Introduction
In January 2025, President Trump declared national emergencies at the U.S. borders, citing an influx of “poisonous fentanyl” and “the extraordinary threat posed by illegal aliens”. According to the Trump Administration, these emergencies authorized the President to impose tariffs under the International Emergency Economic Powers Act (IEEPA). IEEPA grants the President authority to undertake specific economic actions in response to a national emergency. Using IEEPA, the Trump Administration imposed tariffs on Mexico, Canada, and China. These tariffs were challenged in federal courts and ultimately struck down by the Supreme Court on February 20, 2026, in Learning Resources, Inc. v. Trump. To learn more about the IEEPA tariffs and the Court’s decision, click here.
Following that decision, certain questions remained unanswered. Will there be refunds for the IEEPA tariffs? How will those refunds be issued? Will the Trump Administration impose new tariffs, and if so, how? Recent developments have provided some clarity on these issues and what importers can expect moving forward. This article will discuss refunds, new tariffs implemented by the Trump Administration, and an investigation by the United States Trade Representative that could potentially lead to new tariffs.
Refunds & The CAPE System
Reportedly, approximately $133.5 billion was collected on IEEPA tariffs by December 2025. With those tariffs now vacated by the Supreme Court, American importers are seeking refunds. Because the Court’s decision did not mention refunds, importers were left uncertain about whether refunds would be issued. Recent developments at the Court of International Trade (CIT) have provided some clarity, but background is needed to understand those actions.
When a good that is subject to tariffs enters the United States, one of two collection processes applies: formal and informal entries. Formal entry is required when the value of imported goods exceeds $2,500. In a formal entry, the importer must pay the estimated tariff rate and post a bond with Customs and Border Protection (CBP). CBP later calculates the final tariff rate. This is known as “liquidation.” Under federal law, liquidation must occur within one year of the entry. Informal entries generally do not require a bond and are considered liquidated once the importer pays the estimated tariffs.
Under the Tariff Act of 1930, the Secretary of the Treasury is authorized to offer tariff refunds when “it is ascertained on liquidation or reliquidation . . . that more money has been deposited or paid as duties than was required by law.” In those situations, refunds are required if the discrepancy exceeds $20.00. Additionally, refunds may be mandated after a court orders reliquidation.
On March 4, 2026 the Court of International Trade (CIT) issued an order stating that, “all importers of record whose entries were subject to IEEPA duties are entitled to benefit from the Learning Resources decision.” To facilitate this, the CIT ordered that any liquidated entries “for which liquidation is not final” be reliquidated without regard to the IEEPA tariffs. Unliquidated entries were likewise ordered to be liquidated. In other words, the CIT ordered CBP to pretend as if the IEEPA tariffs never existed and begin issuing refunds. As discussed above, liquidation is a crucial step in the refund process, as it determines the amount owed by the importer.
On March 6, the CIT issued a subsequent order temporarily suspending CBP’s obligation to issue refunds, after CBP indicated it needed additional time to liquidate or reliquidate all entries. CBP asserted that the “volume of entries” made each year prevent it from being able to “affirmatively review and liquidate each entry.” CBP is still responsible for collecting and liquidating all non-IEEPA tariffs, which seems to have initially caused CBP to doubt its ability to comply with the CIT’s order. However, CBP then filed a subsequent declaration which outlined its plans to implement a new online system to process IEEPA refunds.
CBP plans to implement the Consolidated Administration and Processing of Entries (CAPE) claims portal. According to CBP, CAPE will be a web-based resource allowing importers and brokers to submit IEEPA refund requests. CAPE will use information submitted by importers to determine refund eligibility. If eligible, tariff rates will be liquidated or reliquidated “as if the IEEPA duties had never been declared.” After liquidation or reliquidation, CAPE will automatically issue refunds to eligible importers. It is important to note that CAPE is not yet finalized. Accordingly, CBP will be implementing a phased development of CAPE, with basic system functionality being activated first. To ensure eligibility for refunds, importers must first enroll in the Automated Clearing House (ACH) program. ACH is a system used by CBP to process and transmit electronic credit and debit transfers and will be used to distribute IEEPA refunds. For more information on the CAPE system, click here.
