Scott Lincicome, Alfredo Carrillo Obregon, and Chad Smitson
With Monday’s launch of the Trump administration’s new tariff refund system, the process of returning more than $166 billion in illegally collected “emergency” import taxes has entered a new stage. Unfortunately, the system’s design is less than ideal and risks leaving thousands of American companies with much less than they’re legally owed. This blog post summarizes the refund system just unveiled by the US Customs and Border Protection—called the Consolidated Administration and Processing of Entries (CAPE)—and explains the good, the bad, and what we still don’t know.
The bottom line: Intentionally or not, the federal government will likely keep tens of billions of dollars it should have returned to importers months ago—and that it promised US courts it would return if they invalidated the tariffs at issue.
Background
As we discussed in March, the Supreme Court decision in Learning Resources, Inc. v. Trump struck down the tariffs the administration imposed under the International Emergency Economic Powers Act (IEEPA) but left the issue of refunds unresolved. Thousands of US importers thus filed suit in the US Court of International Trade (CIT) to get their money back. In one of those proceedings, the judge assigned to all refund claims ordered US Customs and Border Protection (CBP) to issue tariff refunds “immediately.” The agency responded that the limitations of its online import processing system (i.e., ACE) prevented it from issuing quick refunds, so the judge gave CBP a short amount of time to come up with a refund plan and demanded the agency keep the Court updated on its implementation. That plan involved a new online platform, CAPE, to process refund requests, and the system was officially launched on Monday.
Here’s what we know right now.
The Good
Most obviously, it’s a good sign that CBP has developed a system to consolidate and process IEEPA tariff refunds. Yes, it took a Supreme Court ruling and subsequent CIT order to spur CBP into action, but it’s still positive that the agency didn’t drag its heels or refuse outright to implement the CIT order. Given that refunds are a problem of the federal government’s own creation, establishing CAPE in a timely manner is the least they could do—and, thanks to the Court, they did it. Good.
It’s also encouraging that US importers who logged into CAPE this week do not seem to have had significant issues accessing and using the CAPE system. Of course, the system was only deployed on Monday, so it’s too early to rule out future technical issues (some companies have reported errors in their submissions due to heavy site traffic, while others have raised some technical limitations that will require more work on their and CBP’s end). We’ll have to wait several weeks before confirming that the system has been relatively seamless. But for now, CAPE has been deployed on time and is accessible to eligible importers. Compared to other government website debacles, CAPE should be considered a win, but this is admittedly a low bar to clear.
The Bad
Unfortunately, the CAPE system remains far from an ideal system in which all IEEPA duties are immediately and automatically refunded to all importers that paid them.
First, many importers who paid IEEPA tariffs and many imported goods (“entries”) subjected to IEEPA tariffs are not currently eligible for refunds via CAPE (or any other system).
Second, importers that successfully use CAPE will not get their money back immediately. CBP’s estimated refund timeline for unliquidated entries is 60 to 90 days, while the refund timeline for liquidated entries is unclear. (CBP’s guidance indicates that these entries would be reliquidated within one business day but did not indicate when importers could expect to get their refunds thereafter.) While these timelines are, based on CBP’s filings before the CIT, faster than they would have been without the CAPE system, they are not as fast as they could have been if CBP had (1) prepared for refunds last May (when the CIT first ruled against IEEPA tariffs); (2) voluntarily begun the refund process in February after the Supreme Court made its ruling; and/or (3) allowed importers with unliquidated entries to simply file a “post-summary correction” eliminating the IEEPA tariff line item (and thus their liability).
The Worrying Unknowns
Beyond simply culling the list of importers and entries eligible for CAPE, there are two other potential hurdles that will further reduce the IEEPA tariff refund payout.
First, it’s unclear if all eligible firms will proactively apply for refunds via CAPE, and there are several reasons to think they won’t. News reports show, for example, that many firms are choosing to forgo refunds because it would cost more (in lawyer and broker fees) to apply for them than they’re owed. Other firms have indicated they’re worried that CAPE applications might be a red flag for heightened CBP scrutiny of their paperwork, while others still have avoided publicly seeking refunds out of concern for political blowback or customer lawsuits. With some lawsuits already filed and President Trump openly saying he’ll “remember” firms that don’t request refunds, such concerns are hardly unwarranted. Regardless, any firms that do drop their refund claims will be the direct result of the Trump administration’s choice to place the refund and paperwork burdens on importers instead of where it belongs—on the government.
Second, we don’t yet know how intensely CBP will scrutinize importers’ applications in order to reduce refund amounts owed or reject applications outright. The agency has made clear, for example, that full refunds will not be given in many cases because CBP will consider other Trump tariffs (e.g., Section 232) that would have applied if IEEPA tariffs had never existed. Due to the complex mechanics of tariff-stacking, IEEPA tariffs displaced or exempted other tariffs; now, however, those other tariffs will be applied. CBP has also promised that a strict multistage review process awaits the accepted applications, requiring rigorous compliance and offering quick rejections for any applications that don’t meet the standards (even one incorrect entry). Heavy CBP scrutiny could also lead to recalculated (higher) duty amounts owed, penalties for past paperwork errors, or even customs audits. Given the well-documented chaos of the 2025 tariff schedule, administrative errors are surely higher with IEEPA entries than ones from previous years. Overall, US importers who submit applications expecting full refunds might eventually discover they’re getting much less—and maybe also getting a call from a government auditor.
Finally, the government could still appeal the CIT’s refund order before the June 7 deadline. This uncertainty could further dissuade or delay firms that could apply for refunds but instead choose to wait for the legal dust to settle. An appeal would also mean that American taxpayers would be on the hook for higher interest payments—around $22 million per day on the $166 billion owed.
What Comes Next?
To reiterate: The courts have ruled that the federal government illegally collected $166 billion in IEEPA duties and now must pay them back, with interest. As shown in the following graphic, however, the Trump administration’s refund approach will—intentionally or not—systematically reduce the headline refund number by as-yet-unknown billions.
Today, we can start to see the effects of Cut 1, but Cuts 2 and 3 are coming—we just don’t yet know how deep they’ll be. Regardless, this is a far cry from the easy system the Trump administration promised the courts last year—and from the automatic refund systems the federal government has implemented in past cases of bulk duty refunds. Here, CBP is making firms proactively apply to get their money back, assembling long lists of relevant import entries and incurring costly man-hours and legal/consulting/broker fees, all to recover their money—money the government had no legal right to take (yet quickly took) in the first place. The firms are also essentially volunteering for an audit and maybe lawsuits or political retribution, too. And we still don’t know if the government will appeal the CIT’s refund order—something Treasury Secretary Scott Bessent hinted at in February when he said it “could take years to litigate and to get to the payouts.”
CAPE isn’t the worst case, but it’s far from the best. And there’s plenty of time left for it to get worse.
