A federal judge questioned a U.S. Customs and Border Protection (CBP) official on Tuesday about the government’s approach to refunding billions in tariffs that importers paid before the Supreme Court deemed certain tariffs illegal. Judge Richard Eaton of the Court of International Trade sought clarity to decide if he should order the government to expedite or expand refund systems.
Judge Eaton acknowledged the online system CBP created for processing refund claims. He praised its functionality and noted the government aims to return import tax money collected without constitutional authority. However, he warned that a Justice Department appeal, which challenges his order to refund all companies, not only those that sued, might complicate the process. He remarked, “Sometimes lawyers push legal positions beyond what is useful for the client.”
The Justice Department contends only companies that participated in lawsuits against the tariff hikes can seek refunds. This issue now rests with the U.S. Court of Appeals for the Federal Circuit. Eaton had previously directed CBP to establish a system allowing all importers to apply for their share of $166 billion collected before the Supreme Court’s ruling. He permitted a phased rollout as CBP developed appropriate technology.
The agency’s online system began on April 20, processing applications from importers without finalized tax bills. Eaton scheduled the hearing to decide whether to force CBP to issue refunds immediately. Disagreements over the timeline arose when Eaton summoned CBP Commissioner Rodney Scott. The Justice Department objected, proposing a deputy’s attendance. Although the Federal Circuit temporarily blocked Scott from testifying, Susan Thomas, CBP’s executive assistant commissioner for trade, spoke at the hearing instead.
The hearing addressed CBP’s readiness to extend the refund process to companies with longstanding tariff payments. As of Tuesday, refund claims amounting to $90 billion were processed, with $23 billion in refunds directed. Initially, CBP restricted applications to businesses with unresolved tax bills from the Supreme Court’s decision date or recently settled bills.
Thomas mentioned that a process for older shipments should be ready by July’s end, but held back on handling cases beyond an 80-day window while Eaton’s comprehensive refund order remains under appeal. She stated, “I can’t speak to the appeal, but I can tell you I will be prepared.”
Government lawyers argued Eaton need not enforce order compliance, as 6.9% of the $166 billion collected are under appeal. They assured most taxed imports eligible for refunds would be processed by existing systems or are involved in ongoing lawsuits. Plaintiffs’ attorneys argued that $11 billion remains significant. They asserted it unconstitutional for their clients to pay fewer tariffs than others who paid invalid duties under Trump’s authority. They suggested that Eaton might certify the case as a class action, covering thousands of similar importers.
Judge Eaton postponed any decision on the class action proposal and issued no rulings. He expressed hope that CBP’s progress would achieve his order’s objectives without needing to resort to class actions. He concluded, “Let the Customs and Border Patrol be the Customs and Border Patrol. Let them do their job.”
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