US Policy Insight into the IEEPA / reciprocal tariffs refund mechanism proposed on 6th March 2026 by U.S. Customs and Border Protection.
US Policy Insights:
US CBP Proposes Refund Mechanism for International Emergency Economic Powers Act (IEEPA / reciprocal) tariffs
On 1 February 2025, President Trump wielded the International Emergency Economic Powers Act (IEEPA)to address two foreign threats to the United States;the influx of illegal drugs from Mexico, China, and Canada, and the United States’ persistent trade deficit. This article will provide an overview of the Supreme Court’s recent decision addressing the illegality of the IEEPA and provide an overview of the latest proposed steps for companies to claim a refund via the US Customs Border Protection (CBP) under the ACE mechanism.
Enacted 1977, the IEEPA provides authority for the President to investigate foreign threats, and declare national emergency. This includes the ability to “investigate, block during the pendency of an investigation, regulate, direct or compel, nullify, void, prevent or prohibit…importation or exportation.”[1] Petitioners in Learning Resources, Inc. v. Trump, 607 [2] alleged that the IEEPA does not authorise drug trafficking or reciprocal tariffs. On 20 February 2026, the Supreme Court set out a decision lead by majority opinion in Learning Resources, Inc. v. Trump, 607 U.S. which held that the IEEPA does not authorise the President to impose tariffs. This included the statement from the Chief Justice, “While taxes may accomplish regulatory ends, it does not follow that the power to regulate includes the power to tax as a means of regulation.”[3]
Learning Resources, Inc. v. Trump also reflects on economic and political consequence, discussing the US Government’s projections that the IEEPA tariffs would reduce the US national deficit by $4 trillion, and that international agreements concluded as a consequence of the tariffs could be worth $15 trillion.[4]
Subsequent to this decision, a declaration was made to respond to questions issued by the Court of International Trade on 4th March 2026.
This outlined that between February 2025 to February 2026, a total of 71,647,732 entries were filed with the US CBP. The CBP confirmed that they are currently liquidating entries with duties imposed by the IEEPA, and that CBP has not issued refunds of IEEPA duties as a result of liquidations that have taken place since the Supreme Court’s decision.
The CBP have proposed that in accordance with applicable law, any validated refund of IEEPA duties would include interest, and that “Regardless of entry type and liquidation cycle, CBP still requires a review period to ensure no violation of other Customs laws and no other duties, taxes, or fees are owed (e.g., anti-dumping, Sec. 301 duties, Sec. 232, etc.).”[5]
The US framework requires importers to deposit estimated duties on each entry of imported merchandise at the time the merchandise enters the United States, or shortly thereafter. Subsequently, the CBP is required to “liquidate” each entry, which obligates fixing the final amount of duty owed. If an entry is not liquidated within one year of importation, a “deemed liquidation” will occur, whereby the entry will liquidate by operation of law at the rate and amount of duties identified by the importer at the time of entry. To mitigate the risk of deemed liquidation, which may result in an underpayment of indirect tax, the CBP has developed the Automated Commercial Environment (ACE) – a system of record which automates the liquidation of import entries after 314 days, unless liquidation is suspended or extended in accordance with US law, or a CBP user manually removes an entry. Due to the volume of entries per year, the CBP is unable to review every entry, statutory authority grants the CBP the authority to reliquidate the entry within 90 days of the original liquidation to resolve any errors. Importers declare the duties owed for imported merchandise on Entry Summary lines in the entry covering the merchandise. For each Entry Summary line, the importer must complete the Chapter 1 – 97 regular duty classification (most favoured nation duty), and must also report any applicable Chapter 99 duties, including IEEPA duties, and those imposed pursuant to section 232 of the Trade Expansion Act of 1962, and / or section 201 and / or section 301 tariffs of the Trade Act 1974, in addition to any anti-dumping, countervailing, or additional duties. If it is determined upon liquidation or reliquidation that an excess of funds have been
deposited, whereby a refund with interest is due to the importer, the CBP will certify that the refund and interest amount owed to the Department of the Treasury, which will then then employ its own processes to disburse the certified amounts to the importers of record.