Refunds have been a looming issue since the Court’s decision in Learning Resources. Given the amount collected under the IEEPA tariffs, many U.S. importers are likely seeking to recover refunds. When the Court did not address refunds in its opinion, those importers were left with uncertainty. However, with its introduction of the CAPE system, CBP has provided at least one potential avenue for producer refunds under IEEPA.
Section 122 Tariffs
On February 20, 2026, President Trump announced a new 10% global tariff rate under Section 122 of the Trade Act of 1974 (Section 122). The initial announcement came the same day the Supreme Court invalidated the IEEPA tariffs. Since its enactment, no tariffs had previously been implemented under Section 122. Because no tariffs have been imposed under Section 122 before, many importers may be unclear about Section 122’s purpose and how it relates to the newly announced tariffs.
Section 122 was implemented to address “fundamental international payments problems.” More specifically, Section 122 allows the president to impose tariffs to: 1) deal with large and serious United States balance-of-payments deficits; 2) prevent an imminent and significant depreciation of the dollar in foreign exchange markets; or 3) cooperate with other countries in correcting an international balance-of-payments disequilibrium.
A balance-of-payments refers to a record detailing all transactions made between a country’s entities and international trading partners. It includes a current account, a capital account, and a financial account. The current account tracks a nation’s trade of goods and services, its earnings on foreign investments, and its foreign money transfers. The capital account covers transactions in foreign financial institutions and central bank reserves. The financial account records deposits, ownership of investment securities, and direct investment between U.S. residents and foreign entities. A balance-of-payments deficit means that the United States is sending more money out than it is taking in.
Unlike IEEPA, Section 122 explicitly grants the President authority to impose tariffs. However, Section 122 also places limitations on any tariffs enacted under its authority. To address one of the above-mentioned payments problems, the President may enact a temporary tariff. The tariff cannot exceed 150 days, unless approved by Congress. 19 U.S.C. § 2132(a)(3). The tariff rate may not exceed 15% ad valorem. An ad valorem tariff is calculated based on the total value of the goods, rather than their quantity or weight. In other words, the tariff may not exceed 15% of the total value of the imported goods. Section 122 requires that the tariff rate be applied “consistently with the principle of nondiscriminatory treatment.” 19 U.S.C. § 2132(d)(1). This means that the rate must generally apply equally to all countries. However, when a country has “large or persistent balance-of-payments surpluses,” the President may target them specifically.
Using the authority granted by Section 122, the Trump Administration announced a 10% ad valorem import duty on articles being imported into the United States. The administration asserts that the Section 122 tariffs are necessary to correct “a large and serious balance-of-payments deficit.” The announcement explains that the United States is currently in an overall account deficit and running a deficit in each component of the current account. To support this claim, the Trump Administration asserts that: 1) the annual U.S. goods trade deficit reached 40% during 2024; 2) the U.S. made less on exported capital and labor than other countries made by exporting capital and labor to the U.S. and; 3) more money is currently being transferred out of the United States than is being transferred in. According to the announcement, these issues “endanger U.S. economic and national security.”
The announcement additionally lists certain exemptions from the Section 122 tariff rate. The exemptions include but are not limited to: certain critical minerals; natural resources unavailable in the United States; beef, tomatoes, and oranges; pharmaceuticals; certain electronics; certain aerospace products; and informational materials. Additionally, goods traded according to the agreement between the United States, Mexico, and Canada will be exempted. As discussed above, the Section 122 tariffs face a 150-day statutory-limit, which could potentially be extended by Congress. This means that the tariffs could at least be active until July 20, 2026.
