President Donald Trump’s administration is trying to muck up its responsibility to refund businesses who paid the president’s illegal tariffs. By claiming U.S. Customs and Border Protection lacks the ability to claw back tariff funds after a certain number of days, the government lays the groundwork to argue it doesn’t have a practical mechanism to repay certain importers, according to a recent court filing.
The Department of Justice is also disputing the court’s ability to issue nationwide relief to affected importers. In the court filing last Friday, the DOJ said it will appeal, asking that a judge require each business seeking a refund to file individual lawsuits in order to recoup their losses.
“CBP has no authority to reliquidate or refund money without a court order,” the Justice Department wrote.
Court of International Trade Judge Richard K. Eaton ordered CBP Commissioner Rodney Scott to appear for a June 9 hearing about the administration’s compliance with the court’s refund order. In response, the government made known its intent to appeal that order and requested Scott not be ordered to appear, a request Eaton quickly shot down.
“Commissioner Scott’s testimony is necessary to ascertain… if it is the Government’s policy to refund the duties to importers both large and small,” Eaton wrote. “There is $166 billion involved.”
People who work closely with the importers seeking refunds told TPM the government has proven it can create a never-before-done repayment process, which those importer associations and advocates told TPM is actually going quite well. So if the government moves to appeal the next part of a court-ordered refund obligation, it could have a hard time making a weaponized-incompetence sort of argument.
After the Supreme Court in February struck down Trump’s tariffs, which were imposed under a 1970s statute called the International Emergency Economic Powers Act, or IEEPA, the case was kicked to the Court of International Trade. The CIT ordered U.S. Customs and Border Protection to stop collecting IEEPA tariffs and refund importers for what they’d already paid. CBP undertook the behemoth task of building a system that was capable of refunding $166 billion to the 330,000 importers that might be eligible for refunds. And within about two months, the first round of refunds was hitting the bank accounts of businesses who qualified for what CBP defined as its phase one.
In a recent court filing, Brandon Lord, the executive director of Trade Programs at CBP’s Office of Trade, said that as of May 22, about $85 billion in “potential and certified” refunds had been accepted to be processed, and that $20.6 billion in refunds had been completed.
“It really has been a pretty simple process, I think far simpler than we imagined that it would be,” Alison Leavitt, managing director for the Wine & Spirits Shippers Association, told TPM.
In her role, Leavitt runs the association and interacts with its diverse membership which includes tiny French wine importers, large beer importers, and related industries like barrel manufacturers.
“I have to commend the CBP for actually putting together this program so quickly and making it so easy for importers,” Leavitt said.
The efficiency of the refunds even caught some business owners by surprise.
“It’s like setting up the entire IRS system in four weeks,” Sara Albrecht, chairman and CEO of the conservative nonprofit legal firm the Liberty Justice Center, which represented small businesses in the winning suit against the government to overturn IEEPA tariffs, told TPM. “Like, that’s kind of crazy.”
For phase one, CBP is refunding importers whose IEEPA claims have not completed the more than 400-day cycle through which tariff payments go before hitting the U.S. Treasury. Phase two refunds are what’s at risk if the administration appeals, said Albrecht. That’s because CBP officials have long said those refunds will deal with dollars that have already been liquidated.
Liquidation comes 314 days after an import enters the U.S. During that time, CBP checks entries for various discrepancies and decides whether an importer owes more, less, or if any other changes need to be made. Albrecht described the process as similar to filing tax returns, in which filers either get a refund or owe an additional amount.
Importers have an additional 90 days to protest their liquidation in a second round of reconciliation. After that: “You’re just stuck,” Albrecht said, and the transaction is essentially closed to additional changes from Customs. It is this mechanism which CBP said it cannot overcome. The agency also may not want to establish a precedent that shows it in fact can go back and recoup those funds post-liquidation, a precedent which could complicate matters with non-IEEPA — i.e. legal — tariffs, Albrecht said.
One argument lawyers could make to push back on the government is that CBP has set up this entire system that actually is going really well and that’s unprecedented. So why now would the government want to halt that successful innovation?
“When we started down this path of, how are we going to refund, [CBP] kept saying, ‘We’re going to do the easy ones first, which is great because you want the most refunds out the door as quick as possible,” Albrecht told TPM. “But they also kind of knew they were going to have this problem.
“We all have the list of stuff we’re supposed to do on our desk and that one thing that just keeps getting moved to the next week and the next week because it’s hard and we don’t want to do it,” she continued. “That’s kind of what they were doing here.”
During oral arguments before the Supreme Court, Justice Amy Coney Barrett asked about the Herculean task of executing tariff refunds. After the Court blocked the tariffs, Justice Brett Kavanaugh in his dissenting opinion again highlighted the level of difficulty the government would face repaying businesses. CBP had its portal up and running by April 20.
While Leavitt and Albrecht separately expressed an understanding about procedural challenges related to CBP’s authority and liquidation, both conveyed cautious confidence that the Court of International Trade will side with businesses and order CBP to press on with phase two refunds.
“I think they may be up against a barrier,” said Leavitt, “but that barrier needs to be broken down.”
It’s almost like some of the assholes in the government had bought a ton of the rights to tariff refunds in advance of such a ruling and therefore had some incentive to make it easy to get the refunds (at least early on)
That and a proof of concept on how quickly a slush fund could be set up and drained.
Understanding and anticipating this administration is pretty straightforward when you assume it is a criminal enterprise.
That’s “funny” because the Corrupt Subprimes let the tarrifs stay in place on their initial ruling because the governments’ argument was that the refund process would be simple…