Court orders $20.6B IEEPA tariff refund payout to importers

Congress passed the Trading with the Enemy Act (TWEA) in 1917 to give President Wilson emergency economic powers during World War I. In 1933, Congress expanded TWEA to cover peacetime emergencies, and presidents used it for decades without significant oversight. On August 15, 1971, President Nixon invoked TWEA to impose a 10% surcharge on all dutiable imports and end the dollar's convertibility to gold, unilaterally ending the Bretton Woods system. Sen. Frank Church (D-ID), who chaired the Senate Foreign Relations Committee and led 1970s investigations into executive abuses, co-authored the International Emergency Economic Powers Act of 1977 to replace TWEA's peacetime powers with a statute requiring a formal national emergency declaration and congressional notification.

IEEPA passed in 1977 as a reform, but presidents quickly found it could support broad economic actions. President Carter used it in November 1979 to freeze roughly $12 billion in Iranian government assets in U.S. banks after Iranian students seized the U.S. Embassy in Tehran. President Reagan invoked IEEPA in 1985 to impose trade sanctions on Nicaragua and again in 1986 against South Africa. President Clinton used it in 1994 to tighten sanctions on Haiti during the military junta period and in 1995 against Colombian drug trafficking organizations. By the time Trump invoked IEEPA for tariffs in 2025, presidents had used the statute more than 60 times, always for targeted sanctions, asset freezes, or export controls, never for broad revenue-raising tariffs on entire trading partners.

The key precedent for IEEPA's outer limits is Dames & Moore v. Regan, 453 U.S. 654 (1981). The Supreme Court upheld, 8-1, Carter's use of IEEPA to freeze Iranian assets and transfer them to an international arbitration tribunal as part of the Algiers Accords that ended the hostage crisis. Justice Rehnquist's majority opinion endorsed broad presidential authority under IEEPA but anchored it in a pattern of 'congressional acquiescence': Congress had implicitly approved asset-freeze and claims-settlement actions through decades of practice. The ruling didn't authorize open-ended revenue collection; it approved specific economic measures Congress had historically tolerated. The Learning Resources majority cited this limit: tariffs, unlike asset freezes, had never enjoyed congressional acquiescence.

On February 20, 2026, Chief Justice John Roberts wrote the majority opinion in Learning Resources, Inc. v. Trump, joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson. The Court held 6-3 that IEEPA's authorization to 'regulate importation' doesn't include tariffs, because tariffs are a revenue-raising function the Constitution reserves exclusively to Congress under Article I, Section 8. Roberts applied the , which requires Congress to speak clearly when authorizing executive actions with vast economic consequences, to reject the administration's reading of 'regulate' as encompassing taxation. Justice Kavanaugh dissented, joined by Thomas and Alito, arguing that historical executive practice supported broad tariff authority.

The tariffs were paid almost entirely by U.S. importers, not foreign exporters. The Consumer Technology Association estimated the 145% China tariff added roughly $123 billion in annual costs across the consumer electronics sector, including laptops, smartphones, tablets, and gaming consoles. The Retail Industry Leaders Association identified toys, apparel, and home goods as the next most exposed categories. The National Retail Federation estimated that more than 10,000 small importers with annual revenues under $10 million had no ability to renegotiate supplier contracts or diversify supply chains on the timetable the tariffs demanded. Penn Wharton calculated that the Trump administration collected more than $165 billion in IEEPA duties from over 300,000 companies between February 2025 and February 2026.

On May 27, 2026, Brandon Lord (CBP's Executive Director of Trade Programs) filed a declaration with the reporting that approximately $20.6 billion in IEEPA tariff refunds had been certified and sent to Treasury for disbursement. CBP built the CAPE (Consolidated Administration and Processing of Entries) refund portal in roughly six weeks and launched it April 20, 2026. By the May 27 filing, over 16 million import entries had been accepted for processing and 8.5 million had been reliquidated and certified for repayment. Refunds move to importers via ACH bank transfer, typically 3 to 5 weeks after reliquidation.

The March 4, 2026 order from CIT Judge Richard Eaton, designated to handle all IEEPA refund cases by Chief Judge Mark A. Barnett, directed CBP to liquidate and reliquidate all import entries without applying IEEPA duties. On March 27, Judge Eaton expanded the order to cover entries where liquidation had already become final, meaning even importers who had accepted final customs assessments still qualified for refunds. The CIT allowed phased implementation, giving CBP time to build the CAPE system rather than demanding an immediate lump-sum payment.

Despite the refund machinery working, 4,185 consolidated refund payments remained stuck as of May 27 because importers hadn't provided bank account information to CBP's ACE system. CBP can only send refunds via ACH to registered accounts; importers who skip enrollment have their refunds placed in reject status until they supply the information. Small businesses bore disproportionate harm during the 2025 tariff period. Fortune reported that some small-business owners took second mortgages and increased credit lines to cover duty costs while waiting for inventory to arrive.

Within hours of the Supreme Court ruling on February 20, 2026, President Trump invoked Section 122 of the Trade Act of 1974 to impose a 10% global tariff on imports from nearly every country. Section 122 allows a tariff surcharge of up to 15% for up to 150 days to address a 'large and serious' balance-of-payments deficit, with a statutory expiration of July 24, 2026. On May 7, 2026, a 2-1 CIT panel struck down the Section 122 tariffs, ruling that Trump's proclamation failed to identify the type of deficit the statute actually requires. U.S. Trade Representative Jamieson Greer appealed to the Federal Circuit, which entered an administrative stay on May 12. The stay preserved the tariffs only for the duration of the appeal, not past the July 24 statutory deadline.