The clock is ticking on tariff refunds
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Illustration: Lazaro Gamio/Axios
A federal court wants businesses to receive tariff refunds swiftly. The Trump administration would rather they wait.
Why it matters: Businesses that quietly ate the tariffs could see an earnings tailwind when refunds come in. But the clock is ticking: The longer refunds drag, the more difficult it becomes to process.
Where it stands: "The administration has a reason to make people jump through hoops, because every person who doesn't jump through the hoops ends up leaving money behind," Greg Husisian, a trade attorney at Foley & Lardner, tells Axios.
- A delay for importers means a delay for any potential consumer benefits.
- Costco said on Thursday that it intends to return any recovered tariff charges to customers, in part through lower prices.
The intrigue: Tariff entries — the individual records created for shipments crossing the U.S. border — have expiration dates of sorts.
- Once those entries "liquidate" and get finalized in the Customs and Border Protection import system, clawing back the money gets more complex.
- The Court of International Trade ordered government officials this week to begin processing tariff refunds that have not been liquidated.
- The order covers every importer hit by the now illegal tariffs imposed by Trump under the International Emergency Economic Powers Act, not just the thousands of businesses that have already sued to receive them.
- The Trump administration is all but certain to appeal, which could extend the refund process even longer.
By the numbers: It's cheaper for the government to move faster. Interest is accruing on an estimated $175 billion owed to importers at a rate of roughly $23 million per day, according to the Cato Institute.
Driving the news: "The law is clear: I believe that, particularly with respect to the unliquidated entries, you have to start doing [refunds] now," Judge Richard Eaton of the Court of International Trade said on Wednesday.
- "There have been some indications in the press that this should be a chaotic — must be a chaotic — and messy process," the judge said at a hearing. "I don't anticipate that at all."
Between the lines: This is set to define the refunds battle in the months ahead. The courts want to move fast, while the Trump administration is angling for more time.
The government says the refund process is a burden for customs officials, adding that liquidated IEEPA tariffs would need a separate legal process for refunds.
- Trump administration lawyers asked the court for more time to comply with the order to start refunds, a request Eaton denied.
- It was the latest example of the government requesting a delay. A federal court rejected the government's bid to delay sending the case to the lower court, which would have stalled the refund process entirely.
The other side: Customs regularly issues refunds for one-off miscalculated tariffs, but the government argued during the hearing that the sheer scale of IEEPA tariffs entered into the customs system and the refunds owed makes the process "a huge undertaking."
- There are 71 million entries filed since IEEPA duties were imposed, about double the volume the previous year, CBP said in a separate court filing.
- The government said stripping out IEEPA tariffs from each of those entries would require a manual review of those millions of entries, arguing that an item imported into the nation might be subject to overlapping tariffs.
Judge pushed back: "We live in the age of computers…It must be possible for customs to program its computer so it doesn't need a manual review."
What to watch: Eaton has scheduled a hearing for Friday for the government to further detail how the refund process will play out.
