Between now and when its term ends in June, the United States Supreme Court is expected to decide whether global “reciprocal” tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act of 1977 (IEEPA) are unlawful. The much-anticipated decision could come at any time and, no matter the outcome, likely will significantly change the U.S. tariff landscape in both the short- and long-term. Here’s what importers need to know as they wait.

How We Got Here

The question before the court is whether IEEPA gives the president the authority to unilaterally impose tariffs in response to what the administration deems to be “national emergencies,” in this case U.S. trade deficits and the influx of illegal drugs, mainly fentanyl. Two lower courts have already decided the answer is “no,” and the Supreme Court will now decide whether to uphold those decisions.

What Importers Can Do

Regardless of when the Supreme Court’s decision is issued, unanswered questions will likely remain. First and foremost is how importers might receive refunds if the tariffs are found to be unlawful.

When goods are brought into the country, the “importer of record” must pay duties, including reciprocal duties. Presumably, if an importer paid IEEPA reciprocal duties but the Supreme Court strikes down the tariffs, the importer should be entitled to a refund. How that happens is likely to depend on, among other things, instructions from the court, the status of entry and whether it has “liquidated” or been made final, and how U.S. Customs and Border Protection (CBP) decides to process refund requests.

Regardless, if you’re an importer, and you’ve paid reciprocal tariffs, there are things you can do to help preserve your right to a refund if the court decides the tariffs were unlawfully imposed.

Keep Track of Your IEEPA Tariffs

If your company imports goods into the U.S., you should monitor and track all IEEPA duties paid in connection with those goods. The IEEPA tariff for each item is assessed based on a unique Harmonized Tariff Schedule of the United States (HTSUS) number identified at the time of entry. CBP keeps all the data needed to identify and calculate the IEEPA duties in the Automated Commercial Environment (ACE), which importers may access through the ACE Secure Data Portal. Regardless of which refund mechanism may ultimately be used, knowing what you paid and when you paid it will help make sure you receive any refund you’re entitled to.

Watch the Status of Your Entries

Monitor the status of each entry so you know the liquidation date, when CBP decides the duties and other fees are correct and fully paid and the entry is closed. An entry must liquidate within one year after the entry date and usually occurs within 314 days. Before an entry liquidates, the importer may file a “post summary correction” to change the declarations made at the time of entry. For entries subject to reciprocal tariffs, post summary corrections could be used to remove IEEPA tariffs so when the entry liquidates, CBP should issue a refund of the invalid tariffs. Importers with open entries subject to IEEPA tariffs should prepare to file post summary corrections for those entries if the Supreme Court invalidates those tariffs.

Pursue Administrative Remedies

If an entry has already liquidated, customs law provides a mechanism to challenge or “protest” the legality of certain CBP decisions related to that entry, including the HTSUS classification, the duty rate and the amount of duties paid. A protest must be filed within 180 days after an entry liquidates. If an importer protests illegal IEEPA tariffs and the protest is granted, an importer would receive a refund. If a protest is denied, the importer has another 180 days to seek judicial review at the Court of International Trade (CIT).

Importers whose entries of merchandise subject to IEEPA tariffs have already liquidated should prepare to protest the liquidation of those entries to receive a refund of the IEEPA tariffs paid. Such a protest should be filed either immediately after the Supreme Court rules if the Trump Administration loses or before the end of the 180-day protest period if no Supreme Court decision has been issued, whichever occurs first.

Should You File a Lawsuit to Protect Your Right to a Refund?

An increasing number of importers are filing lawsuits alleging the tariffs are unlawful, and many other importers are asking if they should do the same. Filing now may help preserve an importer’s claim to refund(s); the downside to not filing is the potential loss of refund opportunities for some entries.

The reason for filing a lawsuit is that CBP’s assessment of IEEPA duties may not be subject to protest because a protestable decision requires CBP to have engaged in some sort of decision-making process. When CBP’s role is merely collection of IEEPA duties mandated by executive order, it is only following instructions and not making a decision. As a result, under CIT precedent, before liquidation the only course of action to preserve an importer’s right to a refund is to file a case at the CIT challenging the IEEPA tariffs as unlawful.

Keep in mind that this is all uncharted territory. While the government has said it would not object to the CIT ordering reliquidation of entries subject to IEEPA challenge, a decision to reliquidate entries could still be appealed – and appeals can take months or years to be decided. Moreover, the details of any refund process may depend on the Supreme Court’s ruling and whether it applies only to future entries, the named parties, or perhaps only to some but not all of them. If the Supreme Court remands the case, the subsequent rulings of the lower courts and the administration’s reaction to those rulings could also impact the timing and availability of refunds.

Still, under CIT precedent, a complaint filed now with respect to entries not yet liquidated will arguably preserve the right to a full refund. That is likely to continue to be true even after the Supreme Court decision is handed down. While a protest may be required, it is also possible the CIT will find that importers must file for relief from the court even after the tariffs are declared illegal. A final decision also will consider the number of entries, their liquidation status, the amount of any refunds and an individual importer’s cost/benefit tradeoff from litigation. So, it makes sense to prepare now and cover both bases – administrative and judicial relief.

There is a standing order at the CIT to automatically stay all such new cases, but importers are filing now to claim their place in line for refunds if the Supreme Court ruling goes their way – a kind of insurance against the loss of their right to a refund. Miles & Stockbridge’s international trade lawyers also are awaiting the Supreme Court ruling and can help importers prepare or answer any questions about the tariffs.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.