Lawyer: Questions Surround Duty Refund Process If IEEPA Tariffs Found Unlawful
There may be a "bifurcated" process for duty refund should the plaintiffs prevail in litigation over the legality of tariffs imposed under the International Emergency Economic Powers Act, a trade lawyer said. That could include a court-ordered process in addition to a separate administrative process because of the volume of claims that will arise should the courts decide that IEEPA is not an appropriate authority for tariffs.
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Speaking at a July 24 American Bar Association event, LMD Trade Law's James Min said "there's not much to it" if the government prevails, but the future is much more uncertain if the plaintiffs do. "We'll have to see" what the duty refund process will look like if the plaintiffs prevail, he said, but historical precedent points to a "bifurcated refund process," consisting of a court-ordered process for the parties to the case and an administrative process to "file claims for those refunds."
The precedent comes from a 1998 Supreme Court case that ruled that a harbor maintenance fee for exports was unconstitutional. The government then had to "figure out how to refund those fees to folks that CBP had collected the fees from," Min said. In the current scenario, it will be "interesting to see whether the court actually orders the tariff refunds for the various plaintiffs, and then CBP may have to create a separate administrative process," he said.
While a duty refund process already exists, Min said, he "just can't see how CBP is going to open the floodgates of every single importer filing duty refund claims or even protests." He guessed that "there may be a court order process and a separate administrative process that would streamline the duty refund."
Amid the uncertainty, Min said, he advises clients to "really look at these entries" and importations subject to IEEPA duties and "keep an eye on" whether they are being liquidated or have been suspended, because "once the entry is liquidated, then the clock starts ticking for your administrative rights to either file protests or other remedies."
Ultimately, if the plaintiffs prevail, "the devil is going to be in the details of how the refunds will work," Min said.
Georgetown Law professor Kathleen Claussen called the litigation "just one big distraction for all of these trading partners" hoping that IEEPA tariffs will be ruled unlawful. "None of it matters," she said. "It really doesn't matter, because" President Donald Trump "has all these other tools in the toolkit that he could use."
"I don't think the litigation should matter," Claussen said. "But somehow it is mattering to a lot of these countries, naturally so, but I think they're missing the forest for the trees."