A federal judge inquired into the U.S. Customs and Border Protection’s (CBP) procedure for refunding tariffs following a Supreme Court decision. This ruling determined that President Donald Trump’s imposition of higher duties on imports was illegal. Judge Richard Eaton of the Court of International Trade sought clarification to decide if the government should expedite its refund system.
Eaton commended the CBP’s online system for handling refund claims, advocating for repayment of import taxes collected without proper authority. However, a Justice Department appeal of his order to refund all companies, not just those who filed lawsuits, put the process at risk. ‘Sometimes legal positions extend beyond what’s beneficial for the client,’ Eaton stated in a 90-minute hearing.
The Justice Department maintained that only participants in over 4,000 lawsuits challenging the legal basis for the higher tariffs could claim refunds. This issue now rests with the U.S. Court of Appeals for the Federal Circuit. Eaton had previously ordered the CBP to establish a system allowing all importers to apply for their share of the $166 billion collected before the global tariffs were invalidated by the Supreme Court. The agency began rolling out this system in phases, first focusing on applications from importers with unresolved tax bills.
During Tuesday’s hearing, Eaton evaluated whether to demand an immediate refund of all owed money or grant CBP more time. The discussion intensified as Eaton summoned CBP Commissioner Rodney Scott to explain the agency’s timeline. The Justice Department opposed this and requested an alternative deputy’s attendance. When Eaton insisted on Scott’s presence, an appeal was filed against this requirement and the broader refund eligibility ruling. The Federal Circuit temporarily suspended the requirement for Scott’s testimony, and Susan Thomas from CBP represented the agency in court.
The focus turned to CBP’s readiness to extend refunds to companies with older tariff payments. As of Tuesday, claims for $90 billion were approved, and $23 billion in refunds were issued, according to Thomas. CBP’s current applications are limited to businesses with unsettled tax bills or those resolved within 80 days of the Supreme Court’s decision. Thomas stated that a system for older cases was in progress, likely ready by July’s end. However, processing beyond the 80-day mark would wait while Eaton’s order faced appeal.
Government lawyers argued that accelerating the process was unnecessary, representing only 6.9% of the $166 billion collected. They pointed out that most eligible refunds can be managed through the current system or are part of existing lawsuits. The plaintiffs’ lawyers highlighted that even the remaining $11 billion is substantial and argued against the constitutionality of paying less than other companies.
Eaton deferred deciding whether to certify the case as a class action for numerous similar importers, noting that it should be addressed later. ‘It would be disappointing to venture into class action rather than letting CBP progress towards my order’s goal,’ Eaton remarked, urging the agency to carry out its duties effectively.