Tariffs Update: The Roller Coaster Ride Continues

Just as some U.S. importers began receiving refunds of duties paid under the International Economic Emergency Powers Act (IEEPA), the tariff refund landscape is shifting again due to a threatened appeal by the U.S. government. At the same time, the administration advanced action under other tariff laws that likely will result in new or expanded tariffs; reduced tariffs on some steel, aluminum and copper derivatives; and directed stricter enforcement of the customs laws.

As Refunds Are Received, Complications Arise for the IEEPA Refund Landscape

In our previous alert, we reported that the U.S. Supreme Court had found President Donald Trump’s tariffs issued under the International Emergency Economic Powers Act (IEEPA) to be illegal. On April 20, U.S. Customs and Border Protection (CBP) opened Phase I of its Consolidated Administration and Processing of Entries (“CAPE”) system to process refund claims (“declarations”) by importers.

CBP reported at the end of May that it had validated 15.85 million entries filed in CAPE so far and that, of those, 8.5 million entries have been liquidated or reliquidated for a refund. That figure represents over $85 billion in refund claims. CBP further indicated that it had completed its processing and directed Treasury to disburse refunds in an amount of more than $20.6 billion, or about 24 percent. CBP also noted that 3.9 million CAPE declarations failed due to being more than 80 days past the liquidation date.

“Liquidation” is the final computation or ascertainment of duties by CBP, which typically occurs around 314 days after the entry date. CBP has defined finally liquidated entries as those beyond CBP’s statutory 90-day reliquidation period, but for purposes of Phase I CBP used 80 days past liquidation as the cut-off for eligibility.

As previously reported, Phase I included only unliquidated entries and non-finally liquidated entries. On March 31, CBP had declared to the U.S. Court of International Trade (CIT) that CBP was unable to include finally liquidated entries in its technical development of Phase I due to CBP’s commitment to have CAPE up and running by mid-April.  At that time, CBP indicated that it “intends to expand CAPE to process finally liquidated entries in a subsequent phase of development.”

On May 29, however, the Justice Department filed a Motion to Amend Order with the CIT on behalf of CBP, indicating that it plans to appeal to the Federal Circuit the CIT’s so-called “universal” order requiring refunds of all tariffs collected under the IEEPA. CBP now takes the position that it does not have the authority to reliquidate entries that were finally liquidated, absent an order by the court for an importer with an appeal pending before the court.

The court has ordered a hearing on June 9 to consider the matter. In the interim, one of the plaintiffs in the Supreme Court case filed a motion for certification by the CIT of a class that would include:

All importers who paid tariffs imposed under the International Emergency Economic Powers Act … and who hold claims that are not currently eligible for processing and refund through the Consolidated Administration and Processing of Entries (“CAPE”) program. #99 in V.O.S. Selections, Inc. v. United States (Ct. Intl. Trade, 1:25-cv-00066) – CourtListener.com

The motion further requests that, once the CIT certifies the class, the CIT should enter an injunction “directing Defendants to make the CAPE system available to process and pay refund claims, with interest, for all class members.” This approach, if accepted by the CIT, would require CBP to allow processing of finally liquidated entries, and other excluded entries, through the CAPE system.

Given these developments and the resulting uncertainty, many importers are questioning whether to appeal their finally liquidated entries in court. No one approach fits all importers, but importers may want to consider the following:

1. Expect the unexpected, as the appeal unfolds for CBP’s implementation of the IEEPA refunds.
2. Monitor: Continue monitoring the liquidation status of your entries.
3. Protest Consideration: When entries are approaching the statutory 180-day after liquidation protest deadline, importers may want to consider the value of tariffs at issue against the cost of the protest filing, as well as the company’s risk tolerance. However, CBP currently will not process through its CAPE system any entries that have been protested, and such protests will need to be withdrawn if CAPE becomes available for finally liquidated entries.
4. Appeal: Now, CBP has taken the position that it does not have authority to reliquidate finally liquidated entries, outside of a court order being specifically issued for the particular importer. Thus, importers should consider whether filing an appeal in the CIT is the right recourse for their situation. Again, consideration of the value amount of finally liquidated entries, the risk tolerance of the company, and the anticipated cost for any appeal are prudent considerations for this decision, along with the current posture of the CBP appeal.

An appeal to the CIT today may be premature, however, given the ongoing litigation and the fact that U.S. importers have two years from the date of entry to file a Section 1581(i) residual jurisdiction appeal. However, some importers may feel inclined to file a court action sooner rather than later as a proactive, “belt and suspenders” measure.

Certain Steel, Aluminum and Copper Tariff Derivatives Benefit from Reduction in Tariff Rate

On June 1, a Presidential Proclamation further modified the Section 232 steel, aluminum and copper tariffs to further reduce some of the metal tariffs on certain derivative products. This action followed certain reductions implemented on April 2, which had temporarily reduced (until the end of 2027) tariffs on certain fixed industrial machinery and power equipment to 15%.

