In February, the U.S. Supreme Court ruled that the administration’s emergency tariffs were illegal, and it ordered the government to return the $165 billion it had collected so far. Last week, the U.S. Court of International Trade ruled that a set of replacement tariffs installed after the first set were overturned were also invalid. Liz Levinson co-leads the international trade practice at law firm Fox Rothschild in Washington. She sued the federal government on behalf of 100 companies over the IEEPA tariffs. BBTW columnist Peter Green spoke with Levinson about refunds, court rulings, and what’s actually left of the tariff slate.
The courts have now struck down the two main pillars of the tariff program. Let’s start with the IEEPA duties — what’s happening on the ground right now?On the IEEPA duties, the Customs Service has started refunding the money. There are actual live people who have received money starting on May 11th. The process is that they’ve created a mechanism for gaining the refunds that’s broken up into different phases. We’re now in Phase 1, which covers all shipments that have not been liquidated or that were liquidated within the last 80 days. The burden is on the importer to upload a spreadsheet — a spreadsheet of all their entries that fit those criteria, i.e., they’ve either not been liquidated or they were liquidated within the last 80 days.
What does “liquidated” mean in this context? It’s not a term most people know.It’s an important term for your readers to understand because “liquidated”, a lot of people think they import something into the United States, Customs clears it, they maybe sell it downstream, it enters commerce. But from Customs’ point of view, it is not final. They can still come back and ask for more duties, and they have 314 days to do that. And that process of finalization is called “liquidation.”
So even after the goods have changed hands multiple times — bought, sold, consumed — the importer is still technically on the hook?Yep. The importer of record — Customs can come back and say you owe more duties because they maybe disagree with the classification you brought it in under, or some other reason. Maybe there’s anti-dumping duties or other kinds of duties that you didn’t pay. Nothing is final until the shipment is liquidated.
And if something was already liquidated before you can file a Phase 1 claim?If it was liquidated, you will get something back, but you may be part of Phase 2. This is Phase 1 — liquidated within 80 days. So if something was liquidated 90 days ago, you can’t put in now in Phase 1, but you will get your refund eventually when they come up with Phase 2. If something has been liquidated and it’s beyond that 80 days, you have to make sure you don’t hit 180 days, because if it’s more than 80 days but less than 180 days, you have to file what’s called a protest. But basically, you’re either in Phase 1 or you’re in Phase 2.
So the refund goes to the importer. What about the retailers, the small businesses, the consumers who absorbed those higher prices?It’s just the importer, not the retailer. There’s been a number of lawsuits. People suing the importer. Costco $COST has been sued. I think Walmart $WMT has been sued. FedEx $FDX and DHL have been sued. If you had the foresight to make a contract with your provider saying, “if you get this money back, you’ve got to refund me,” but otherwise [the importer] has no legal obligation [to pay you back].
Why did the courts strike down the IEEPA tariffs in the first place?They found them unconstitutional. The Constitution, Clause 8 of Section 1 of the Constitution, gives Congress the authority to levy taxes, and that includes import duties. The Court found that the president doing it was illegal. Unconstitutional. They found that you could not levy taxes or import duties under any circumstances under IEEPA. IEEPA does not use the word taxes or customs duties anywhere in the provision. That’s meant for other purposes.
And then the administration tried a different legal basis — Section 122 — to impose a blanket 10% tariff on imports. What happened there?The Court of International Trade in New York ruled that that is illegal. Section 122 allows the president to levy taxes when it’s necessary to correct a balance of payment problem with another country. And the administration did not find any of these balance of payment inequities with any other country. And that was a prerequisite. The administration just didn’t want to do the homework.
What’s actually left standing, then? What tariffs are still in effect?There’s the normal tariffs, which we refer to as the most favored nation tariffs. Those are approved by Congress. Now the administration has brought some more, 76 more Section 301 cases that are being considered now by the Office of the U.S. Trade Representative. The administration is hoping to replace all these tariffs with new Section 301 tariffs. The IEEPA duties are not in effect.
And the 10% Section 122 tariff — is Customs still collecting it while this is being litigated?The Court said, yes, we find them illegal, but we’re going to allow Customs to continue to collect the 10% while this is being litigated. And ultimately, maybe it goes up to the Supreme Court, and they’re going to have to have another refund system just like they did for IEEPA.
You filed suit on behalf of 100 companies. What are the stakes for your clients?The largest is expecting $8 million back in refunds, the smallest $1,500.
Have any of your clients been casualties of this — gone out of business entirely?Some of them did, because they couldn’t afford to pay the tariffs at the time. A toy company who were bringing in all the toys from China and South Korea.
—Peter S. Green
(This interview has been edited and condensed for clarity and length)
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