Importers Eagerly Await Supreme Court Decision on IEEPA Tariffs and Potential Tariff Refunds
POSTED BY Andrea Nappi Conforme, Bahaneh Hobel, John Trinidad, and Tracy Genesen
Alcohol beverage importers may finally get their answer from the United States Supreme Court this week on the validity of the Trump Administration’s tariffs issued pursuant to the International Emergency Economic Powers Act (IEEPA).[1] Recent news reports suggest that the Court’s answer may come as early as this Friday, when the Court is scheduled to issue opinions on pending cases. Based on the questions posed by both liberal and conservative justices during oral argument, many commentators expect the Court to conclude that the president exceeded his authority by invoking IEEPA to issue those tariffs.
There are, however, a lot of open questions beyond just the validity of the tariffs. Most importantly, if the Court finds the tariffs are invalid, will importers that have already paid the tariffs be entitled to refunds and what will the process be for getting those refunds. Questions also remain as to whether the case will be remanded to a lower court to determine the appropriate relief and whether it will fall to the Customs and Border Patrol to establish a refund process.
In considering a strategy for navigating the uncertain tariff environment, some importers have taken proactive steps in an attempt to protect any right they may have to claim a refund should the Court invalidate the tariffs. For example, a number of companies filed suit with the U.S. Court of International Trade (CIT) to preserve their ability to receive tariff money back should the Supreme Court deem tariffs unconstitutional. Costco, in one of the most publicized CIT cases, sought a preliminary injunction, along with several other plaintiffs, to suspend the liquidation of certain Customs entries for goods subject to IEEPA tariffs, in part based on concerns that the CIT may not have authority to order refunds through reliquidation. The other concern driving the filing is that a standard protest would not be appropriate as the actions taken by Customs in the application of duties (and tariffs) are purely ministerial in nature, and therefore not protestable.
In mid-December, CIT denied the consolidated plaintiffs’ motion for preliminary injunction finding that it was moot because (as CIT confirmed), it has the authority to reliquidate entries. The court did not address whether the liquidated entries would be protestable, implying that they may not be. More importantly, the government stated that it would not challenge a future reliquidation order by CIT and the CIT confirmed that based on its statements, the government would be judicially estopped from doing so in the future.
Notwithstanding CIT’s denial of plaintiffs’ motion, importers may ultimately be required to file an action with CIT to obtain a refund. The CIT noted in its opinion and denial of Costco’s motion that injunctions were not the appropriate tool to prevent entries from liquidating as Customs would be overrun and unable to process the volume of requests. This implies that CIT filings from every affected importer would not be encouraged for the same reason.
While it is difficult to predict the future, we can take court opinions and orders in the IEEPA cases to draw some reasonable inferences. At this stage, assuming the IEEPA tariffs are invalidated, it is most likely that CIT will consolidate pending cases and issue a ruling on how refunds will work for all importers.
In the meantime, there are some actions importers can take to be in a position to pursue a tariff refund.
Take steps to confirm current access to CBP’s Automated Commercial Environment system (ACE).
Maintain records (separate from the ACE System) in case the ACE system is overwhelmed or otherwise made inaccessible should the tariffs be invalidated by the Supreme Court.
Make sure documentation and records are complete, including (for each entry of goods): entry number; entry date; HTS code and description; type and amount of duties paid; country of origin; projected liquidation date. Importers should also have copies of 7501s, entry summaries, commercial invoices, packing slips, and bills of lading.
Note also that the first alcohol imports subject to IEEPA tariffs will begin to liquidate in mid-February.
Thank you to Andrea Nappi Conforme, President of the National Association of Beverage Importers (NABI) for co-authoring this blog post with our DP&F Alcohol Beverage Law and Compliance team. NABI is a national trade association representing U.S. importers of beer, wine and distilled spirits. For more information about NABI or membership inquiries, please contact NABIpresident@bevimporters.org.
For further questions regarding IEEPA tariffs and potential refunds, or other alcohol beverage matters, please reach out to DP&F’s Alcohol Beverage Law and Compliance team.
[1] The cases are Donald J. Trump, et al. v. V.O.S. Selections, Inc., et al. and Learning Resources, Inc., et al. v. Donald J. Trump, et al.
