Trade court certifies a class covering importers that never sued, widening a repayment program that has already pushed more than $126 billion out of the Treasury
NEW YORK, Oct. 9, 2026. A federal trade judge has opened the government’s tariff refund machinery to tens of thousands of importers who never filed a lawsuit, a ruling that could expand one of the largest customs repayment exercises in American history and that sets up a direct confrontation with the Justice Department over how far a court may go in ordering relief for parties not before it.
Judge Richard Eaton of the U.S. Court of International Trade granted class-action status on Thursday in litigation over refunds of duties collected under the International Emergency Economic Powers Act, according to Bloomberg News, which first reported the order. The certified class covers importers that have not already submitted claims for repayment through U.S. Customs and Border Protection’s refund portal. The case is Freestyle World Inc. v. Customs and Border Protection, No. 26-cv-1088, in the Court of International Trade in New York.
The order lands in the middle of a refund program that is already extraordinary by any measure. Customs has fully processed almost $130 billion in refunds since the Supreme Court held earlier this year that IEEPA does not authorize the president to impose tariffs, Bloomberg reported. Separate figures disclosed in a court filing this week put the gross flow even higher: as of Oct. 2, the agency’s Consolidated Administration and Processing of Entries system, known as CAPE, had accepted roughly $136.6 billion in potential and certified refunds, of which about $126 billion had been transmitted to the Treasury Department for disbursement.
For importers, customs brokers and the trade compliance departments that have spent nineteen months reconciling duty bills that turned out to be unlawful, Thursday’s ruling changes the calculus. Until now, the operating assumption among many trade counsel was that a company wanting certainty about its money needed either an eligible entry in CAPE or its own complaint on the CIT docket. Judge Eaton’s order suggests a third path.
How the refunds got here
The sequence that produced Thursday’s ruling began in February, when the Supreme Court held that the emergency statute Congress passed in 1977 does not supply tariff authority. The decision invalidated the across-the-board duties that had been the centerpiece of the administration’s trade program since April 2025, and it left the government holding hundreds of billions of dollars in duties that had been lawfully collected under color of a statute that turned out not to apply.
What followed was less a clean unwinding than an improvised one. The Court of International Trade directed Customs to refund the unlawfully collected duties, an order that eventually reached not only entries still open on the agency’s books but also some that had already been finally liquidated, the customs term for an entry whose duty calculation has become administratively final. Customs responded by building CAPE, a phased portal through which importers could declare entries and request repayment.
The administration did not accept the breadth of that order. On June 2, the government appealed, arguing that the trade court lacked jurisdiction to issue what amounted to universal relief and that repayment should reach only the parties that had actually sued. The Justice Department’s brief leaned on three arguments, according to an analysis published by BakerHostetler: that universal relief violates the Supreme Court’s prohibition on universal injunctions in Trump v. CASA, that it exceeds the scope of the Federal Circuit’s remand in the companion case V.O.S. Selections v. Trump, and that it conflicts with the party presentation principle, the doctrine that courts decide the cases litigants bring rather than the ones judges might prefer.
Two days later, on June 4, importers moved to answer that argument on its own terms. Terry Precision Cycling LLC, one of the V.O.S. Selections plaintiffs, filed a motion to certify a class under Rule 23(b)(2) consisting of all importers that paid IEEPA duties and held claims not currently eligible for processing through CAPE. The logic was straightforward. If the government’s objection was that relief cannot run to non-parties, then make them parties. Certification, the motion argued, would “obviate the need for tens of thousands of similarly situated importers” to file individual suits, and would remove the ambiguity about how CASA applies to a refund order of this scale.
That is the argument Judge Eaton accepted on Thursday. Importers already seeking refunds had sought to expand the existing litigation on the ground that a class action would help small businesses without the resources to sue individually, Bloomberg reported. The administration had maintained that importers with certain categories of claims must bring their own actions.
The plumbing problem
The certification order arrives at a moment when the mechanical side of the refund program is visibly straining.
In a filing dated Oct. 6, Brandon Lord, executive director of Customs’ Trade Programs Directorate, disclosed that the agency had finally begun processing refunds for finally liquidated entries, the most legally awkward category in the whole exercise, according to a report by Supply Chain Dive. That phase was originally targeted for the end of July. It slipped to October.
The numbers Lord provided give a sense of scale and of pace. As of Oct. 6, Customs had accepted 477 CAPE declarations covering finally liquidated entries, and those declarations encompassed 425,517 individual entries. The phase is expected to handle roughly $11.4 billion, or about 6.9 percent, of the IEEPA duties at issue.
There is a significant catch. Only plaintiffs who submitted a valid importer of record number to Customs by July 30 can currently receive refunds in this phase. Companies that submitted later must wait for further instructions, and the agency has given no timeframe for when that guidance will appear.
Kelly Nelson of KPMG’s Trade and Customs Services practice described the development as “Another important step in the CAPE process,” and advised importers involved in the tariff litigation to keep monitoring it closely, Supply Chain Dive reported.
