IEEPA Tariffs and Protective Refund Claims, Part Two

The Supreme Court is expected to release its ruling on Learning Resources, Inc. v. Trump any day now. With this decision, the Supreme Court will decide whether the president is authorized under the International Emergency Economic Powers Act (IEEPA) to implement sweeping tariffs under the auspices of a broad national emergency declaration. The decision will determine whether the tariffs imposed under the IEEPA are valid, invalid, or partially valid. 

Excluded from the IEEPA tariffs are other tariffs levied under Section 301 of the Trade Act of 1974 (Section 301). Section 232 of the Commerce Act (Section 232) is not challenged in Learning Resources and will remain regardless of the Supreme Court’s decision. These tariffs relate to unfair trade practices, most prominently China, as well as the national security statute, which relates to items such as steel and aluminum. 

The IEEPA tariffs have had an outsized impact on manufacturing and distribution companies, where costs, supply chains, and pricing are highly sensitive to sudden policy changes. For manufacturers, IEEPA tariffs add volatility to the cost of imported raw materials, components, and subassemblies. Uncertainty around the scope, timing, and legality of the tariffs makes it harder to plan production, forecast margins, and make long-term sourcing decisions. 

Distributors face a different, but equally challenging, set of issues. Tariffs directly affect landed costs and inventory valuation, often requiring quick pricing changes that can strain customer relationships and compress margins. Because inventory is frequently purchased well in advance of sale, shifting tariff obligations can create mismatches between inventory costs and sales prices, distort cost of goods sold, and increase financial reporting risk. Overall, the volatility and uncertainty from IEEPA tariffs pose meaningful operational and financial challenges across the manufacturing and distribution value chain. 
 
Conventional wisdom says that the Supreme Court is more likely than not to strike down the sweeping tariffs under IEEPA. Many legal commentators have weighed in, with most believing the Court will find against the Trump administration. Even betting markets have entered the conversation, with current odds on Polymarket hovering around 75% in favor of the Supreme Court ruling against the administration. Considering these predictions, many are wondering what resources may be available for those who have paid these tariffs. For many, the most likely restitution they will get is via refund claims. 

Potential for Refund Claims 

With respect to specific refund procedures, it is currently unknown how the Supreme Court will deal with the potential for refunds if it rules that the tariffs are not valid under IEEPA. The Court may assign the creation of the IEEPA tariff refund process to the lower courts or to U.S. Customs and Border Protection (CBP). Post Summary corrections (PSCs) and formal protests are two commonly used refund methods, but both require specific timelines to be followed. Alternatively, the Supreme Court may recommend a specialized refund program. 

Timing is uncertain as to potential refund claims. Normal tariff refunds can take years, and it is unknown whether an expedited process will be implemented for IEEPA refund claims. Processing by customs brokers and CBP can add to refund delays, but businesses can take the following steps can be taken proactively while a court decision is pending. 

Immediate Actions: 

• Model potential outcomes of the Supreme Court ruling, differentiating between:
  • Broader reciprocal tariffs
  • Fentanyl-related tariffs applicable to China, Mexico, and Canada
  • Additional IEEPA tariffs levied on certain countries are implemented separately from the reciprocal and fentanyl-related tariffs
• Gather documentation supporting the potential refund process on imports starting in February 2025.
  • Verify each item’s tariff classification and country of origin. The country of origin may be different from the export country.
  • Consider non-dutiable costs that do not belong in imported value.
• Coordination between customs brokers, tax, trade, and legal teams for planning and risk management.
• Review supplier contracts to mitigate against impacts from future tariff changes.
• Consider which refund mechanisms (e.g., post-summary corrections, protests) may be appropriate based on the Court’s ruling and estimated timing for filing relief measures. 

Given the evolving U.S. tariff landscape, there is uncertainty and complexity with respect to IEEPA tariffs and potential refunds. Even if these tariffs are struck down, those levied under Sections 301 and 232 remain in place; it is likely that the administration will have a backup plan to implement if the Supreme Court does strike down the IEEPA tariffs. 

Consulting with trusted advisors and including major stakeholders early in the planning process can provide a quantifiable benefit. EisnerAmper has partnered with trusted legal advisors to help with such issues. Contact us below to see how we can assist.