After $20 billion in tariff refunds, Trump administration's latest move could halt payments
After roughly two months since President Donald Trump's administration rolled out its electronic tariff refund platform, CAPE, the Department of Justice is now threatening legal action to bring the process to a grinding halt. On Friday, the DOJ said that it intended to appeal a federal judge's order that expanded the scope of getting refunds to all companies that paid the duties and not just those who sued for the rebate.
A series of rulings from the U.S. Court of International Trade had spared companies from having to individually sue the administration for the refunds, making them universal, after the Supreme Court struck down the sweeping emergency tariffs. While the court gave Customs and Border Protection discretion over the timing and pace of repayments, Judge Richard K. Eaton demanded that CBP Commissioner Rodney Scott appear in court to share a timeline of when his department would repay all 330,000 importers, CNBC reported. Following the order, the DOJ, in a court filing, objected to the judge's demand and argued that he exceeded his authority in ordering universal refunds. The department claimed the government can't issue refunds for importers or finalize the amount owed unless the applicant sues to recover the money it paid in illegal tariffs.
The Justice Department's lawyers asked Eaton to allow the CBP commissioner's deputies to appear in his place, arguing that Scott, being a high-ranking presidential appointee, could not be compelled to testify. Furthermore, arguing against Eaton's authority to issue the universal injunction, the layers added that CBP would continue to move "as quickly as it can to process refunds in a phased approach" only for the businesses that filed legal complaints asserting their rights to the rebate, the publication reported.
Experts predict that the DOJ's latest filing indicates that the government is not looking to issue payments to all importers who paid them. "I do expect more companies will start considering taking proactive action, like filing protests or lawsuits if they haven't already," James Kim, an international trade partner at ArentFox Schiff, told Politico's 'Morning Trade'. Furthermore, Valerie Sorensen-Clark, a partner at the GDLSK law firm, who previously worked with the CBP, said the dispute now appears to be headed to an appeals court. "Regardless of where the courts ultimately land, additional clarity on the issue will benefit importers, CBP, and the trade community alike," she wrote on LinkedIn.
Before Friday's filing, the refund process had been going relatively orderly, with applications for refunds totaling $85 billion over half of the $166 billion the agency estimated the government owes to companies based on the applications accepted for processing as of May 22. In a reported legal filing, the CBP said it had so far directed the Treasury Department to issue $20.6 billion in refunds. The refunds are to be deposited into the bank accounts of the successful applicants in phases, with the first payment issued on May 12, about three weeks after the CBP started taking applications.
