Scott Lincicome, Alfredo Carrillo Obregon, and Chad Smitson
The July 1 update that US Customs and Border Protection (CBP) provided the Court of International Trade (CIT) shows that the agency has made significant headway in returning the billions of dollars owed to US importers based on the Supreme Court’s recent invalidation of “emergency” tariffs. However, the filing also shows that frictions built into the process continue to slow the issuance of tariff refunds and that an entire class of importers—collectively owed tens of billions of dollars—might be unable to get their money back without having to sue for it.
Here’s where things stand.
On February 20, 2026, the Supreme Court invalidated the tariffs that President Trump implemented last year under the International Emergency Economic Powers Act (IEEPA). As of June 29 (more than four months after the ruling), CBP has authorized $104.29 billion in refunds and paid out $71.06 billion (including interest). Based on our calculations of the total amount owed by the government as of June 29 (taking into account interest and payouts), the government still owes importers about $100.65 billion—more than half of the total owed.
CBP deserves credit for giving most eligible importers the opportunity to receive refunds—even if the process was not automatic. It’s also good that CBP has now rolled out Phase 2 of its refund (CAPE) system, covering entries flagged for reconciliation. Refunds could eventually climb to $130 billion of the $166 billion in IEEPA duties paid by importers (before interest).
Eventually.
Indeed, that only $71.06 billion of the approved $104.29 billion has actually been paid suggests that frictions built into the CAPE process are creating obstacles for importers seeking refunds. For example, CBP claims that refunds for 8,384 approved declarations have not been issued because the eligible importers lack proper automated clearinghouse or banking information.
A bigger problem, however, is what we and CIT Judge Richard Eaton, who has overseen the refund process, have flagged: Many smaller US firms have been unable to obtain refunds through the current CAPE process. In particular, CBP has approved refunds for nearly 60 percent of the government’s total obligations, but that $104.3 billion in processed refunds was for just 30 percent of all import entries on which IEEPA tariffs had been paid. In other words, the approved refunds mainly come from large, high-value entries—a strong indication that, as Judge Eaton noted, most refunds have thus far gone to large firms/importers such as Walmart and Ford. This underscores what we and others have suspected since the beginning of the refund process: The deck is stacked against small firms that lack the resources to fight for and obtain what the government owes them.
Any delays caused by the government’s appeal of Judge Eaton’s universal injunction will further complicate the process. That appeal, filed before the Court of Appeals for the Federal Circuit (CAFC) on June 2, challenges the injunction’s applicability to entries for which liquidation has become final (i.e., more than 180 days have passed since CBP rendered a final determination of the duties and other import charges owed on those entries). As a reminder, finally liquidated entries are not eligible for Phase 1 or 2 of CAPE processing. CBP’s latest filing indicates that it could begin processing finally liquidated entries—which cover about $11.4 billion, or 7 percent of total IEEPA tariff revenue—in a forthcoming Phase 3 of CAPE by late July. However, the government is arguing before the CAFC that CBP cannot issue refunds for these entries without the importer of record filing suit at the CIT first.
In a preemptive move, US importers whose refunds could be affected by this appeal are making initial moves toward a class-action lawsuit that would satisfy this requirement—yet the government is also challenging this approach at the CIT.
Finally, CBP’s refund data suggest that the agency still owes another $25 billion in refunds for entries not covered in Phases 1 through 3. These include entries subject to certain anti-dumping and countervailing duties, entries for which active drawback claims or administrative protests exist, and entries not filed within ACE (CBP’s online portal for processing imports and exports). The agency’s latest filing does not provide a timeline for processing these entries through CAPE or otherwise issuing refunds.
In sum, it’s good news that refunds accounting for most of the IEEPA tariffs paid have been issued or should be issued soon and that the CAPE system’s functionality is being updated to cover additional imports. However, frictions embedded in the system and the unique hurdles faced by small businesses deserve continued attention and a quick resolution by CBP.
The ongoing litigation is also unfortunate and worth monitoring. Collectively, the government’s actions indicate that it could end up keeping tens of billions of dollars that it unlawfully confiscated from US importers, through absolutely no fault of their own.
