The Trump Administration Is Still Fighting To Keep Billions in Illegal Tariff Revenue

The Trump administration is still fighting to keep billions of dollars in tariff revenue that it unlawfully collected from American businesses.

Despite begrudgingly starting to refund some of those tariff payments in April, the Trump administration told a federal court this week that it should not have to refund all those payments. If the administration prevails, it would only have to issue refunds to the businesses that filed lawsuits challenging the legality of those tariffs—which the U.S. Supreme Court struck down in February—while many other businesses would be out of luck.

Meanwhile, the Trump administration is also trying to shield a top customs official from appearing before the Court of International Trade (CIT) next week in defiance of a judge’s order.

To understand how we got to this point, let’s go back to the Supreme Court’s ruling in February. The high court ruled that the International Emergency Economic Powers Act (IEEPA) “does not authorize the President to impose tariffs,” but it left unanswered the question of what to do about the roughly $166 billion that importers had paid since Trump imposed those tariffs last year.

The task of sorting out the refund issue fell to the CIT, which in March issued a universal injunction telling the Trump administration to refund all of the IEEPA tariffs. At the time, Judge Richard Eaton wrote that “all importers of record whose entries were subject to IEEPA duties are entitled to the benefit of” the Supreme Court’s ruling.

The Trump administration is now appealing that injunction to the Court of Appeals for the Federal Circuit.

On Wednesday, Eaton responded to the Trump administration’s appeal with a letter sent to the Justice Department and the appeals court. In the letter, Eaton took issue with the administration’s claim that it had “voluntarily” engaged in the refund process. In several attachments pulled from the Customs and Border Protection’s (CBP) own announcements of the refund process, Eaton highlighted how the Trump administration was acting in response to the CIT’s orders.

“A stay would discourage continuing progress,” he wrote.

All of this is happening against the backdrop of another, related fight between the administration and Eaton, who has ordered Customs and Border Protection Commissioner Rodney Scott to appear before the CIT next week to answer questions about the refund process.

Having apparently run out of patience with the administration’s foot-dragging on the tariff refund issue, Eaton ordered Scott to appear before the court on June 9.

“Commissioner Scott’s testimony is necessary to ascertain if it is the Government’s policy to return all of the unlawfully collected duties either by complying with the court’s order, or by some other means—that is, if it is the Government’s policy to refund the duties to importers both large and small,” Eaton wrote on May 29, in response to the Trump administration’s initial attempt to get Scott off the hook. “There is $166 billion involved.”

In the appeal filed this week, the Trump administration argued that the CIT could not compel Scott to show up for that hearing. As of Friday morning, the federal appeals court had not ruled on the matter.

Caught in the middle of all this are the many, many businesses that paid the illegal tariffs and are awaiting refunds—though some business owners have told Reason that they don’t have much hope of ever seeing that money again.

“Judge Eaton’s latest filing makes an important point: the progress made so far toward refunding unlawful IEEPA tariffs ONLY happened because the court ordered the government to act,” the Liberty Justice Center, which represented many of the plaintiffs in the IEEPA tariff case, wrote on Twitter in response to Eaton’s letter this week. “American businesses deserve their money back, and we will continue fighting to ensure those refunds are delivered quickly and fairly.”

So far, more than $20 billion in refunds have been issued, the Trump administration told the federal appeals court this week. In its latest progress report filed to the CIT on May 26, CPB said $85 billion in refunds were “processing.”

That still leaves tens of billions of dollars in unlawfully collected tariffs that must be refunded. Eaton is right to keep up the pressure on the Trump administration, which seems determined to weasel out of paying as many refunds as possible and keeping some of the ill-gotten gains from its unlawful tariff scheme.