CBP opens the third phase of its tariff refund system on Oct. 6, but only for importers who sued. Seven months after the Supreme Court voided the IEEPA tariffs, roughly 50 billion dollars is still unreturned and the court has not said whether everyone else gets in
WASHINGTON, Sept. 21, 2026
On Sept. 15, a CBP official named Brandon Lord filed a declaration in a case most importers have never heard of, and set a date that will determine whether tens of thousands of American businesses ever see the tariffs they paid under an authority the Supreme Court has already held the President did not have.
Mr. Lord, executive director of the Trade Programs Directorate in CBP’s Office of Trade, told the Court of International Trade in Freestyle World, Inc. v. United States, CIT No. 26-01088, that the agency will deploy Phase 3 of its Consolidated Administration and Processing of Entries system on Oct. 6. Phase 3 handles finally liquidated entries, the category that has been stranded since the refund programme began in April.
It is the last structural piece of the largest customs refund operation in American history. It is also, by design, the narrowest. Phase 3 is open only to plaintiffs who have filed suit at the Court of International Trade and obtained a reliquidation order. For the roughly 330,000 importers who paid duties under the International Emergency Economic Powers Act and did not sue, Oct. 6 changes nothing at all.
Kelly M. Reid of Ward and Smith, P.A., writing in the National Law Review on Sept. 18, put it without ornament: “Importers whose entries are not covered by comparable court-ordered relief do not become eligible for Phase 3 merely because the system opens on October 6, 2026.” She added a point that is frequently misunderstood: “CAPE operates within these existing sources of authority. It does not create a new one.”
The scale of the thing
The numbers come from Mr. Lord’s own declarations, and they explain why a refund that ought to be arithmetic has taken seven months.
As of March 4, CBP had collected approximately 166 billion dollars in IEEPA duties from 330,566 importers across 53,173,939 entries. Of those entries, 33.7 million, about 63 percent, were informal. The entry summary lines requiring update numbered 1,684,648,252, roughly 20.5 lines per entry. Mr. Lord estimated that manual processing at five minutes per entry would consume 4,431,161 staff hours.
For context, CBP processed 338,000 tariff refund entries of any type in the entire preceding fiscal year, according to testimony from Susan S. Thomas, the agency’s executive assistant commissioner for trade. In CAPE Phase 1’s first six weeks, it processed IEEPA refunds on nearly 8.5 million.
Mr. Lord was candid about the strain in his March 6 filing. “In light of the Court’s March 5, 2026 amended order, CBP is now facing an unprecedented volume of refunds,” he wrote. “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.” He reached for the only comparable precedent he could find, the Harbor Maintenance Fee refunds ordered after the Supreme Court’s 1998 decision in United States Shoe Corporation v. United States, and noted that “the process took several years to complete and required an updated regulatory procedure.”
Progress since has been substantial. As of Sept. 11, 286,044 CAPE declarations had been submitted, 201,293 had passed file validation, and 27.2 million entries had been accepted. Approximately 134.7 billion dollars in potential and certified refunds had been accepted for processing, with roughly 122 billion dollars transmitted to the Treasury for disbursement.
Which leaves, on the government’s own accounting, somewhere between 30 and 45 billion dollars of the original 166 billion not yet returned, accruing interest daily.
How the money got trapped
The Supreme Court decided Learning Resources, Inc. v. Trump on Feb. 20 by a vote of 6 to 3, holding that IEEPA does not authorise the President to impose tariffs. Chief Justice Roberts announced the judgment. Justices Thomas and Kavanaugh dissented, with Justice Alito joining Justice Kavanaugh. The Court did not rule on refunds. It left the remedy to the Court of International Trade.
Judge Richard K. Eaton took the assignment seriously. On March 4, in Atmus Filtration, Inc. v. United States, he ordered CBP to liquidate all unliquidated IEEPA entries and reliquidate all non-final liquidated entries without the duties, and he applied the order to all importers nationwide rather than only to litigants. “To find otherwise would be to thwart the efficient administration of justice,” he wrote, “and to deny those importers who have filed suit the efficient resolution of their claims, and to deny entirely importers who have not filed suit the benefit of the Learning Resources decision.”
On March 27 he went further, ordering that “any liquidated entries for which liquidation is final shall be reliquidated without regard to the IEEPA duties.”
That March 27 order is the one the government appealed. On May 29 the Justice Department stated in writing that it would appeal the universal injunction “except as to the particular importer plaintiffs in each case in which the Court has entered the injunction.” The notice of appeal followed on June 2, docketed at the Federal Circuit as No. 26-1895.
The distinction the government drew is the entire story. It has not appealed, and says it intends to comply with, the plaintiff-specific reliquidation orders. It has appealed the part that would reach everyone else.
