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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

Michigan Law Firm - Warner Norcross + Judd LLP

After the Supreme Court in February struck down tariffs issued under the International Emergency Economic Powers Act of 1977 (IEEPA), the most common question has been: where are the refunds?

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In litigation filed in the Court of International Trade (CIT), U.S. Customs and Border Protection (CBP) filed declarations indicating that refund processes would be put into place and, as of April 20, the first phase of refund processes through the Consolidated Administration and Processing of Entries (CAPE) portal went live. Some key questions remain regarding refunds and reimbursement of these tariffs.

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To apply for a refund in the CAPE refund system, you must be an importer of record who paid IEEPA tariffs that have now been struck down by the Supreme Court. Importers of record (or their authorized customs brokers) must have an account with the ACE Secure Data Portal for CBP, where they submit declarations regarding the tariffs paid and bank account information where refunds should be issued.

Once submitted, it is expected to take about 90 days for refunds to issue. These refunds are not for any other tariffs, such as Section 232 or other tariffs, levied in the past year. Further, only importers of record are able to file for refunds. If a buyer paid tariffs to a supplier who had incurred the tariffs as the importer of record, for example, that buyer would not be able to seek a refund through the CAPE system.

In this initial phase of the refund process, only certain unliquidated entries (meaning not finalized and paid) and certain entries still within 80 days of liquidation are subject to refunds through the process that went live on April 20. Through declarations filed by CBP in proceedings in the CIT, CBP has indicated that it is working on a different phase or system that will be put in place in the future for refunds to address fully liquidated IEEPA tariffs. It is not clear yet when that system will go into effect.

<strong>What Are Responsibilities Up and Down the Supply Chain?</strong>

If you are not the importer of record but you incurred IEEPA-related tariff costs, or passed on such costs to your customers, whether you receive some benefit from these refunds will likely depend on how you paid the tariff-related costs. In the past year, several mechanisms were used to pass these costs up the chain from the importer of record. Some companies simply raised prices. Some added a tariff-related surcharge, whether explicitly tied to tariffs or not. While others entered into agreements providing for tariff-related payments, some of which may have included a provision requiring repayment if the tariffs were ever refunded or even obligations to secure refunds if refunds became available.

How such tariff costs were passed on may significantly impact whether tariff costs may now be recoverable from an importer of record receiving refunds (or if that importer of record may have a contractual or other duty to seek refunds). Given the emergent nature of the tariffs, many agreements for tariff cost relief may have been documented informally, or not at all. Identifying where and how these agreements were documented is a critical first step. If you are the importer of record who passed on IEEPA tariff costs up the chain, it is important now to look at your contracts with your customers to see what obligations, if any, you may have to seek refunds and to pay those refunds forward to your customers.

If you are higher up the chain and incurred costs related to IEEPA refunds, you must also look at your contractual terms and how you paid these costs to determine what rights you may have in seeking reimbursement from your suppliers who may be receiving these refunds. Some companies, such as IKEA, are also facing class-action lawsuits from consumers who paid higher prices and now want a share of the refunds available. As these refunds are issued and money starts hitting accounts, we expect to see more activity from those impacted by the costs of these tariffs in the past year.

Our automotive, supply chain and trade lawyers are actively monitoring these developments and are standing by to assist clients in addressing these refunds and reimbursement responsibilities.

Ahead of the Curve Auto Supplier

Automotive

Supply Chain

Partner

Homayune A. Ghaussi

Adam T. Ratliff

Corporate

Regulatory and Compliance

IEEPA Tariff Refunds: Show Me the Money

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IEEPA Tariff Refunds: Show Me the Money

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