The Government Told Courts It Could Easily Refund Unlawful Tariffs. Now It Says It Can’t.

Legal Issues

from the can't-trust-this-doj dept

When companies sued to block Trump’s IEEPA tariffs last year, one of the key arguments they made was obvious: if these tariffs turn out to be illegal, we’ll never get our money back. We need an injunction now. The government had an equally confident response: relax, if the tariffs are struck down, we’ll just issue refunds. No big deal. No injunction needed.

Multiple courts bought it. And now, with the Supreme Court having ruled the tariffs unlawful and a judge ordering the refunds, CBP is telling the court that it actually can’t comply with the order. The promises that defeated all those injunctions? Turns out nobody bothered to check whether they were actually true.

Once again, courts trusted what the government told them. Once again, it turns out they were wrong.

Let’s rewind to see how we got here.

Back in April 2025, when importers like V.O.S. Selections were seeking a preliminary injunction to stop the tariffs from being collected, the Department of Justice told the Court of International Trade there was simply no need for such drastic relief. In its brief opposing the injunction, the DOJ was explicit:

And, even if future entries are liquidated, defendants do not intend to oppose the Court’s authority to order reliquidation of entries of merchandise subject to the challenged tariffs if the tariffs are found in a final and unappealable decision to have been unlawfully collected. Such reliquidation would result in a refund of all duties determined to be unlawfully assessed, with interest.

No injunction needed! Refunds would flow. With interest, even. The government repeated this refund promise in case after case after case. In the Learning Resources stay motion, the government told the D.C. district court that there was no risk at all that the government wouldn’t repay:

For any plaintiff who is an importer, even if a stay is entered and defendants do not prevail on appeal, plaintiffs will assuredly receive payment on their refund with interest. “[T]here is virtually no risk” to any importer that they “would not be made whole” should they prevail on appeal. See Sunpreme v. United States, 2017 WL 65421, at *5 (Ct. Int’l Trade Jan. 5, 2017). The most “harm” that could incur would be a delay in collecting on deposits. This harm is, by definition, not irreparable.

In the Axle case, same thing.

In any event, were Axle to ultimately prevail, it could receive a refund of duties paid that would otherwise be eligible for duty-free treatment under the de minimis exemption on any unliquidated entries. 28 U.S.C. §§ 2643-44. To the extent any future entries are liquidated, the Court may order reliquidation of entries subject to the challenged de minimis exemption if the duties paid by Axle are, in a final and unappealable decision, found to have been unlawfully collected. Such reliquidation would result in a refund of all duties determined to be unlawfully assessed, with interest.

In the Princess Awesome joint stipulation, the government formally agreed that there was nothing to fear about getting repaid:

Defendants stipulate that they will not oppose the Court’s authority to order reliquidation of entries of merchandise subject to the challenged IEEPA duties and that they will refund any IEEPA duties found to have been unlawfully collected, after a final and unappealable decision has been issued finding the duties to have been unlawfully collected

And the courts relied on these representations. In December 2025, when AGS Company Automotive Solutions sought a preliminary injunction to stay the liquidation of its entries, the three-judge panel denied the motion specifically because of the government’s refund promises:

For the reasons stated above, we conclude that the Government has taken the “unequivocal position” that “liquidation will not affect the availability of refunds after a final decision” in V.O.S. Gov’t Resp. at 2–3. The Government would be judicially estopped from “assum[ing] a contrary position” in the future.

Note the court’s foresight here. The panel explicitly invoked judicial estoppel—basically saying “okay, now that you’ve said this to a court, you’re bound by it going forward.” You get the sense that the court had a sense of where all this was going.

Then the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that the IEEPA tariffs were unlawful. Judge Eaton at the Court of International Trade—designated as the sole judge to handle IEEPA refund cases—last week ordered CBP basically pay back everyone who paid an IEEPA tariff. Everyone. Not just those who sued.

In court, when the DOJ pushed back a bit, Eaton was blunt:

“Customs knows how to do this,” Eaton said during a court hearing on Wednesday. “They do it every day. They liquidate entries and make refunds.”