Subsequent to the decision in Learning Resources, Inc. v. Trump, 2026 WL 477534 (U.S. Feb. 20, 2026), whereby it was determined that “with respect to any and all unliquidated entries that were entered subject to the IEEPA duties imposed by the Executive Orders considered by the Supreme Court […] the U.S. Customs and Border Protection [must] liquidate those entries without regard to the IEEPA duties”, and that “[a]ny liquidated entries for which liquidation is not final shall be reliquidated without regard to those duties.”[6]
It is published that as of 4th March 2026, more than 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”). Accordingly, 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 4th March 2026.
It is not currently possible for the CBP to prevent entries from liquidating without the IEEPA duties. CBP does not have the capability to separate entries subject to IEEPA duties from entries that are not.
As importers have flexibility in reporting applicable duties at the Entry Summary line level, isolating the IEEPA duties would require manual calculation by CBP officials. Assuming each Entry Summary with IEEPA tariffs is entitled to a refund, then 53,173,939 refunds would need to go through this process. There is no workaround in ACE that would allow this process to be circumvented.
CBP state that a total of 330,566 importers have paid duties or duty deposits under the IEEPA regime, and that 21,423 entities have completed the required registration process to receive refunds electronically.
The CBP have published the Interim Final Rule (IFR) Electronic Refunds (91 FR 21), stating that effective from 6th February 2026, the CBP will issue all refunds electronically. Until the electronic refund setup process is completed, refunds cannot be issued and will instead be rejected. For this reason, the CBP Court of International Trade’s order of March 4, 2026, “that, with respect to any and all unliquidated entries that were entered subject to the IEEPA duties, U.S. Customs and Border Protection [must] liquidate those entries without regard to the IEEPA duties,” and that “[a]ny liquidated entries for which liquidation is not final shall be reliquidated without regard to IEEPA duties.”
In addition to refunding the IEEPA duties, the CBP are required by law to pay the importers’ interest.
The CBP have proposed the developed of a new functionality in ACE, as set out below.
“ CBP is confident that it can develop and implement new ACE functionality that will streamline and consolidate refunds and interest payments on an importer basis, rather than issuing 53,173,939 separate entryspecific refunds with multiple payments going to the same importer. Though operational, legal, and technical considerations may require alterations or modifications, CBP anticipates that the process will involve the following steps:
• The importer files a declaration in ACE that includes a list of entries on which IEEPA duties were paid.
• ACE runs a series of validations on each entry within the declaration and automatically recalculates the duty owed without the IEEPA tariffs (with applicable interest).
• CBP verifies the declaration and processes refunds as soon as practicable.
• ACE automatically finalizes (liquidates or reliquidates) the entries.
• ACE automatically aggregates the refunds with interest by importer and liquidation date.
• CBP certifies the refunds.
• The Department of the Treasury issues IEEPA refunds electronically.”[7]
The CBP is making efforts to have this new ACE functionality ready for use in 45 days, and estimates that the automated controls described above will save CBP over 4 million hours compared with the manual processes it would otherwise have to complete.[8]
Alinea Customs offers specialist consultancy services on the U.S. Harmonized Tariff Schedule (HTS), including related customs compliance and advisory matters. Parties seeking detailed guidance on exporting to the United States are invited to contact customs@alineacustoms.com to discuss their requirements in greater depth.
[1] IEEPA §1702 (a) (1) (B)
[2] Learning Resources, Inc. v. Trump 2026 WL 477534 (U.S. Feb. 20, 2026)
[3] Ibid p. 4, p. 5.
[4] Ibid p 11.
[5] Atmus Filtration, Inc. v United States, U.S. Customs and Border Protection; and Rodney S. Scott, Court No. 26-01259
v.
[6] Learning Resources, Inc. v. Trump, 2026 WL 477534 (U.S. Feb. 20, 2026)
[7] N 5 [27]
[8] N 5 [21]