The distinction between entry categories matters more than it may appear. An unliquidated entry is still administratively open, and refunding it is a routine accounting adjustment. A finally liquidated entry has, under ordinary customs law, passed beyond the point of reopening. Ordering Customs to reach back into those is the part of the trade court’s order that the government most strenuously contests on appeal, and it is also where the largest pools of money sit for importers that moved high volumes through 2025.
Who actually gets the money
The refund program has generated an argument that cuts across the usual lines in trade policy debates, and Thursday’s ruling will sharpen it.
A report published Oct. 1 by the Center for American Progress, written by Ryan Mulholland, Mimla Wardak and Kennedy Andara, argues that the repayments function as a windfall for large corporate importers rather than relief for the small firms and consumers who absorbed the cost. The report cites a New York Times figure putting roughly $166 billion as the total slated to be returned, and Treasury data showing about $115 billion in customs duty refunds between May and August.
Of that $115 billion, the authors estimate that roughly $35 billion, or about 30 percent, may reach the roughly 234,000 identified small-business importers, an average of about $149,000 each. State averages in their model range from about $14,000 per importer in Hawaii to $124,000 in Texas, with New Jersey and Kentucky also above $100,000. The authors are explicit that these are modeled first-pass estimates based on 2024 import patterns and are simple averages rather than amounts any particular firm received.
The costs those same firms absorbed were larger. Small-business importers paid an average of $426,000 more in duties from March 2025 through August 2026 than in the preceding eighteen months, the report calculates, against a total tariff revenue increase of $330.4 billion. Small-business bankruptcy filings rose 50 percent year over year in the first half of 2026.
The report also cites an Atlanta Fed analysis estimating that only 34 percent of refunds will reach the most financially constrained small and mid-sized firms, and a Cato Institute estimate that about $4.5 billion in interest had accrued on the initial IEEPA revenue as of May, compounding daily. Small businesses, the authors write, “are largely left holding the bag,” and they argue there is “damage that refunds cannot fully undo.”
On the other side of the ledger, the refunds have been visible in corporate earnings. Target, Ross Stores, Polaris and Carter’s have all reported refund-driven gains, according to the report. The Canadian apparel retailer Aritzia disclosed a $97 million tariff refund in its most recent results.
The fiscal picture has been striking in its own right. Refunds exceeded gross customs collections in May, June and July, meaning the federal government was a net payer of customs duties for three consecutive months. August returned to positive territory, with $12.8 billion in net receipts.
For the class Judge Eaton certified, the equity argument is the point. The firms that have not filed claims are disproportionately the ones without a customs lawyer on retainer, and a class mechanism is the standard answer to exactly that asymmetry.
The tariff wall that replaced the one struck down
It would be a mistake to read the refund litigation as the unwinding of American tariff policy. It is the unwinding of one legal basis for it, and the substitution has been rapid.
Within days of the February ruling, the administration invoked Section 122 of the Trade Act of 1974, a balance-of-payments provision that permits a temporary surcharge of up to 15 percent for up to 150 days, and imposed a 10 percent across-the-board charge effective Feb. 20. The Court of International Trade struck down that surcharge in May, though the practical effect was limited because the statutory clock was already running. The Section 122 duties expired on July 24.
By then the replacement architecture was in place. On July 24, Section 301 tariffs tied to forced labor findings took effect at rates of 10 percent and 12.5 percent across roughly 60 of the largest U.S. trading partners, with extensive exemptions. Two days earlier, an additional 25 percent Section 301 duty on Brazilian goods had taken effect, exempting articles already subject to Section 232 measures.
The Section 232 program, meanwhile, has expanded steadily. Advanced computing semiconductors drew a 25 percent duty in January. A proclamation in August set 100 percent duties on larger unmanned aircraft systems, those with thermal imagers, docking stations and listed components, with 25 percent on smaller drones, effective in September and with preferential combined caps of 15 percent for Japan, South Korea, Taiwan, Switzerland, Liechtenstein and the European Union and 10 percent for the United Kingdom. Patented pharmaceuticals and their active ingredients drew 100 percent duties, applying to Annex III companies from July 31 and to all other companies from Sept. 29. A polysilicon proclamation establishing minimum import prices and a 15 percent duty on downstream solar products takes effect Dec. 4.
Separately, the Section 338 action against Canada escalated through the late summer, with 50 percent duties on specified Canadian products from Aug. 22, further product additions effective Sept. 15, and an outright import prohibition on certain Canadian goods from Sept. 29. Those duties apply regardless of USMCA qualification and stack on top of Section 232.
The cumulative result is a tariff wall that is narrower in its legal foundations but, for many suppliers, no lower. Modelled estimates from Global Trade Alert’s U.S. tariff engine put the current trade-weighted applied rate on Chinese goods at about 25.5 percent, on Indian goods at about 18.7 percent, on Turkish goods at about 17.6 percent, and on Brazilian goods at about 16.6 percent. Japan sits near 12.5 percent and South Korea near 12.3 percent. Canada, despite the Section 338 escalation, comes in around 7.6 percent on a trade-weighted basis, a figure that reflects the heavy weight of USMCA-qualifying trade and that conceals a severe tail for the specific lines caught by the action. Mexico is near 6.7 percent and the United Kingdom near 5.9 percent. These are modelled applied rates under the regimes in force, not statutory schedule rates.
