The Trump administration recently appealed a Court of International Trade (CIT) order requiring the federal government to broadly refund now-defunct tariffs imposed under the International Emergency Economic Powers Act (IEEPA). This legal action adds new uncertainty to the federal process for importers seeking to recover funds.

The U.S. Department of Justice (DOJ) formally appealed parts of the CIT's April order on June 2. That order directed the federal government to broadly issue refunds for the rescinded tariffs. According to Michael Lowell, chair of the global regulatory enforcement group at law firm Reed Smith, this move could create new obstacles for some companies seeking to recover funds and may disrupt the overall refund program.

The appeal was filed with the U.S. Court of Appeals for the Federal Circuit, after the DOJ argued in a May 29 court filing that the CIT exceeded its authority by extending relief to entries that had undergone "final liquidation" and to importers that had not filed suit in that court.

According to a May 26 court filing, as of May 22, U.S. Customs and Border Protection (CBP) had processed approximately $85 billion in potential and certified tariff refund claims through its "Entry Consolidation and Processing Engine" (CAPE), with about $20.6 billion approved and sent to the Treasury Department for disbursement. At the program's outset, the government estimated total refunds could ultimately reach as high as $166 billion.

Lowell shared his views on the implications of this new legal development in an email response to CFO Dive.

CFO Dive: What does this government decision mean for businesses that have paid these tariffs, including those that have already received refunds or are still waiting for them?

Michael Lowell: Refund claims in the first phase of CAPE will not be affected by the government's recent statements. However, for businesses that still have refund claims to submit in future phases of CAPE, if they have not filed suit at the CIT, they may face the risk of being unable to recover funds.

CFO Dive: Will the government's planned appeal pause the tariff refund process, or affect the timing or availability of refunds?

Michael Lowell: For entries eligible for refunds in the first phase of CAPE, the government's decision should have no practical impact. The government is focused on entries that were liquidated (i.e., became final) more than 80 days before the importer submitted the refund claim. The government believes these entries require a separate CIT order, which effectively creates an importer-by-importer approach. This stance could delay the deployment of further CAPE functions, and consequently delay the remaining refund process for importers.

CFO Dive: What do you think is the government's ultimate intent here?

Michael Lowell: The government has already refunded over $20 billion in IEEPA tariffs. The ultimate goal is clear: the government is trying to retain as much of the remaining funds as possible. To that end, the government will attempt to create obstacles for importers seeking to recover funds. Whether this strategy ultimately succeeds remains to be seen.

CFO Dive: What actions should affected companies take immediately under the current circumstances?

Michael Lowell: The immediate considerations have not changed: companies should continue to ensure they preserve their statutory refund rights for any entries not eligible for first-phase CAPE processing. Companies should also monitor the progress of the appeal to make informed decisions about whether to file suit at the CIT.