Washington– In a defeat for the Trump administration, a federal judge in New York ruled on Wednesday that companies that paid tariffs that the Supreme Court struck down last month are entitled to refunds.
Judge Richard Eaton of the US Court of International Trade wrote that “all registered importers” are “entitled to benefit” from the Supreme Court’s ruling that struck down blanket import taxes imposed by President Donald Trump last year under the 1977 International Emergency Economic Powers Act (IEEPA).
Eaton also wrote that he alone “will hear cases related to IEEPA fee recovery.” The ruling provides some clarity on the customs duty recovery process, something the Supreme Court did not even mention in its February 20 decision. Commercial attorney Ryan Majerus, partner at King & Spalding, a former US trade official, said he expected the government to appeal or “seek a stay of implementation to buy more time for US Customs to comply.”
The federal government has collected more than $130 billion in now-expired tariffs through mid-December, and could ultimately be on the hook for a $175 billion refund, according to calculations from a Penn Wharton budget model.
Specifically, Eaton was ruling on a case brought by Atmus Filtration, a Nashville, Tenn., company that makes filters and other filtration products, claiming the right to draw back customs duties.
Another federal court on Monday rejected the Trump administration’s attempt to slow the refund process. The US Court of Appeals for the Federal Circuit has begun the next stage in the recovery process by sending it to the New York Commerce Court to resolve the issue.
Now US Customs and Border Protection must figure out a way to process refunds. Customs routinely refunds customs duties when there is some sort of error, but its system “was not designed to refund duties en masse,” said trade lawyer Alexis Early, a partner at Brian Cave Leighton Beisner. “The problem is in the details of the administrative process.”
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Anderson reported from New York.
AP Writer Lindsay Whitehurst contributed to this story.