Businesses start claiming refunds for illegal Donald Trump tariffs

A system allowing businesses to claim refunds for tariffs imposed by Donald Trump, which the US Supreme Court deemed unconstitutional, officially launched on Monday. The move marks the initial phase of a complex process that could eventually see consumers reimbursed for import taxes they indirectly paid, though this is expected to be a slow and challenging endeavour.

US Customs and Border Protection (CBP), the agency overseeing the system, confirmed that importers and their brokers could begin submitting refund claims via an online portal from 8 am. This follows the Supreme Court's 20 February ruling that found Trump had overstepped his authority by setting new import tax rates on products from numerous countries, citing a national emergency to invoke a 1977 emergency powers law. The 6-3 decision concluded that Trump had usurped Congress's tax-setting role.

While the Supreme Court's majority opinion did not directly address refunds, a judge at the US Court of International Trade subsequently determined last month that companies subjected to these tariffs were indeed entitled to their money back.

Businesses are now required to submit declarations detailing the goods on which they collectively paid billions of dollars in import taxes. CBP estimates that if a claim is approved, refunds will be issued within 60-90 days. However, the government plans to process these refunds in phases, prioritising more recent tariff payments. Any number of technical factors and procedural hurdles could also delay an importer's application, meaning any reimbursements businesses plan to make likely would "trickle down to consumers slowly."

The launch was not without its initial difficulties. Rebecca Melsky, co-owner of Washington D.C.-based clothing company Princess Awesome, reported that the system appeared "buggy" when she attempted to create a mandatory account on Monday. She tried using two different web browsers to submit her CBP import code and company information but was unsuccessful. Similarly, a lawyer in Northern Virginia noted that his clients experienced system delays and lag times. Ms Melsky's company imports some of its clothes from factories in Bangladesh, China, India and Peru, and she estimated it paid \$32,000 in these tariffs. "My expectations have been pretty low about whether we were actually going to see any money back to us," she said. "I’m heartened by the fact that there’s any system at all, but I’m only slightly more optimistic than I was last week, which was not very."

Customs and Border Protection said in court filings that over 330,000 importers paid a total of about $166 billion on over 53 million shipments. Not all of those orders qualify for the first phase of the refund system's rollout, which is limited to cases in which tariffs were estimated but not finalized or within 80 days of a final accounting.

AP Photo/Mark Lennihan

To receive refunds, importers have to register for the CPB's electronic payment system. As of April 14, 56,497 importers had completed registration and were eligible for refunds totaling $127 billion, including interest, the agency said.Legal experts are advising caution and diligence. Meghann Supino, a partner at Ice Miller, stressed the importance of accurately listing all document numbers for forms submitted to CBP that describe imported goods and their value. "If there is an entry on that file that does not qualify, it may cause the entire entry to be rejected or that line item might be rejected by Customs," she warned. Ms Supino anticipated "hiccups" with the portal's launch, stating: "Like any electronic online program that goes live with a lot of interest, I would expect that there might be some hiccups with the program on Monday. So we continue to ask everyone to be patient, because we think that patience will pay off."

Nghi Huynh, partner-in-charge of transfer pricing at accounting and consulting firm Armanino, echoed this sentiment, highlighting that many companies claiming refunds will have imported a mix of items, not all of which will qualify immediately. "It’s about having a clear process in place and keeping track of what’s been submitted and what’s been paid, so nothing falls through the cracks," she said, emphasising that "Each file can include thousands of entries, but accuracy is critical, as submissions can be rejected if formatting or data is incorrect."

Despite the initial frustrations, some businesses are seeing progress. Justin Angotti, an associate attorney in the international trade practice of global law firm Reed Smith, confirmed that his clients eventually had their declarations accepted on Monday, sometimes after several attempts. He praised CBP's responsiveness, stating: "So far, Customs has been very responsive in trying to troubleshoot the issue."

The question of whether consumers will benefit from these refunds remains. Tariffs are paid by importers, who often pass these costs on through higher prices. While businesses are not legally obliged to share their refunds with customers, class-action lawsuits are progressing through the US legal system, aiming to compel companies ranging from Costco to Ray-Ban maker Essilor Luxottica to reimburse shoppers.

Individuals may have a better chance of receiving refunds from delivery companies such as FedEx and UPS, which collected tariffs directly from consumers. FedEx has stated its intention to return tariff refunds to customers once received from CBP. "Supporting our customers as they navigate regulatory changes remains our top priority," FedEx said in a statement. "We are working with our customers as CBP begins processing refunds and plan to begin filing claims on April 20."