Court ruling blocks some tariffs; refunds may be possible, pending appeals

The Court of International Trade (CIT) in Manhattan has blocked many of President Trump’s recently-issued tariffs, concluding that the President’s use of the International Emergency Economic Powers (IEEPA) to enact the tariffs was unlawful, ordering the administration to cease the tariffs within 10 days. Subsequently, the administration appealed the ruling to the U.S. Court of Appeals, which granted the motion for an extended stay, allowing the tariffs to stay in place while litigation continues. Importers should continue paying tariffs until further notice is issued by the government.

After granting the stay, the Court of Appeals has requested the plaintiffs to respond by June 5 and the government to reply by June 9. If the administration is unsuccessful in the appeals process, the impacted tariffs will be lifted, and Customs and Border Protection (CBP) will be required to begin the process of refunding prior payments. Many questions remain open regarding the refund process, including which parties will be entitled to the refunds and what mechanisms will be used to process refunds. What is certain is that robust recordkeeping will be a necessity.

Impacted tariffs:

• The April 2 Liberation Day tariffs, including the “universal” 10% tariff on all countries (except Mexico and Canada) and the “reciprocal” country-specific tariffs that have been paused for negotiations
• The 25% tariff on Mexico and Canada, issued February 1 and subsequently amended
• The 10% China tariffs, issued February 1 and subsequently amended
• The elimination of de minimis treatment for China and Hong Kong imports under $800 (meaning duty-free treatment for these imports will return if the court ruling is upheld)

Unimpacted tariffs:

• Section 301 tariffs
• Section 232 – 25% tariffs on autos/auto parts
• Section 232 – 25% tariffs on steel/aluminum
• Section 232 forthcoming tariffs on semiconductors, pharma, copper, lumber, and ships

While the CIT struck down the use of the IEEPA to impose the tariffs currently in place, it also held that the President does have the power to impose tariffs of up to 15% for 150 days to address concerns about the balance of trade. Additionally, though the ruling may eventually prevent President Trump from issuing tariffs using IEEPA, there are many other tariff authorities he may rely on in the future, though these alternatives are more limited in scope and/or duration than IEEPA.

Given the fluid nature of the IEEPA tariffs, Aprio recommends that importers closely monitor the liquidation status of their entries, consider filing requests for liquidation extensions, and, where applicable, enroll in reconciliation programs.

Learn more about the details of this announcement through the published CIT court ruling.

Contact your Aprio advisor with any questions about how this alert impacts you.