The US customs agency is developing a new system to handle potential refunds for roughly 53 million shipments made under US President Donald Trump’s controversial import tariffs.
Last month, the US Supreme Court deemed Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs unlawful, effectively marking the president’s trade scheme unconstitutional.
After more than 330,000 importers paid the illegal duties, US Customs and Border Protection (CBP) has started work on a system to manage up to $237 billion (US$166 billion) worth of refunds.
Notably, executive director of US Customs and Border Protection’s trade policy and programs directorate Brandon Lord explained that the agency’s current systems held over 53 million entries with IEEPA duties.
Lord said that assuming each entry was entitled to a refund, the process would have required over 4.4 million “man hours” for the agency to complete.
“It is not feasible for CBP to divert all import specialist and entry specialist personnel to processing IEEPA duty refunds on a full-time basis with no time off,” said Lord.
In a declaration handed to US Court of International Trade judge Richard Eaton on Friday, Lord said the agency was “making all possible efforts” to have a new refund functionality “ready for use in 45 days”.
Existing system not up to the task
Eaton first directed the customs agency to reimburse importers using existing processes for its computer system ‘ACE’.
As first reported by Reuters, this demand changed after Eaton met with government lawyers to discuss a potential settlement process.
Lord argued in his declaration that import and entry specialists took approximately 5 minutes to process each individual refund – including to amend, liquidate and certify the refund for each entry.
“CBP is now facing an unprecedented volume of refunds,” said Lord.
“Its existing administrative procedures and technology are not well suited to a task of this scale and will require manual work that will prevent personnel from fully carrying out the agency’s trade enforcement mission.”
After considering Lord’s declaration, Eaton amended his order to no longer require “immediate compliance” from the agency.
An automated approach
In “preparing for the potential need to refund IEEPA duties”, Lord said CBP had considered a process to issue refunds in a “more efficient manner”.
The agency expects this new process would involve importers first filing their declaration in the ACE computer system, which would then run a “series of validations” and automatically re-calculate the duty owed without the IEEPA tariffs.
The customs agency would then verify the declaration and process refunds “as soon as practicable”, which would later be issued electronically by the US Treasury Department.
The total refunds, with interest, would be automatically aggregated by ACE according to the importer and liquidation date, Lord explained.
As a result, the new approach would see each importer receive a single, total payment, rather than divvying out millions of individual refunds.
CBP estimated the new automated controls would save the agency “over 4 million hours”.
Lord further asserted the new system would “minimise errors” by ensuring accurate refund calculations and allowing the agency a review period to resolve any discrepancies with the importer.
Nintendo, Fedex among 2,000 lawsuits
According to Reuters, some 2,000 lawsuits have been filed by companies seeking refunds.
Alongside hundreds of smaller importers, multinational giants Fedex, Costco and L’Oreal were among the largest companies to file a lawsuit.
Gaming giant Nintendo also took legal action, with its lawyers accusing multiple US federal agencies of engaging in “unlawful trade measures”.
“All tariffs collected under the IEEPA Duties must be refunded with interest," the lawyers wrote.
In his declaration to the court, Lord noted the new ACE functionality would streamline both refunds and interest payments.
Lord also addressed concerns the refund process would be costly and time-consuming, stating the new process would require “minimal submission from importers”.
“CBP will provide guidance on how to file to refund declarations in the new system,” he said.
Australian goods still subject to tariffs
Though the US terminated its reciprocal tariffs following the Supreme Court’s decision in February, Trump quickly retaliated by imposing a new global 10 per cent “temporary import surcharge” under a separate law.
The new tariffs were applied to most goods imported to the US, with some items subject to a higher tariff rate than others.
According to Australia’s Department of Foreign Affairs and Trade, automobiles, trucks and truck parts remained subject to a 25 per cent tariff, while “certain advanced computing chips and products” such as the AI-tailored Nvidia H200, have received the same tariff rate as of January.
“This tariff will not apply to chips that are imported to support the buildout of the US technology supply chain,” the White House said in January.
The US pays no tariffs for exports to Australia under the Australia-United States Free Trade Agreement (AUSFTA).
