The U.S. government is preparing to launch a new online portal next week aimed at helping businesses claim refunds for tariffs deemed illegal by a recent Supreme Court ruling. The portal, named the Consolidated Administration and Processing of Entries (CAPE), will be operated by U.S. Customs and Border Protection (CBP) and will officially open for refund applications on April 20.
### Background of the Tariff Refund
In February, the Supreme Court ruled that former President Trump had unlawfully imposed tariffs under the International Emergency Economic Powers Act (IEEPA). Following this decision, businesses have sought restitution through thousands of lawsuits at the Court of International Trade (CIT). It is estimated that the U.S. government may owe businesses approximately $175 billion in refunds due to these illegal tariffs.
According to CBP, CAPE is designed to streamline the process for filing refund requests that comply with the court’s ruling and applicable laws. The guidance provided by CBP highlights the electronic submission process for claims related to IEEPA duties.
### Burden Placed on Importers
While the new portal may facilitate refunds for businesses, legal experts indicate that the responsibility for claiming these refunds largely falls on the importers themselves. Trade attorneys note that CBP is requiring hundreds of thousands of U.S. importers to navigate the refund process, which may not be straightforward.
Lizbeth Levinson, co-chair of the international trade practice group at Fox Rothschild, commented on the matter, stating that although CBP has been collaborative, the burden remains squarely on the importers to initiate their claims. The system is currently limited to what are referred to as “unliquidated tariffs,” meaning only duties that can still be amended are eligible for claims, along with tariffs finalized by CBP within the last 80 days.
### Who Can Claim Refunds?
Only two categories of entities are eligible to submit claims via CAPE: businesses that directly paid IEEPA tariffs and customs brokers that settled duties on behalf of importers. Importantly, only the designated importer of record is entitled to recover any refunds. Consumers affected by elevated prices due to tariffs cannot file claims themselves.
### Refund Process and Timeline
Importantly, the refunds will not be automatic. Businesses must actively opt into the refund process and await CBP’s confirmation of their claims. Levinson made it clear that these claims cannot be expected to result in immediate payouts. She stated that businesses must navigate a series of procedural hurdles to secure any refunds, despite the fact that customs officials possess necessary reimbursement information.
In terms of what types of tariffs are eligible, only IEEPA tariffs fall within the scope of CAPE at this time. CBP has indicated that the portal will accept requests for estimated tariffs alongside those finalized in the past 80 days. According to Sanne Manders, president of Flexport, about 63% of all IEEPA duties are reportedly eligible for refund claims, while the remaining duties will not be included in the initial rollout.
### Anticipated Challenges
Although CBP aims to process valid claims within 60 to 90 days, complications can arise. Errors or inaccuracies in the claims can delay the refund process. This concern is echoed by Manders, who noted that it is common for customs brokers to make mistakes, such as misapplying tariff codes.
From a logistical standpoint, experts warn that the transitional period starting April 20 could lead to complications as claim submissions begin. Adam Hanover, an advisory director at CohnReznick, expressed skepticism about the effectiveness of the system, voicing concerns about potential operational challenges.
### Alternative Solutions for Businesses
Given the complexity and unpredictability of the refund claims process, some businesses have considered alternate routes. Certain hedge funds and financial services firms are offering to purchase refund claims from importers. This provides companies an immediate cash influx while shifting the administrative load of filing claims onto the financial institutions.
Flexport’s Manders explained that this option could be especially attractive to businesses needing immediate liquidity. By selling their claims, importers can receive funds quickly rather than endure the lengthy claims process.
### Conclusion
As the launch date for CAPE approaches, businesses are preparing to navigate the intricacies of claiming tariff refunds. With the knowledge that refunds will not occur automatically, many companies, including Learning Resources CEO Rick Woldenberg, have expressed frustration over the refund process. While Woldenberg plans to be among the first to file a claim once the portal opens, he stressed that an automatic reimbursement system would be simpler and more efficient for all parties involved. The coming weeks will reveal how effectively CBP’s new portal can manage the anticipated influx of claims.
Source: Original Reporting
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