U.S. importers move closer to universal tariff refunds

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U.S. importers tariff refunds

Highlights

Class counsel in Freestyle World, Inc. v. United States requested a court order on Tuesday for automatic tariff refunds and interest to all eligible importers, not just plaintiffs.
The Supreme Court's February ruling against IEEPA tariffs enabled $115 billion in repayments, but thousands of importers remain unpaid as the administration resists universal refunds.
Democratic lawmakers urge Customs and Border Protection to expedite refunds and are preparing legislation to contest new tariffs, including those affecting Canada.

Class action seeks broader refund mechanism

As first reported by Fortune, class counsel in Freestyle World, Inc. v. United States filed a motion on Tuesday asking the U.S. Court of International Trade to enter a relief order that would automatically return tariff payments to all eligible class members, including importers that did not file separate lawsuits.

The lawyers said the order would give Customs and Border Protection the authority it says it needs to issue full refunds with interest to all class members. In a statement to Fortune, class counsel co-leads Lawrence Friedman of Barnes, Richardson & Colburn, and Elizabeth Cabraser and Nicholas Diamand of Lieff Cabraser Heimann & Bernstein, said they will keep working with the court and the government to ensure importers receive refunds as quickly as possible.

The case was certified as a class action on Oct. 8 and is being heard by Judge Richard Eaton, who is overseeing tariff refund litigation in the court. The Department of Justice has until Nov. 13 to answer the initial complaint and until Dec. 9 to respond to the motion for relief.

Refund dispute carries wider business impact

The Supreme Court ruled in February that tariffs imposed under the International Emergency Economic Powers Act exceeded presidential authority, opening the door to large-scale repayments. More than $115 billion has been returned to American companies as of August through Customs and Border Protection's CAPE system, but thousands of importers, including small businesses, individual buyers and parties using third-party importers of record, have yet to receive refunds.

The administration is contesting universal repayment, arguing refunds should go only to importers that sued. In a court filing, the Justice Department said Customs and Border Protection has no authority to reliquidate or refund money without a court order, while Eaton has previously maintained that all importers who paid the IEEPA tariffs are entitled to refunds and that the trade court's jurisdiction differs from that of a typical district court.

The dispute also has implications for pricing pressure and trade policy. Democratic lawmakers, including Sen. Elizabeth Warren and Sen. Ron Wyden, are increasing pressure on Customs and Border Protection to accelerate repayments and are also signalling plans to challenge new tariffs through legislation, starting with levies tied to Canada.

In a previous article, we explained how rising import duties pushed up U.S. toy prices ahead of the holiday season.

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