The latest Proclamation expands the temporary tariff reduction from 25 to 15% for certain agricultural equipment such as combines and harvesters, residential heating, ventilation and air conditioning (“HVAC”) systems and components, and mobile industrial equipment and machinery such as bulldozers and forklifts.  The Proclamation further reduces the U.S. content threshold from 95% to 85% to qualify items as made “entirely” from American steel, aluminum or copper eligible for a lower 10% tariff rate. It also reduces the total tariff rate (general “Column 1” tariff rate plus 232 tariff rate) to 15% for products of countries that have entered into a trade agreement with the U.S. — i.e., Argentina, Ecuador, El Salvador, Guatemala, Japan, the Republic of Korea, Liechtenstein, Switzerland, Taiwan, the United Kingdom, or a member nation of the European Union. Fact Sheet: President Donald J. Trump Updates Tariffs on Steel, Aluminum, and Copper Imports – The White House

As 10% Section 122 Tariffs Approach Expiration in July, 10-12.5% Tariffs Are Proposed Under Section 301 Against 60 Countries Found to Have Failed Forced Labor Enforcement

In our previous alert, we reported that, closely following the Supreme Court IEEPA decision, President Trump implemented in late February a temporary “import surcharge” of 10% on virtually all products from all countries. The import surcharge, under Section 122 of the Trade Act of 1974, automatically expires on July 24, unless continued by Congress.  The Administration now appears to be preparing to replace the import surcharge with new tariffs against countries found not to be enforcing forced labor laws.

On June 1, the United States Trade Representative (USTR) announced proposed tariffs of 10-12.5% on imports from 60 countries under the authority of Section 301 of the Tariff Act of 1974. The hearing on the proposed action is scheduled for July 7. USTR has released its report, press release, and Federal Register notice 2026-11296.pdf with the details, which are summarized below:

1. 10% tariffs are proposed for six countries with failed enforcement of forced labor laws, including: Canada; Ecuador, the European Union; Indonesia; Mexico; and Pakistan.
2. 12.5% tariffs are proposed for 54 countries that failed to impose and effectively enforce prohibitions on forced labor, including: Algeria; Angola; Argentina; Australia; the Bahamas; Bahrain; Bangladesh; Brazil; Cambodia; Chile; China, People’s Republic of; Colombia; Costa Rica; Dominican Republic; Egypt; El Salvador; Guatemala; Guyana; Honduras; Hong Kong, China; India; Iraq; Israel; Japan; Jordan; Kazakhstan; Kuwait; Libya; Malaysia; Morocco; New Zealand; Nicaragua; Nigeria; Norway; Oman; Peru; the Philippines; Qatar; Russia; Saudi Arabia; Singapore; South Africa; South Korea; Sri Lanka; Switzerland; Taiwan; Thailand; Trinidad and Tobago; Türkiye; United Arab Emirates; United Kingdom; Uruguay; Venezuela; and Vietnam.

Importers of products from the targeted countries should monitor the upcoming hearing and its outcome.

President Trump Orders Enhanced Customs Enforcement, Targeting Foreign Importers of Record

On June 3, President Trump issued an Executive Order, Strengthening Customs Enforcement – The White House. Among other areas, the White House is requiring the Department of Homeland Security (DHS) and CBP to strengthen several requirements for Importers of Record (IORs) including:

• Increasing bonding requirements and requiring Importers of Record to maintain a minimum level of tangible domestic assets, bonding, or both;
• Subjecting foreign IORs to heightened requirements for formal entry;
• Authorizing only U.S. IORs to file informal entry;
• Imposing a “good standing” requirement on all IORs; and
• Increasing vetting procedures for all individuals and entities that conduct activities directly related to the importation of goods.

Moreover, more importers of record may be considered to be “foreign” and subject to greater scrutiny if they do not own real property in the U.S., have a physical presence with significant activity in the U.S., or have sufficient tangible assets located in the U.S.

The Order also includes directions to Department of Homeland Security (DHS) and Customs and Border Protection (CBP) to:

• Establish various disclosure and certification requirements designed to combat duty evasion and noncompliance with supply chain rules.
• Increase enforcement of existing customs laws, including by establishing a 50% minimum penalty floor limiting CBP’s discretion to reduce the assessed penalties on importers who violate customs laws.
• Enhance the seizure and disposal of non-compliant imports.
• Enhance transparency, including by publishing annual transparency reports.

What importers — and U.S. purchasers who buy from “foreign” importers of record — should do now and within the 45-180 day phase-in period:

• Plan to monitor and review the new standards, policies, guidance, requirements, and regulations established to implement the new EO rules.
• Be alert to the increased penalties.
• Check your supply chain — be aware of who is importing your products.
• Meet with counsel and discuss the EO and its potential impact for your company’s Customs compliance.