U.S. Must Return $166 Billion in Unlawful Tariffs to Businesses, but the Refund System Is Only 40 Percent Ready

The tariff refund system introduced by the administration of Donald Trump is now more than 40 percent complete, a U.S. Customs official told a federal judge on Thursday. Additional performance testing of the system, he said, is expected to take place “in the coming weeks.”

Businesses are pressing for the swift return of $166 billion in tariffs that the Supreme Court ruled unlawful last month. The administration, however, warns that rerouting the funds to roughly 330,000 importers who paid the levies will take time.

In an update submitted on Thursday, March 12, to Judge Richard Eaton, who is overseeing the process, U.S. Customs and Border Protection (CBP) said the new software will consist of four components.

Brandon Lord, executive director of CBP’s trade policy and programs department, wrote that the readiness of each of those components currently ranges from 40 to 80 percent.

Work is continuing and, he said, additional performance testing of the system is expected to take place “in the coming weeks.” Once the system is ready, officials expect to process the vast majority of refunds during the “first phase of development.”

The judge responded quickly to the report, noting that the government had demonstrated “satisfactory progress,” and ordered another update to be submitted within a week.

Last month the Supreme Court ruled 6–3 that President Trump cannot use the 1977 emergency powers law to impose tariffs. The decision overturned the bulk of sweeping import duties the president had imposed on dozens of trading partners after returning to the White House.

Eaton, who was appointed to the bench by former president Bill Clinton, was authorized to oversee the refund process by the chief judge of the U.S. Court of International Trade.

Amid refund claims already filed by more than 2,000 companies, the judge is seeking to establish the most streamlined procedure possible.

He initially demanded that the government begin processing refunds immediately. However, after hearings last week—during which CBP officials outlined practical difficulties—the judge granted the administration more time, while continuing to press for the process to move faster.

“These levies must now be returned with interest—and the clock is ticking,” the judge wrote in an order published on Friday.

Eaton noted that the accumulating interest increases the government’s total obligations by roughly $650 million for every month the refunds remain unpaid.

“That financial burden will ultimately be borne by American taxpayers,” he emphasized.

The funds are intended to be returned to importers. Consumers, however, have filed several class-action lawsuits against major companies, seeking to ensure that the money they receive is ultimately passed on to buyers.

In addition, a number of Democrats are urging the administration to distribute the funds directly to Americans.

While the battle over refunds continues, the president has replaced the previous tariffs with a new 10 percent duty on nearly all imports, imposed under a different statute. Lawsuits challenging that move are now being considered by several of Judge Eaton’s colleagues.