Nov. 5 marked the beginning of oral arguments before the Supreme Court on Trump administration tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
Did Trump have the authority to impose tariffs under IEEPA?
It’s been the source of a major legal battle in the lower courts, including the U.S. Court of International Trade, and the federal courts, which have already ruled that Trump’s use of IEEPA this year has exceeded the authority granted by the statute. The Trump administration has appealed this ruling, saying that striking these tariffs could undermine diplomacy and national security.
Should the Supreme Court ultimately rule those tariffs invalid, U.S. produce importers who have paid IEEPA-related tariffs could potentially be granted refunds.
Tariff revenue increased over 200% in the U.S. from January to July, generating over $100 billion in revenue for the U.S. federal government, just from the baseline tariffs that began in April, says International Fresh Produce Association Vice President of U.S. Government Relations Rebeckah Freeman Adcock.
Based on those figures, estimates suggest the U.S. could owe $750 billion to $1 trillion in potential refunds, says Adcock, adding that depending on the outcome of the case, federal revenue would fall by about $2.2 trillion through fiscal year 2035, according to the Committee for a Responsible Federal Budget.
The question of tariffs is critical to the fresh produce industry for many reasons, but this case also raises larger legal questions in the U.S., especially the question on whether the court will apply the major questions doctrine that limits executive action not clearly authorized and enumerated by Congress, she says.
Adcock says justices will be considering three key issues in the case:
- Does IEEPA give the president the authority to impose tariffs?
- Does using that emergency power to manage trade constitute an overreach?
- How broadly should courts interpret the executive authority under the major questions doctrine?
The outcome will have significant implications not just for tariffs, says Adcock, but also for the future of U.S. trade policy and for the distinction between presidential power and the other branches of government.
What We Know from Day 1
Jonathan Stoel is co-director of the Washington, D.C.-based global law firm Hogan Lovells’ international trade practice that employs a team of professionals around the world that he says work 24/7 on trade issues.
Stoel’s colleagues, present at the oral arguments on Nov. 5, say while President Donald Trump was absent from the proceedings, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. trade representative Ambassador Jamieson Greer all attended and sat in the front row.
“The administration was certainly conveying how important it believes this case is to them on a variety of grounds,” says Stoel. “I don’t know if there’s ever been a case where you’ve had three cabinet officers in the court. Usually, the administration is solely represented by the solicitor general.
“I also think the president has been very clear in his tweets and elsewhere that the tariffs are fundamental to his economic policy and that, in his view, they are necessary for a host of reasons — not only to reduce the trade deficit, for example but also because of the administration’s ongoing negotiations with other countries,” he adds.
A centerpiece of Trump’s trade agenda since Jan. 20, IEEPA tariffs were first applied to Canada, Mexico and China, including Hong Kong, under the “fentanyl tariffs,” he says. These tariffs affected more than 40% of U.S. trade.
On “Liberation Day,” or April 2, Trump announced IEEPA tariffs, or “reciprocal tariffs,” that affected all U.S. imports from around the world.
Third and most recently, says Stoel, the president assigned special IEEPA tariffs to imports from Brazil, a result of ongoing diplomatic strains between the South American country and the U.S.
Two of those types of tariffs — the reciprocal tariffs — and the tariffs on Canada, Mexico and China, are at stake in the Supreme Court argument that began Nov. 5, he says.
Path to Pursuing Refunds
Interestingly, during the Nov. 5 Supreme Court oral arguments, there was almost no discussion about how refunds would or would not work, says Stoel, who spoke with The Packer that day.
“I don’t think the Supreme Court gave us any guidance today, nor should we expect that in the Supreme Court’s decision that they’re going to give us guidance about how specific companies should seek a refund,” he says.
If the Supreme Court invalidates the IEEPA tariffs, the key issue for all importers to consider is whether their entries have liquidated or settled under U.S. law, which typically provides 314 days for entries to liquidate, says Stoel.
Why does that matter? Once liquidation happens, there are far less opportunities for refunds, he says.
“So, it’s important that you’re working with your customs brokers and your attorneys and keep an eye on when your entries are going to liquidate,” he says.
Stoel says if an entry is going to liquidate, meaning the time for liquidation is drawing close, he advises importers ask Customs and Border Protection (CBP) to provide an extension of liquidation. U.S. law, specifically, customs regulation, provides that customs can extend liquidation one year at a time for up to three years, he says.
The goal of extending liquidation is to preserve all of your options as an importer and make sure that you’re able to obtain a refund on all the entries that have been made subject to the tariffs, he says.
“One of the goals of keeping the entry from liquidating is that, if the entries have not liquidated, you should be working with your customs broker to file a post summary correction, or PSC,” says Stoel. “This can be done with simply one piece of paper with your broker. Once filed, the government can be asked to both liquidate the entry and refund the tariff that was collected.
“If CBP grants an extension of liquidation and the entries remain unliquidated at the time the Supreme Court issues a decision invalidating the IEEPA tariffs, the importer should be able to file a PSC to revise the entry and seek a tariff refund,” adds Stoel. “A PSC must be filed with respect to each entry and must be filed at least 15 days before liquidation.”
Depending on how long the tariffs have been collected, importers may also be eligible for interest in addition to the tariffs they paid, he says.
And if an importer’s entry is liquated anyway, “don’t panic,” says Stoel. “There should be alternatives available to you. If CBP liquidates an entry, you have 180 days after liquidation to file a protest with customs and ask the government to refund tariffs paid.” Stoel says even if the government denies a protest, importers should still be able to appeal that denial to the U.S. Court of International Trade.
“The third option, depending on the Supreme Court decision, is that it may be necessary to file affirmative litigation, most likely in the Court of International Trade,” says Stoel, adding that the purpose of the litigation is twofold: “One, you’re asking the court to protect your entries and not let them liquidate, so that you preserve all of your options to obtain a tariff refund. The second is that we don’t know if the Supreme Court will decide if the litigations already ongoing will apply to everyone, meaning to all importers, or if they only apply to the specific plaintiffs that are before the court.”
If the courts decide they don’t apply to everyone, then it may be necessary to file your own litigation in order to preserve your rights, with respect to both entries you made in the past and those entries in the future, he says.
“Lastly, all of this takes time and takes care,” says Stoel. “Don’t panic doesn’t mean don’t do anything.”
Preparation is Key to a Refund
Stoel says there are three things for produce importers hoping to secure a tariff refund to keep in mind:
- Don’t panic. Importers have 314 days from the date of entry before entries are liquidated or finally settled under U.S. law.
- A decision is expected by the Supreme Court relatively soon (either later this month or after the holidays), which will provide clarity and ease the uncertainty that has surrounded tariffs this year.
- Preparation is critical. As the industry awaits the Supreme Court’s decision, importers need to assess their legal and tactical options. “It’s important to gather your documentation, identify relevant entries and work with your customs brokers and lawyers, as well as your advisers at IFPA, to make sure that you’re ready, so that if, and when, the time comes to secure refunds, you’re not left behind.”
Tariffs ‘Likely to Remain a Fixture of U.S. Trade Policy’
It’s important to keep in mind, regardless of how the Supreme Court rules on the use of IEEPA for imposing tariffs, tariffs are going to remain a central part of Trump’s economic agenda, says Alexis Taylor, IFPA chief global policy officer.
Taylor says the key tariff takeaway is this: Even if the Supreme Court finds IEEPA tariffs cannot be used to impose tariffs, the president still retains multiple legal pathways to shape trade policy with tariffs, and they’re likely to remain a fixture of U.S. trade policy for the foreseeable future.
