully collected duties.

Depending on the court’s decision, CBP could liquidate or reliquidate plaintiffs’ entries at the lawful rate and issue refunds. Where plaintiff entries have already liquidated, liquidation does not categorically bar the court from ordering reliquidation or equivalent monetary relief to make plaintiffs whole.[4] The plaintiffs’ refunds would include both principal and statutory interest, as CBP must pay interest on excess duties[5] at the IRS overpayment rate, which adjusts quarterly[6] and generally runs from the duty deposit date until liquidation or reliquidation, and then through payment.

CBP refunds the importer of record for covered entries via ACH refund (if enrolled) or U.S. Treasury check. Filing CBP Form 4811 can change where the check is mailed, but not who is entitled to the refund.

B.    Track Two — Administrative Refund Process

If USCIT’s injunction is affirmed and the final disposition strikes down the IEEPA-based tariffs, non-plaintiff importers may not automatically receive refunds. Instead, CBP could establish an administrative refund process, either announced through the Cargo Systems Messaging Service (CSMS) or through a new regulatory process. In prior contexts (e.g., Section 301 and Section 232 exclusion programs), CBP has allowed importers to pursue refunds through two mechanisms:

• Unliquidated Entries: Importers may file Post-Summary Corrections (PSCs) in ACE to remove the unlawful tariff component from entry summaries. A PSC generally must be filed within 300 days of entry and no later than 15 days before the scheduled liquidation.

• Liquidated Entries: Importers may file a protest under 19 U.S.C. § 1514 within 180 days of liquidation, arguing that the duties were “not required by law” and therefore refundable under 19 U.S.C. § 1520(a)(1). If CBP denies or fails to act on a protest, importers may request accelerated disposition under 19 C.F.R. § 174.22. After 30 days, the protest is deemed denied, which preserves the importer’s right to seek judicial review at the USCIT under 28 U.S.C. § 1581(a).

III. Legal Precedent: 1998 Harbor Maintenance Fee Case

A historical view of the Harbor Maintenance Fee (“HMF”), while not perfectly analogous to the IEEPA-based tariffs, offers some comparative value. The HMF was established by Congress in 1986 to fund harbor maintenance and initially applied to both imports and exports. In 1998, the U.S. Supreme Court ruled in United States v. U.S. Shoe Corp that the HMF, as applied to exports, violated the Export Clause of the U.S. Constitution. Pursuant to the Court’s decision, the HMF could no longer be collected on exports.

As a result, on August 28, 1998, USCIT ordered an immediate refund of undisputed export HMF payments to exporters who were also plaintiffs.  The order applied to payments received by Customs within two years of an exporter's filing of a complaint with the court, and required plaintiff exporters to file a claim with CBP’s predecessor agency.

Subsequently, in 2000, the U.S. Court of Appeals for the Federal Circuit in Swisher International, Inc. v. United Statesheld that there is no limitation on the period within which a refund request may be filed under Customs Regulations, which were later implemented.[7] Exporters who never filed a complaint under the court procedure could seek HMF refunds administratively. The court also held Customs’ denial of an export HMF refund request was a protestable decision under 19 U.S.C. § 1514.

IV. Practical Considerations

It will be worthwhile to see whether the court’s treatment of litigants versus non-litigants differs, should the plaintiffs succeed on the merits of the IEEPA-tariff challenges, that is, whether the court’s judgement is limited only to plaintiffs in those cases or applicable to all importers. Presumably, CBP would have to implement a new regulatory process to accept refund requests or it could rely on preexisting procedures for protests or duty refunds. Either way, given the expansive nature of the IEEPA-based tariffs, the volume of refunds will likely be daunting.

Moreover, while the importers of record (IOR) qualify for refunds, the process would likely be complicated in cases of informal entries handled by intermediaries such as express consignment operators, who often serve as the nominal consignee and the IOR. Intermediaries may have to create their own refund processes to pass refunded duties and interest received from CBP onto their customers.

It is also possible that if the U.S. Government loses in court, it may seek alternatives to reimpose the tariffs under Section 301, 338, or other trade remedy provisions, further delaying duty refunds.

V. Conclusion

Ultimately, irrespective of the final judicial decision, disparate outcomes could result for smaller importers who lack ACH or ACE accounts with CBP or the resources to manage the process. To preserve their rights, IORs should continue to monitor the court cases and liquidation dates of their entries, file Form 4811 for address changes, and communicate with their customs brokers.

Given the magnitude of potential refunds in question, express delivery companies and customs brokers who may have served as the IOR should also consider establishing systems to track and disburse duty refunds they may receive for their customers.

For importers, the headaches of duty refunds would be a welcome problem to have. However, we will have to await the final judicial outcome to see how potentially the largest duty refund program in customs history would play out.

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This article is provided for informational purposes only and is not intended to constitute legal advice nor does it create an attorney-client relationship with LMD Trade Law PLLC or its affiliates.

[1] 50 U.S.C. § 1702(a)(1)(B).

[2] 28 U.S.C. § 2643(a)(1).

[3] 28 U.S.C. § 2643(c)(1).

[4] See Shinyei Corp. of Am. v. United States, 355 F.3d 1297, 1312–13 (Fed. Cir. 2004); See Also Shinyei Corp. of Am. v. United States, 524 F.3d 1274, 1283–84 (Fed. Cir. 2008).

[5] 19 C.F.R. § 24.36(a)(1).

[6] 19 C.F.R. § 24.3a(c)(1) (2023) (customs refund interest uses the rate established under 26 U.S.C § 6621; § 6622).

[7] See current 19 CFR 24.24(e)(4).

Originally published by: American Association of Exporters and Importers (AAEI)