President Donald Trump's administration said it is unable to comply with a recent court order to begin refunding $166bn in tariffs the US Supreme Court has struck down, and that setting up systems to handle mass refund requests will probably take 45 days.
The administration is making "all possible efforts" to install automated systems that can issue refunds to more than 330,000 importers that made 53mn customs entries under the International Emergency Economic Powers Act (IEEPA), a top customs official said. But making immediate changes is not possible because doing so could clash with other deadlines and divert staff away from "imminent threats" to national security and the economy, the Customs and Border Protection (CBP) official said.
"CBP has never been ordered to, nor has it attempted to, process a volume of refunds anywhere near the volume of total entries and Entry Summary lines on which IEEPA duties have been deposited," CBP trade programs executive director Brandon Lord wrote in a declaration filed in federal court on Friday.
The administration's stated difficulty in paying the ordered refunds could offer legal ammunition to states that have filed a lawsuit to block new 10pc tariffs that Trump imposed last month. The administration successfully avoided a court-ordered freeze on its IEEPA tariffs last year by pledging to pay refunds if they were struck down. But the expectation of weeks of delay in paying out refunds could test the patience of federal judges hearing the latest tariff lawsuit.
The US Court of International Trade on 4 March ordered CBP to strip out IEEPA tariffs owed on "any and all" imported goods, with a focus on taking out the tariffs during "liquidation" — the calculation of final duties — on all customs entries. The Trump administration earlier this week already conceded it will pay interest on refunds it is require to make, which economists expect will result in billions of dollars of additional payments paid back to importers.
Lord, in his declaration, said CBP is "not able" to comply with court order earlier this because its systems were already set up to automatically liquidate more than 300,000 custom entries every week. Halting liquidation and offering refunds would require CBP staff to spend 4mn hours to manually input refunds, he said, whereas the automated system still being developed would "streamline and consolidate refunds and interest payments" for the affected 330,000 importers.
Under the planned automated system, refunds would not occur automatically. Lord said importers would have to file a "declaration" with a list of entries on which IEEPA duties were paid, after which CBP would validate the declaration "as soon as practicable". The system would then finalize the entries and pay out refunds electronically. But Lord identified a potential obstacle, which is that just 21,000 of the 330,000 importers paying IEEPA tariffs have taken steps to receive refunds electronically.
Federal judge Richard Eaton, who is hearing all tariff refund cases in the US Court of International Trade, has yet to respond to CBP's declaration. The court could order additional requirements to handle the tariff refunds.