The position is a reversal of one the department took earlier. In a December 2025 filing quoted in a CIT opinion, it wrote that “even if future entries are liquidated, defendants do not intend to oppose the [CIT’s] authority to order reliquidation. Such reliquidation would result in a refund of all duties determined to be unlawfully assessed, with interest.” In a May 2025 stay motion at the Federal Circuit, it argued a stay “would not cognizably harm plaintiffs” because “if tariffs imposed on plaintiffs during these appeals are ultimately held unlawful, then the government will issue refunds to plaintiffs, including any post-judgment interest that accrues.”
A former Trump administration official and trade lawyer close to the White House described the current stance to Politico in June: “The message from the government is pretty straightforward: We don’t have the authority to issue these refunds, and unless a court orders us to repay a specific company, we’re not going to do it.”
Three buckets, three very different outcomes
Practically, every entry an importer made under the IEEPA tariffs now sits in one of three categories, and the difference between them is the difference between a refund and nothing.
Unliquidated entries, and entries liquidated within the last 80 days, are handled by CAPE Phases 1 and 2. No lawsuit is required. Phase 1 launched April 20 and covers roughly 63 percent of entries. Phase 2 deployed June 29 for reconciliation-flagged entries where the type 09 reconciliation entry has not yet been filed, adding an estimated 2.8 million entries and 28.7 billion dollars.
Entries liquidated between 81 and 180 days ago fall outside CAPE’s filing cutoff but remain inside the protest window under 19 U.S.C. 1514. The recommended move is a protective protest, with Hogan Lovells suggesting the 160 to 170 day mark. There is a sequencing trap: CBP will not process a CAPE claim on an entry with an open protest, and withdrawing a protest to clear the entry could forfeit unrelated classification, valuation or origin claims riding on the same protest.
Finally liquidated entries, past 90 days, are the contested territory. The Cato Institute estimated in July that these amount to roughly 11.4 billion dollars, about 7 percent of total IEEPA revenue, though the government’s own exposure estimate has been reported at 30 billion dollars or more. A further 25 billion dollars sits outside all three phases entirely: entries subject to antidumping and countervailing duties pending liquidation, active drawback claims, open protests, non-ACE filings. Roughly 166,000 AD/CVD entries worth about 2.9 billion dollars require manual processing under 19 U.S.C. 1505(c), and no mechanism for them has been built.
The 80-day cutoff that defines these buckets is not statutory. Mr. Lord explained its logic in his March 31 declaration: CAPE accepts declarations for entries liquidated within the preceding 80 days “to ensure that processing is complete and the entries are reliquidated by the 90th day to meet the agency’s legal timeframe for voluntary reliquidation pursuant to 19 U.S.C. 1501.” Ms. Reid of Ward and Smith makes the consequential point: “The 80-day cutoff is thus an administrative processing limit, not the expiration of CBP’s statutory authority.”
The class question
The mechanism that could open the system to everyone is sitting undecided on Judge Eaton’s desk.
On June 4, Terry Precision Cycling LLC moved to certify a nationwide class under Rule 23(b)(2) in V.O.S. Selections, Inc. v. United States. Freestyle World, Inc. filed a separate certification motion on June 23. Oral argument on the V.O.S. motion was heard Aug. 6 in Courtroom No. 1 at One Federal Plaza in New York. Argument on the Freestyle World motion was heard Aug. 19. As of the most recent authoritative confirmations, dated Sept. 11, no ruling has issued on either.
The reply brief filed July 22, signed by Neal Kumar Katyal and Colleen E. Roh Sinzdak of Milbank LLP alongside Jeffrey M. Schwab, Reilly W. Stephens and James McQuaid of the Liberty Justice Center, frames the stakes in terms of a clock that keeps running. “The government has refused to suspend the liquidation of entries with IEEPA tariffs, meaning that every day, more and more entries become ineligible for CAPE processing and more and more importers will be forced to file costly and burdensome suits to obtain their refunds.”
The brief’s central argument is one of judicial economy. “Here, the government’s proposed path requires thousands of identically situated plaintiffs to bring identical claims for identical relief. That is exactly the needless waste of judicial and party resources that Rule 23(b)(2) is built to avoid.” And on what a class order would actually do: “Plaintiff does not seek an order granting mere ‘access’ to a website. It seeks an order removing a uniform legal barrier, the government’s refusal to open the CAPE system to all importers who paid unlawful IEEPA tariffs, regardless of when their entries liquidated or whether they filed an individual suit.”
The brief closes that section bluntly: “At bottom, the government asks this Court to erect an inefficient procedural barrier to class members’ claims that is plainly inconsistent with Rule 23(b)(2), making it harder for importers to obtain their refunds and easier for the government to retain as much of the $166 billion in illegally collected IEEPA tariffs as it can. The law does not demand that absurd result.”