What importers should do now
For trade compliance teams, Thursday’s ruling creates an immediate set of questions and a narrower set of answers.
The first question is whether a company is in the certified class. The reported definition covers importers that have not already submitted claims through the Customs portal. Firms that have filed are presumably outside it, which is the intended structure: the class is designed to capture the firms the existing mechanism has not reached. Counsel will want to read the order itself rather than rely on summaries, because the precise boundary between a submitted claim, a partially submitted claim and an abandoned one will determine membership for a nontrivial number of companies.
The second question is whether class membership changes anything about record retention. It does not change the underlying obligation. Entry summaries, commercial invoices, payment records and classification documentation for 2025 and 2026 entries remain the evidentiary foundation of any refund, whether it arrives through CAPE, through individual litigation or through a class judgment. Firms that have let 2025 records drift should treat this week as the prompt to consolidate them.
The third question is timing, and here the honest answer is that nobody knows. The government’s appeal of the underlying refund order is pending before the Federal Circuit. A certified class does not insulate the merits from reversal, and a ruling for the government on the jurisdictional question would unsettle both the class and the broader program. Companies building refund expectations into 2027 budgets should treat the receivable as contingent rather than booked, and should expect their auditors to ask how they are characterizing it.
The fourth question concerns the firms that sold or borrowed against their refund rights, a practice the Center for American Progress report notes has emerged over the past several months. A broader class could affect the pricing of those instruments in both directions, by increasing the universe of eligible claims and by introducing new litigation risk around the appeal. Companies that have monetized receivables should revisit the representations they made to counterparties.
The fifth and most consequential question is strategic rather than procedural. The refund program concerns duties that have already been struck down. The duties a company will pay in 2027 come from Section 232, Section 301 and Section 338 actions that remain fully in force and are, in several sectors, still expanding. A Section 301 product exclusion covering 178 items of Chinese origin expires on Nov. 10. A 180-day negotiation window on commercial aircraft closes on Jan. 5, 2027, with tariffs to follow if no agreements are reached. Commerce and USTR can now add derivative products to existing Section 232 actions at any time by Federal Register notice, which means scope risk no longer arrives on a predictable calendar.
For exporters to the United States, the signal is similar. The IEEPA litigation has demonstrated that the legal basis for a tariff can collapse without the tariff disappearing, because the administration has shown both the will and the statutory inventory to substitute one authority for another within days. Supply chain decisions premised on a favorable court ruling have repeatedly proven fragile.
Reaction on the Hill and in the ports
Reaction to the certification split along familiar lines within hours.
Importer coalitions that had pressed for the class treated it as overdue. Their argument through the summer had been arithmetic rather than ideological: the universe of affected importers runs into the hundreds of thousands, the per-firm amounts for small companies run in the low six figures, and the cost of bringing an individual action at the Court of International Trade exceeds the recovery for a substantial share of them. A refund program that only pays firms able to litigate is, on that view, a program that pays large firms.
Customs brokers, who sit between the agency and the importer and who have absorbed much of the administrative burden of the CAPE rollout, were more guarded. Their concern is operational. The finally liquidated phase has so far processed 477 declarations covering 425,517 entries, and the agency has not published guidance for plaintiffs who submitted importer of record numbers after July 30. Adding a certified class to a queue that is already running months behind its own targets raises the question of whether Customs has the staffing to execute what the court has ordered.
Fiscal analysts made a third point. Interest on the collected duties compounds daily, and the Cato estimate of roughly $4.5 billion accrued by May has grown since. Every month of procedural delay adds to a bill that falls on general revenue rather than on the agencies that collected the duties.
The appeal that matters more
Thursday’s order is significant, but it is not the final word, and trade lawyers were careful to say so.
The question the Federal Circuit will resolve is whether a trade court may order a nationwide remedy that reaches importers who never appeared before it. That question has implications well beyond customs. It is the same question that has been litigated across administrative law since Trump v. CASA curtailed universal injunctions, and the refund program is now the largest practical test of where the line falls when the relief sought is money already collected rather than an order restraining future conduct.
If the Federal Circuit affirms, the class certification becomes the delivery mechanism for a repayment that will ultimately be measured in the high tens of billions beyond what has already moved. If it reverses, the program contracts to the parties that sued, and the small importers the class was designed to protect will be left with a claim they must fund themselves.
Either way, the refunds are only the backward-looking half of the story. The forward-looking half was written this week on the other side of the Potomac, where the Office of the U.S. Trade Representative was assembling a fifteen-economy coalition on industrial overcapacity and the New York Fed was publishing new estimates of how much of the tariff bill American consumers have actually paid.