Enter the declaration of Brandon Lord, CBP’s Executive Director of the Trade Programs Directorate, filed the day after Judge Eaton’s order. He points out that, actually, there are a TON of tariffs to repay.

As of March 4, 2026, over 330,000 importers have made a total of over 53 million entries in which they have deposited or paid duties imposed pursuant to the International Emergency Economic Powers Act (“IEEPA”), 50 U.S.C. § 1701 et seq. (the “subject entries”). As of March 4, 2026, the total amount of IEEPA duties and estimated duty deposits collected pursuant to IEEPA is approximately $166 billion. Approximately 20.1 million entries remain unliquidated as of March 4, 2026.

And, apparently, it turns out that CBP is not at all prepared to repay what it owes:

In light of the Court’s March 5, 2026 amended order, CBP is now facing an unprecedented volume of refunds. Its existing administrative procedures and technology are not well suited to a task of this scale and will require manual work that will prevent personnel from fully carrying out the agency’s trade enforcement mission. Personnel would be redirected from responsibilities that serve to mitigate imminent threats to national security and economic security.

Lord’s declaration lays out a big list of technical and logistical obstacles. CBP’s Automated Commercial Environment (ACE) system can apparently only batch-process 10,000 entry summary lines at a time, and there are over 1.6 billion entry summary lines that need updating. Importers frequently lumped their IEEPA duties together with other duties on the same line, meaning CBP personnel would have to manually untangle the amounts. Processing each individual refund takes about 5 minutes, which across 53 million entries works out to over 4.4 million hours.

There’s also a mess involving different entry types and automatic liquidation timelines—Lord’s declaration goes into a bunch of technical details about “formal” vs. “informal” entries, claiming that 4 million entries will automatically process next week and “CBP does not have a process to prevent” it. Even if the legal details are deep in the weeds, the message is clear: even with the Supreme Court ruling in hand, CBP claims parts of this train are still moving and they can’t stop it.

CBP says it can build new ACE functionality in 45 days that would streamline the process. The proposed system actually sounds reasonable. Which makes it worse: if you spent the better part of a year telling every court that would listen that refunds were totally manageable, that there was “virtually no risk” importers wouldn’t be made whole, that “such reliquidation would result in a refund of all duties determined to be unlawfully assessed, with interest”—then maybe, just maybe, you should have spent some of that year building the system to actually do it? Send over a DOGE bro or two to vibe code up a solution?

The Supreme Court case wasn’t a surprise. The government was a party to it. They knew the ruling was coming. They knew that if they lost, refunds would be necessary on a massive scale. And even just based on how the oral arguments went, they should have known how this would turn out.

Instead, CBP appears to have done absolutely nothing to prepare. The government used the promise of easy refunds as a sword to defeat injunction after injunction, convincing courts that importers would suffer no irreparable harm because the money could always be returned. Having successfully avoided those injunctions—allowing the tariffs to keep being collected for months on end, swelling that $166 billion pot—the government now tells the court that returning the money is an operational nightmare that requires new technology it hasn’t built yet.

This is exactly the scenario the AGS panel warned about. And if the government tries to argue that it can’t provide refunds—rather than that it just needs more time—it will run headlong into the judicial estoppel doctrine that the court already set up like a tripwire. As the AGS panel put it, quoting the Supreme Court: “where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position.”

Every month the government successfully avoided an injunction was another month it kept collecting tariffs. That $166 billion didn’t accumulate by accident. The government had every incentive to promise easy refunds and zero incentive to actually prepare for them. The longer importers waited for relief, the bigger the pot grew.

And now, with the Supreme Court having ruled those tariffs illegal, and with courts having explicitly warned that the government would be judicially estopped from changing its position, CBP says it needs 45 days to build new software before it can start writing checks.

“Customs knows how to do this,” Judge Eaton said. “They do it every day.”

Maybe. But apparently nobody in the entire federal government thought to ask whether CBP could actually deliver on the promises DOJ was making to court after court after court. Either that, or they just didn’t care what the answer was.

Filed Under: brandon lord, cbp, court of international trade, ieepa, refunds, tariffs, trump admin