The legal theory rests on a distinction Troutman Pepper Locke has explained clearly: “A certified class is legally distinct from a universal injunction. Class members are, by definition, parties to the case, so relief granted to a class would not violate the CASA prohibition on orders benefiting nonparties.”
A class is not, however, a safe bet. Rule 23(b)(2) classes carry no opt-out, so an adverse ruling would bind members. The government would almost certainly appeal a grant. And under Stone Container, class-action tolling ends the moment certification is denied, not when an appeal of that denial concludes, which means a denial could restart individual limitations clocks immediately. Holland & Knight’s advice to clients has been unambiguous: do not assume class proceedings will eliminate the need for an individual filing.
Sara Albrecht, chairman and chief executive of the Liberty Justice Center, drew the broader lesson in an email to Trade Law Daily published July 29: “Winning a declaration that a tariff is unlawful is only part of the job. The litigation also must preserve a practical path to recovering duties unlawfully collected while the case was pending.”
Congress weighs in
On Sept. 9, ten House Democrats wrote to CBP Commissioner Rodney Scott about a problem that has nothing to do with the appeal and everything to do with administration.
“We write to request you take quick action to ensure all duties paid by American importers, under the illegal use of the International Emergency Economic Powers Act, are refunded in full in accordance with the law,” the letter begins. It then describes a specific failure mode: “in some cases CBP is failing to approve importer accounts within 90 days of liquidation, making it impossible for importers to meet the 90-day deadline. Many of the importers facing the prospect of missing out entirely on refunds are small businesses operating on thin margins for whom full repayment of illegal tariff payments is critical. In short, CBP’s administrative backlogs are preventing companies from receiving refunds.”
The letter’s framing is the sharpest formulation of the grievance yet put on paper by elected officials: “American importers are not seeking remedy for small errors in classifying or appraising goods at the border. They are seeking restitution for an illegal tariff regime that wreaked havoc on their businesses for roughly a year. CBP’s arbitrary deadlines and internal processing backlogs shouldn’t stand in the way of making small businesses whole again.”
The signers were Representatives Haley M. Stevens of Michigan, Steven Horsford of Nevada, Hillary J. Scholten of Michigan, Brittany Pettersen of Colorado, André Carson of Indiana, Eleanor Holmes Norton of the District of Columbia, Emanuel Cleaver II of Missouri, Seth Moulton of Massachusetts, Dina Titus of Nevada and Mary Gay Scanlon of Pennsylvania.
The complaint is borne out by CBP’s own data. As of Sept. 11, 20,184 refunds worth roughly 1.3 billion dollars were sitting unpaid solely because importers had not supplied valid ACH refund banking details. That figure had risen from 1,880 in May and 22,170 in August before turning down for the first time this month. The trap is a subtle one: ACH enrolment for paying duties does not establish ACH enrolment for receiving refunds, and since February all CBP refunds are electronic.
Jay Foreman, chief executive of the toy company Basic Fun! and a Liberty Justice Center client, offered the small-importer view in June: “It’s almost like the insurance companies, they just deny your claim, and it’s only the people that are willing to fight through four or five, six denials that get paid.” His read on the strategy: “They figure a bunch of people will drop out.”
Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation, has argued the refunds should be uncontroversial. “IEEPA tariffs impacted hundreds of thousands of businesses, from local small businesses to national retailers and from manufacturers to farmers,” he wrote in April. “Refunding the illegal IEEPA tariffs back to the businesses that paid them is pro-worker, pro-customer and pro-growth.”
The fiscal hole
The refunds have done to federal customs revenue roughly what a reversed magnet does to iron filings.
Monthly Treasury Statement data show refunds of 21.97 billion dollars in May, 49.18 billion in June, 33.4 billion in July and 10.5 billion in August. Net customs revenue was negative for three consecutive months: minus 0.04 billion dollars in May, minus 25.56 billion in June, minus 8.6 billion in July, before returning to positive 12.8 billion in August. Throughout all of 2025, monthly customs refunds never exceeded 2 billion dollars.
The Congressional Budget Office put IEEPA-specific refunds through August at approximately 110 billion dollars in its Monthly Budget Review published Sept. 9. Customs duties for the first eleven months of fiscal 2026 came to 167 billion dollars against 165 billion the prior year, a gain of 1 percent despite a year of historically high tariff rates, because refunds cancelled the increase. August duties alone fell 17 billion dollars, or 59 percent, year over year.
CBO’s August assessment was that fiscal 2026 net customs revenue will run roughly 250 billion dollars, or 60 percent, below its February projections, and that “most of the 166 billion dollars in revenue collected under IEEPA will be refunded in fiscal year 2026, which accounts for about half of the 250 billion dollar change.” The projected fiscal 2026 deficit is 2.1 trillion dollars, about 200 billion above the February baseline.