The Section 122 tariffs have already faced legal challenges. A coalition of twenty-four states filed a lawsuit challenging the Section 122 tariffs on March 5, 2026. The suit, filed in the CIT, argues that Section 122 does not authorize the Trump Administration’s tariffs. The complaint argues that a trade deficit is not a balance-of-payments deficit, and therefore Section 122 does not apply. According to the states, the administration is “contorting” the term balance-of-payments and “cherry-picking only the negative components.” They argue that when foreign capital and financial investments into the United States are included, the actual balance-of-payments is only 0.2% of the United States’ gross domestic product, which the states characterize as “essentially a rounding error.” The states claim that Section 122 does not authorize tariffs based on a trade deficit and that the administration cannot “redefine” the term balance-of-payments to justify the Section 122 tariffs. The plaintiffs conclude by requesting the CIT to declare the Section 122 tariffs unlawful, vacate them, and order refunds of tariffs already collected.
Whether the Section 122 tariffs will survive this challenge remains to be seen. As of the time of writing, the tariffs have been in effect for just over a month, and many questions remain unanswered. Section 122 imposes a 150-day limit, but Congress could extend that period. Even if Congress were to extend the deadline, the tariffs could be overturned by the courts. Further, President Trump has indicated that the rate will be increased to 15%. Whether Section 122 authorized the recent tariffs is an issue for the federal courts to decide, which could take some time.
Potential Section 301 Tariffs
On March 17, 2026, the Office of the United States Trade Representative (USTR) initiated an investigation of foreign countries under Section 301 of the Trade Act of 1974 (Section 301). According to a USTR press release, the investigation focuses on “acts, policies, and practices of various economies” related to structural excess capacity in manufacturing sectors. Structural excess capacity occurs when production capacity exceeds domestic and global demand. The USTR claims that this excess capacity will lead to “overproduction and large or persistent trade surpluses, as well as underutilized and unused capacity, in manufacturing sectors.” According to the USTR, this poses “a serious challenge to U.S. efforts to re-shore supply chains and provide good-paying jobs for American workers.” While the USTR has explained why it launched the investigation, many may still be unclear about how Section 301 works and what could come next.
Section 301, at its core, is designed to address “unfair” foreign trade policies and enforce international trade agreements. Section 301 applies when the USTR determines that “the rights of the United States under any trade agreement are being denied.” Section 301 also applies when “an act, policy, or practice of a foreign country violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement, or is unjustifiable and burdens or restricts United States commerce.”
A Section 301 investigation can be initiated by the USTR itself or by a private party. Private parties must file a petition describing the unfair trade practice and how it is harming the U.S. economy. Once filed, the USTR has 45 days to decide whether to begin a formal investigation. The USTR must publish a notice in the Federal Register when self-initiating an investigation. The USTR is also required to seek public comment on proposed actions. For non-trade agreement investigations, a final determination will generally be issued 12 months after an investigation begins.
If the USTR finds through investigation that a country has violated a trade agreement or implemented an act, policy, or practice that is unjustifiable, Section 301 authorizes certain actions. Most notably, the USTR may impose tariffs. Under Section 301 the USTR is authorized to impose duties or “other import restrictions” on the goods of a foreign country for “such time as the Trade Representative determines appropriate.”
The USTR announced that it has self-initiated a Section 301 investigation. The USTR will investigate China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India for the above-mentioned structural excess capacity concerns. If the USTR determines that the policies or practices of the countries under investigation are actionable under Section 301, it may act under the statute, including imposing tariffs.
This is a broad investigation, and it will likely be some time before any official action is announced. However, any actions taken could have significant economic consequences. Individuals interested in submitting a public comment on the investigation may do so here. The deadline to submit written comments is April 15, 2026.
Conclusion
In the aftermath of the Learning Resources decision, many questions remained unanswered. However, some answers have emerged in the weeks since. While not finalized, the CAPE system may provide an avenue for importers seeking IEEPA refunds. Despite ongoing legal challenges, President Trump’s Section 122 tariffs suggest that tariffs remain a central part of the administration’s trade strategy. This is further reinforced by the USTR’s decision to initiate a broad Section 301 investigation against U.S. trading partners. It remains to be seen what the investigation will ultimately find and what actions may follow. Regardless, importers and consumers should stay informed about these developments and monitor further changes in U.S. trade policy.
To learn more about the IEEPA tariffs, click here.
To read the full text of the Trade Act of 1974, click here.
To learn more about enrolling in the ACH program, click here.