Judge Questions CBP’s Tariff Refund Process

A federal judge recently questioned a U.S. Customs and Border Protection (CBP) official regarding the refunding process for tariffs that importers paid before the Supreme Court ruled that President Donald Trump imposed higher duties illegally. Court of International Trade Judge Richard Eaton seeks specific details to decide whether to order the government to accelerate and broaden its refund system.

Eaton commended CBP’s online system developed for processing refund claims, noting its effectiveness and the government’s intent to return import tax money collected without constitutional authority. However, he expressed concerns about a Justice Department appeal that might disrupt the process. The appeal challenges Eaton’s order that requires refunds for all companies that paid tariffs, not just those that filed lawsuits. “Sometimes lawyers push legal positions beyond what is useful for the client,” Eaton said during a hearing in the New York-based trade court. “The legal position pushed by the government may not be in the government’s best interest.”

The Justice Department argues that only companies involved in more than 4,000 lawsuits challenging Trump’s tariff rationale can seek refunds. The issue now lies with the U.S. Court of Appeals for the Federal Circuit.

Tariff Refunds Process

Eaton ordered CBP in March to establish a system enabling “all importers of record” to apply for their share of the $166 billion CBP estimated it collected before the Supreme Court struck down global tariffs. Allowing the agency to implement the system in phases, Eaton permitted CBP to develop technology to handle various refund claims. The agency launched the online system on April 20, prioritizing applications from importers whose tax bills had yet to be finalized.

Eaton convened the hearing to decide whether to demand immediate refunds or grant CBP extra time. Although the pace and scope of the process sparked debate, Eaton summoned CBP Commissioner Rodney Scott to present the agency’s timeline for compliance with the judge’s “universal” order. The Justice Department objected, suggesting a deputy attend instead. Eaton insisted on Scott’s testimony, prompting the department’s lawyers to appeal both mandates and the broader refund eligibility ruling. Recently, the Federal Circuit temporarily suspended Scott’s requirement to testify. Susan Thomas, CBP’s executive assistant commissioner for trade, appeared before Eaton.

Access to Next Phase of Tariff Refunds

The hearing addressed CBP’s ability and readiness to expand the refund process to companies with older tariff payments. Thomas informed the judge that claims totaling $90 billion had been processed by Tuesday, and the Treasury Department had been directed to issue $23 billion in refunds.

Currently, CBP limits applications to businesses with tax bills finalized after the Supreme Court invalidated Trump’s “reciprocal” tariffs or within the preceding 80 days. Thomas stated that CBP was developing a system for older shipments, expected by July’s end. However, CBP would not process cases beyond the 80-day limit while Eaton’s order faces appeal. “I can’t speak to the appeal, but I can tell you I will be prepared,” she said. “I am pushing our teams to the limit.”

Government lawyers argued against hastening the process through Eaton’s order enforcement. They stated the appeal concerns 6.9% of the $166 billion collected, with the majority of taxed imports eligible for refunds through existing systems or pending lawsuits. Lawyers for the companies behind the lawsuit contend $11 billion remains significant, and unequal tariff refunds would violate constitutional principles since Trump improperly imposed duties using an emergency powers law without Congress’ authority. One plaintiff’s lawyer proposed Eaton could certify the case as a class action involving “potentially tens of thousands of identically situated importers.”

Eaton deferred the class action discussion and made no rulings. He remarked, “it would be disappointing if we have to find our way into the world of class action” instead of allowing CBP to progress toward the goal of universal refunds. “Let the Customs and Border Patrol be the Customs and Border Patrol,” Eaton said. “Let them do their job, let them do what I believe the government actually wants to do.”