Treasury Secretary Scott Bessent characterised the coming rebates on the day of the ruling as the “ultimate corporate welfare.”
Whether they function as stimulus is doubtful. The Atlanta Fed estimates that only about one-third of refunds flow to financially constrained businesses, the ones most likely to convert cash into hiring, investment or price cuts. Stephen Juneau, an economist at Bank of America, told clients in July that refunds “could act as a disinflationary force” but that the effect “will be limited as many firms may instead opt to pay down debt or simply save the cash.”
The corporate evidence supports him. PepsiCo chief financial officer Steve Schmitt said the company is using refunds “to help offset some commodity inflation.” McCormick’s Marcos Gabriel said “we are going to use the majority of the tariff refund to offset these higher costs.” Amazon’s refund has been reported at 600 million dollars, Nike’s at nearly 1 billion, and Sony’s at 80 billion yen.
Erica York of the Tax Foundation offered the summary that trade counsel have been repeating to clients all year: the economic damage from a chaotic tariff regime cannot be refunded.
What to do before Oct. 6
For importers, the action items divide by bucket.
Those in Phases 1 and 2 should verify two things: that declarations were actually submitted, and that valid ACH refund banking details are on file. The 1.3 billion dollars stuck on missing banking information is the cheapest money in the system to unlock.
Those in the 81 to 180 day window should file a protective protest, checking first what else that protest would cover.
Those holding finally liquidated entries face a genuine decision. The consensus recommendation across Troutman Pepper Locke, Holland & Knight, Foley, Barnes & Thornburg, Davis Wright Tremaine and BakerHostetler is to file a protective action at the CIT under 28 U.S.C. 1581(i). Foley calls it an insurance policy. The case became more attractive on July 13, when the CIT rescinded Administrative Order 26-01 and ended automatic stays on newly filed refund cases, so new filers can immediately seek the kind of reliquidation order Judge Eaton has entered since July 17.
That order’s language is the operative text Phase 3 implements: reliquidate, without regard to IEEPA duties, any and all of plaintiffs’ entries that have been liquidated for more than 80 days and on which plaintiffs made estimated deposits pursuant to IEEPA. Judge Eaton indicated in a July 15 order that substantially the same relief would be entered in approximately 3,700 pending IEEPA cases.
There is a deadline behind the deadline. The limitations period under 28 U.S.C. 2636(i) is two years, but the trigger is contested. Troutman and Davis Wright Tremaine read it from the date of deposit, which would put the earliest expirations in February 2027. Barnes & Thornburg reads it from the date of entry. BDO has published dates of Feb. 4, 2027 for the trafficking tariffs and April 5, 2027 for the reciprocal tariffs. Foley flags all three readings as live. This is an unresolved legal question with real money attached, and importers should not let a favourable reading of it run their calendar.
Plaintiffs already in the system have a narrower checklist for Oct. 6. Counsel must have supplied CBP a valid importer of record number by July 30; CBP has said it will issue supplemental instructions for those who filed later. The Form 5106 importer identity on file must match the legal name used in the complaint. Declarations must meet all standard CAPE requirements, including CSV formatting and a cap of 9,999 entry numbers. They cannot be amended once accepted, so corrections require a new declaration.
The unresolved part
Phase 3 has slipped once already, from an original target of late July, and CBP confirmed in August that it was delayed while additional validations were built. Two law firms have published different start dates, one giving Oct. 3, a Saturday; the weight of reporting, including Thompson Hine, Mohawk Global and GHY International, is on Oct. 6.
Three larger questions remain open as of today. The Court of International Trade has not ruled on either class certification motion, six weeks after argument. The Federal Circuit has not scheduled oral argument in No. 26-1895, and a decision is expected in late 2026 at the earliest, with certiorari not impossible after that. And the meaning of “finally liquidated” for Phase 3 purposes has not been settled. Aaron C. Mandelbaum of Thompson Hine framed the ambiguity in July: “it remains unclear whether the agency’s reference to ‘finally’ liquidated entries means only entries that have completed both the 314-day liquidation cycle and the 180-day protest period, or whether it also includes entries that are not finally liquidated but fall outside the scope of Phases 1 and 2.”
Interest accrues throughout, compounding daily at 4.5 percent annualised on overpayments above 10,000 dollars. Cato estimates the delay costs roughly 700 million dollars a month, about 23 million dollars a day.
Troutman Pepper Locke summarised the position for importers in a single line in August, and seven months after the Supreme Court ruled it remains accurate: winning at the Supreme Court has not meant winning a refund, at least not for everyone.