US Court Orders Customs To Process Refund of $130 Billion Collected from Illegal Trump Tariffs

Washington: A US trade court judge on Wednesday ​ordered the government to initiate billions of dollars in refunds to importers who remitted tariffs deemed illegal by the Supreme Court last month. The judge also ordered that the refunds include interest.

What did the court say?

Judge Richard Eaton of the US Court of International Trade in Manhattan said the government to finalise the cost related to millions of shipments brought into the US without proper tariff assessment be finalized in coordination with Customs and Border Protection (CBP).

The judge also ordered that the refunds include interest.

Judge Richard Eaton wrote that "all importers of record were entitled to benefit" from the Supreme Court ruling that struck down sweeping double-digit import taxes President Donald Trump imposed last year under the 1977 International Emergency Economic Powers Act (IEEPA).

Eaton directed Customs and Border Protection to finalise the entry cost on shipments without the tariff being assessed, resulting in a refund.

"Customs knows how to do this," he told a court hearing on Wednesday.

"They do it every day. They liquidate entries and make refunds," he said.

Eaton also set a hearing for Friday in which he asked for updates on CBP's refund plans.

Why the Supreme Court find it unconstitutional?

The Supreme Court found those tariffs to be unconstitutional under the emergency powers law, including the sweeping “reciprocal” tariffs he levied on nearly every other country. The majority ruled that the president could not unilaterally set and change tariffs because taxation power clearly belongs to Congress.

In his ruling, Eaton wrote that he alone “will hear cases pertaining to the refund of IEEPA duties." 

The ruling offers some clarity about the tariff refund process, something the Supreme Court did not even mention in its Feb. 20 decision. 

Trade lawyer Ryan Majerus, a partner at King & Spalding and a former US trade official, said "he expects the government to appeal or seek a stay to buy more time for US Customs to comply."

The federal government collected more than $130 billion in the now-defunct tariffs through mid-December and could ultimately be on the hook for refunds worth $175 billion, according to calculations by the Penn Wharton Budget Model.