NEW YORK — A federal court will hear testimony Tuesday from a U.S. Customs and Border Protection official regarding the government’s plans to return billions of dollars in tariffs that businesses paid before the Supreme Court determined certain import taxes imposed by President Donald Trump were illegal.
Judge Richard Eaton of the Court of International Trade has requested specific information to help him determine whether to require the government to accelerate and broaden its tariff refund program. The Justice Department has challenged Eaton’s previous ruling that would make all companies that paid the invalidated import duties eligible for reimbursement with interest.
Justice Department attorneys contended in legal filings that only businesses involved in the more than 2,500 court cases that contested the tariffs should be legally allowed to request refunds.
The dispute has moved to the U.S. Court of Appeals for the Federal Circuit, and Tuesday’s proceedings may offer additional insight into what comes next for the refund program.
In March, Eaton directed Customs and Border Protection to establish a process allowing “all importers of record” to seek their portion of the $166 billion the agency estimates it collected before the Supreme Court invalidated the global tariffs.
The online application system went live April 20, with the agency stating it would initially process requests from importers whose tax obligations remained unfinalized.
By June 1, refund requests worth $89.6 billion had been approved for review, according to CBP, and the agency announced last month that it had instructed the Treasury Department to distribute $20.6 billion in refunds.
The speed and reach of the program became controversial when Eaton ordered CBP Commissioner Rodney Scott to appear in court to explain the agency’s schedule for implementing the judge’s comprehensive directive. Justice Department representatives objected and requested that one of Scott’s subordinates attend instead.
After Eaton maintained his demand to hear directly from the agency’s leader, Justice Department attorneys challenged both that requirement and the judge’s broader decision on refund qualification. Last Thursday, the Federal Circuit temporarily halted the mandate for Scott’s testimony.
Eaton has agreed to receive testimony from Susan Thomas, the agency’s executive assistant commissioner for trade.
Tuesday’s hearing will likely examine CBP’s capacity and commitment to extending the refund program to companies with the oldest tariff payments.
Currently, the agency restricts applications to businesses that either had unfinalized tax bills when the Supreme Court eliminated Trump’s “reciprocal” tariffs in late February, or whose bills were resolved within the previous 80 days.
In a court statement before the hearing, Thomas indicated CBP was creating procedures to address refunds for older shipments but would not handle cases beyond the 80-day period while Eaton’s order covering all duty payers remains under appeal.
“Should the court’s order become final and require reliquidation of entries of all importers, CBP intends to fully comply with the court’s final decision as expeditiously as possible,” she stated.
The matter involves the agency’s complex and time-sensitive procedure for examining and approving customs paperwork on new imports.
When international merchandise arrives in the U.S., importers or customs agents working for them calculate estimated tariff amounts and submit a deposit toward the final payment. CBP then has 314 days — extending to four years if needed — to examine the declared items, establish the actual amount due, and request additional payment or provide a refund based on the deposit.
The taxed goods are then declared “liquidated.” Importers have 180 days to challenge CBP’s decision. Items typically cannot be reevaluated after that deadline.
Eaton stated he is conducting Tuesday’s hearing “to ascertain if it is the government’s policy to return all of the unlawfully collected duties either by complying with the court’s order, or by some other means.”
Legal representatives for the five companies that initiated the lawsuit resulting in the judge’s order argued it would violate constitutional principles for them to pay different tariff amounts than other companies that also paid the invalidated duties, which the Supreme Court determined Trump improperly established by invoking emergency powers legislation to override Congress’s tax-setting authority.
The companies have requested Eaton to designate their case as a class action representing “potentially tens of thousands of identically situated importers.”
Meghann Supino, a partner at law firm Ice Miller, expressed her belief that CBP will continue developing the technology required to refund all tariffs, but “whether they open it up to non-litigants and importers that do not have orders for their own sake is going to continue to be an issue with the appeal.”
