The Trump administration is resisting a court order requiring that the government refund the full $166 billion collected from illegal tariffs, raising the possibility that only some importers will be completely repaid.
In a series of recent legal maneuvers, the government has indicated that it could hold up the return of potentially tens of billions in previously paid duties. The government collected the revenue under a slate of tariffs struck down by the Supreme Court in February.
The Trump administration has also moved to shield Rodney S. Scott, the top customs official, from testifying about the tariff refund process at a court hearing set for next week. In an unusual move, a federal judge had ordered Mr. Scott to appear out of frustration with the government’s handling of the repayments.
Mounting its own, highly aggressive response, lawyers at the Justice Department then filed an emergency appeal late Tuesday in a bid to shield Mr. Scott from appearing. They offered to send another official in his place. In doing so, the government hinted to a panel of appellate judges that they would seek a reprieve from the Supreme Court if necessary.
The result was a dizzying new round of legal wrangling between the U.S. government and importers, the latest in a year of trade brinkmanship and uncertainty. For many businesses, it remains as unclear as ever if, or when, they will get back the full sums they paid in illegal tariffs, particularly given Mr. Trump’s publicly stated opposition to returning any of the money.
The fight arose just hours before the Trump administration announced a new round of tariffs meant to replace those struck down by the Supreme Court, including a proposed tariff of at least 10 percent on more than 80 countries.
Sara Albrecht, the chair of the Liberty Justice Center, the legal group that represented small businesses in suing over Mr. Trump’s past duties, stressed that it would continue fighting to secure full and easy refunds.
“At the end of the day, this money belongs to the businesses that paid it,” she said in a statement. “For the past year, many small businesses were forced to give effectively all of their working capital to the government supporting their illegal tariff scheme.”
The fight over refunds began in the spring, after Richard K. Eaton, a judge on the Court of International Trade, ordered the Trump administration to begin immediately and fully refunding duties imposed under the International Emergency Economic Powers Act, known as IEEPA. Under law, the refunds must be repaid with interest, which is costing the government millions every day.
In subsequent court filings, the government revealed that the task ahead would be massive and costly. The United States owed money to about 330,000 importers, particularly businesses, representing tariffs paid on about 53 million entries. To handle the expected flood of requests, officials at U.S. Customs and Border Protection raced to stand up a system that could process refunds in bulk, which went online in April.
At the time, customs officials said they would focus first on processing claims for certain tariffs, targeting those that had been paid but not finalized before the Supreme Court decision. Tariff payments are computed and settled through a lengthy process, known as liquidation, and the government suggested the possible universe of initial refunds could be about $127 billion of the total $166 billion amassed under IEEPA.
But the federal figure only told part of the story. The government also said there were entire categories of imports for which it could not, or would not, immediately and automatically process refund requests. At the time, customs officials offered little indication of how or when it would repay that money. While the administration has not supplied an exact figure to the courts, it could total nearly $40 billion.
That left in limbo many importers, including some businesses whose tariff bills were already paid and finalized. Only in the past week did the government reveal in clear terms that it would not proceed these refunds automatically, and that it expected each importer to file its own lawsuit — on which a judge would have to issue “importer-specific orders” — just to get its money back.
The stance appeared to infuriate Judge Eaton, who then ordered Mr. Scott, the commissioner of U.S. Customs and Border Protection, to testify at a hearing on June 9. Lawyers for the government later tried to shield Mr. Scott from that unexpected demand, a request that Judge Eaton denied, prompting the Justice Department to ask an appeals court to intervene.
The government also filed a separate notice that it intended to challenge the court’s original refund order.
A spokeswoman for U.S. Customs did not immediately provide a comment.
The government has taken steps to return some of the money owed. In a May 26 report, filed in a related legal proceeding, a top customs official estimated that it had processed about $85 billion in refund requests and repaid almost $21 billion to importers.
Ashley Akers, a top trade lawyer at the law firm Holland & Knight, said she anticipated that the pending appeal would not interrupt the processing of those requests even as the government prepares to litigate over a subset of the tariff revenue it collected. Still, she acknowledged it was a confusing situation for importers, some of which may be required to file their own lawsuits to reclaim the full amounts they are owed.
That could result in “a flood into the federal court system,” she said.
Before the government commenced its appeal, Grace Zwemmer, the U.S. economist for Oxford Economics, said that she expected more than $100 billion in IEEPA refunds to be issued in the second quarter, with the remainder occurring within a year. She added that companies would likely use refunds to replenish their working capital and adjust supply chains, rather than to cut prices or return money to consumers.
The new legal sparring spells more uncertainty for many U.S. businesses, which have already weathered more than a year of on-again, off-again tariffs. Some had been counting on the IEEPA refunds for a financial boost, particularly as Mr. Trump is taking steps to revive his duties using other authorities.
Immediately after the Supreme Court struck down Mr. Trump’s initial roster of tariffs, the White House imposed a new 10 percent tariff on nearly all imports, invoking a never-used power in another decades-old trade law.
The Court of International Trade found that tariff to be illegal as well, but left the duty in place pending appeal. Still, that tariff can only be kept in place without congressional approval for 150 days, and it scheduled to expire in July.
As a result, the administration has been preparing a new raft of tariffs by initiating two trade investigations that cover dozens of countries.
These focus on the practices countries use to boost their manufacturing sectors, and the laws they may or may not have to stop goods made with forced labor. Those tariffs are based on a legal provision that has frequently been tested in court, Section 301 of the Trade Act of 1975, which permits tariffs in response to unfair trade practices.
On Tuesday evening, the administration said that it would impose tariffs of between 10 and 12.5 percent on 59 countries and the 27-member European Union, for failing to crack down on goods made with forced labor. Those tariffs will presumably be added to other tariffs related to manufacturing practices.
Tony Romm is a reporter covering economic policy and the Trump administration for The Times, based in Washington.
The post Trump Administration Fights Court Order to Refund Some Tariffs appeared first on New York Times.
