Tariff Tactics

IEEPA Tariffs Invalidated — Refund Questions Likely Move to the Lower Courts

This morning, the Supreme Court issued a decision holding that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to impose tariffs.  For importers, the Supreme Court’s decision does not address the mechanics of refund claims.  As we discuss more fully below, importers should begin gathering documentation now in anticipation of filing Customs and Border Protection (“CBP”) protests or refund lawsuits in the Court of International Trade (“CIT”). 

As we had previously predicted, the most consequential feature of today’s 170-page fractured decision (including concurrences and dissents) may not be what it says, but what it leaves unsaid and left for future litigation. 

This post analyzes the immediate consequences for importers.  Later posts will address the decision in more detail as well as larger procedural issues, CIT jurisdiction under §1581(a)/(i), protest issues, liquidation posture, and estoppel.

A. Where Refund Litigation Is Likely to Go From Here

The practical consequences of the Supreme Court’s decision will now shift to the CIT, CBP, and possibly the Federal Circuit for further litigation and resolution.

a. Refund Litigation May Move to the CIT

Importers should anticipate expanded CIT litigation activity over IEEPA refund mechanics.  It is possible that the CIT may ultimately order CBP to administer a refund process, similar to the refund resolution process used in United States v. U.S. Shoe Corp., which we discussed here and here (noting “the Supreme Court is likely to remand refund issues back to the lower courts.”).

Any CIT litigation will likely consider: (i) scope of relief; (ii) treatment of liquidated versus unliquidated entries; (iii) availability (or limits) of reliquidation; (iv) relevant administrative protests and exhaustion through the CBP.

b. Liquidation Status May Matter

Importers may not be situated identically with respect to refunds.  Some have pre-liquidation entries as to which no protest or case has been filed, others have liquidation cases pending in the CIT, others have post-liquidation protests, still others have filed no protests or Court actions as to liquidated entries.  Today’s decision did not address how these procedural differences affect refund entitlement. That question now becomes central to future litigation.

If reliquidation authority is constrained in certain circumstances, liquidation timing may become significant.  Conversely, if the CIT interprets its remedial authority broadly, refund pathways may expand.  While we believe it is likely the CIT will take a broader view of remedial authority, that issue will now be tested in litigation.

c. Importers Should Watch Carefully for New Administrative and Structured Refund Pathways

In United States v. U.S. Shoe Corp., the CIT established structured procedures to manage refund claims (approximately $730 million).  Here, with billions of dollars of IEEPA refunds at stake, importers should monitor developments at the CIT as similar judicially supervised administrative structures may become formalized in the coming months.  We note that this outcome is not inevitable and depends on how the CIT interprets its statutory jurisdiction and equitable authority in light of today’s holding.

B. Immediate Questions for Importers

As we described in more detail in a previous post titled “What Importers Can Do if the Supreme Court Invalidates IEEPA Tariffs,” importers should:

• Prepare documentation of IEEPA tariffs paid and of entry liquidation status;
• Request that CPB extend liquidation deadlines or file administrative protests;
• Review contracts to determine the impact of IEEPA refunds; and
• Prepare for potential replacement tariffs.

Now that the Supreme Court decision has issued, importers should consider any CIT litigation strategies, especially to prevent procedural loss of rights through liquidation.  Importers considering litigation are advised to assess: (i) whether entries have liquidated as relevant to seeking reliquidation; (ii) whether protests were filed; and (iii) administrative deadlines that may remain open.

The Supreme Court’s silence on refund mechanics means that procedural positioning may influence recovery outcomes, and coordination among trade compliance, finance, and litigation teams is now essential.

C. The Beginning of a New Phase in IEEPA Refund Litigation

Today’s decision closes only one chapter of IEEPA tariff litigation, and leaves open the refund questions critical to importers.  Whether refunds will be automatic, limited, conditioned, or litigated entry-by-entry remains to be determined. That determination will likely unfold in the CIT through follow on litigation.

For importers, the practical takeaway is clear: today’s invalidation was a necessary condition for recovery but is not sufficient.  Importers should carefully consider their next steps to ensure preservation of refund rights, especially given a high probability that the Administration seeks to re-impose tariffs through other mechanisms (a subject we addressed here and will also address in further posts).

Tariff Tactics will continue to analyze the developing refund landscape, including the jurisdictional and procedural issues that will shape IEEPA refund mechanics and rights.