Trump's IEEPA tariffs ruled illegal. How can companies get refunds? "Be alert for more 232 and 301 investigations in the future."

According to Xinhua News Agency, the White House confirmed that following the Supreme Court’s ruling, the relevant tariffs previously promoted under executive orders and invoked under the International Emergency Economic Powers Act (IEEPA) will no longer be valid.

In short, the tariffs authorized by the Trump administration under IEEPA include two parts: the so-called “reciprocal tariffs” and the fentanyl tariffs.

While the White House confirmed that these tariffs will no longer take effect, it also announced the activation of Section 122.

On February 20th, local time, the White House issued a statement saying that President Trump signed an order on that day to impose temporary import tariffs. Trump cited the authority granted by Section 122 of the Trade Act of 1974, which authorizes the president to address certain fundamental international payment issues through surcharges and other special import restrictions.

The order stipulates a 10% ad valorem import duty on goods imported into the United States, for a period of 150 days.

What tariffs are currently faced by various parties? Since they have been ruled illegal, how will the Trump administration refund U.S. importers in the future? Does this involve Chinese-funded enterprises? Which of the five “tariff cards” named by Trump poses the greatest subsequent threat?

Guan Jian, partner at Beijing Guangwen Law Firm, told First Financial that according to U.S. Customs and Border Protection (CBP) and the U.S. Customs Law, importers can apply for refunds for “illegally or erroneously collected” tariffs. In principle, the refund process is handled by CBP, and U.S. importers can submit refund claims to CBP.

“From an operational perspective, even if the U.S. government does not delay, it is almost impossible for importers to receive refunds quickly.” he warned.

Meanwhile, based on the tariffs used by the Trump administration so far, the “Section 232” tariffs invoked in the name of national security are the most frequently used tool besides reciprocal tariffs, and their scope is broad. Guan Jian told reporters that compared to that, Section 301 tariffs may pose a greater threat to China.

What other tariffs are there?

First Financial: Can the so-called activation of Section 122 claimed by the White House be regarded as a legal “equivalent substitute” for the previously invoked “reciprocal tariffs” under IEEPA? Has the U.S. Supreme Court already ruled that IEEPA has no authority to impose tariffs, rendering the fentanyl tariffs and the so-called “reciprocal tariffs” previously imposed invalid?

Guan Jian: The U.S. aims to use Section 122 to replace the so-called “reciprocal tariffs” and fentanyl tariffs that the Supreme Court has invalidated, but it may not achieve an equivalent effect: after all, before their abolition, U.S. tariffs on its main trading partners were higher than 10%. For example, tariffs on China were 20% (the so-called “reciprocal tariffs” 10% + fentanyl tariffs 10%), tariffs on its allies the EU, Japan, and South Korea reached as high as 15%, and many Southeast Asian economies generally around 19-20%.

Of course, the tariffs challenged in the first instance included the so-called “reciprocal tariffs” and fentanyl tariffs, so tariffs imposed under IEEPA, including fentanyl tariffs, are now invalid. The recent statements on “terminating some tariffs” mention executive orders 14193, 14194, and 14195, which originally targeted fentanyl tariffs.

First Financial: From a judicial practice perspective, to what extent will the Trump administration “act in good faith” in complying with the Supreme Court’s ruling? Is there a possibility of delaying tactics or frequent changes in legal basis to resist judicial review? Are there stronger checks and balances available to the courts?

Guan Jian: Based on the current “termination of some tariffs” statement issued by the White House, the U.S. government has already partially fulfilled the judgment. However, this is largely a forced compliance. Whether it is the immediate issuance of executive orders related to Section 122 or the deliberate ambiguity about refunds, the U.S. government cannot be considered to be acting in “good faith.”

At the same time, from the issuance of executive orders related to Section 122, it is highly likely that the U.S. government is playing a “cat and mouse” game, constantly changing legal justifications to resist judicial review until such review can no longer interfere. For example, the Trump administration might impose Section 232 tariffs citing national security reasons.

How can importers claim refunds?

First Financial: Currently, which department will oversee and supervise the $170 billion in tariff refunds? Will it be handled case-by-case by the U.S. Court of International Trade (CIT), or will CBP issue unified administrative refund guidelines?

Guan Jian: According to U.S. Customs Law and CBP’s administrative rules, importers can apply for refunds for “illegally or erroneously collected” tariffs.

If CBP rejects the application, the applicant can file an administrative lawsuit with the CIT. I understand that importers do not need to go to the CIT for case-by-case resolution.

Meanwhile, the U.S. government has already acknowledged in litigation that if tariffs are found to be illegal, importers may be entitled to refunds. To handle this large-scale refund situation, CBP is likely to issue unified guidelines or procedures, unless the U.S. government intentionally delays.

From an operational standpoint, even if the U.S. government does not delay, it is almost impossible for importers to receive refunds quickly. Based on CBP’s current refund practices (such as anti-dumping refunds), the process involves application, review, approval, and mailing checks via the U.S. postal system. Importers then cash these checks at their banks. The process is extremely slow, typically taking 1-2 years to receive the money.

First Financial: Do these refunds involve Chinese companies? If so, how should they respond?

Guan Jian: This refund mainly affects U.S. importers and generally does not impact Chinese manufacturers. Only Chinese exporters registered as importers of record with U.S. Customs—meaning they are legally responsible for the imported goods (companies or individuals) and clear customs and pay tariffs in their own name—are eligible to apply for refunds.

Which substitute tariff tool poses the greatest threat?

First Financial: Among the five tariff policy alternatives proposed by the Trump administration (Sections 301, 232, 201, 122, and 338), which tool is the most threatening?

Guan Jian: Regarding Section 232, this is the most frequently used tool besides reciprocal tariffs, and its scope is broad. The U.S. can freely expand the range of goods subject to tariffs (such as downstream derivatives), and there is no time limit. The courts have also recognized the U.S. government’s approach, making judicial challenges unlikely.

For Section 122, this allows the U.S. to impose tariffs up to 15% on trading partners within 150 days. However, this has time and rate limits. Of course, Congress could authorize extensions for up to a year, and the Trump administration might repeatedly invoke this section.

Section 201 has no fixed tariff ceiling; historically, it has reached 30-50%, with a maximum duration of 4 years, extendable to 8 years. It is a safeguard measure with high statutory requirements and time limits.

Section 301, comparatively, may pose a greater threat to China. During both the first and second terms of the Trump administration, the most investigations under Section 301 have targeted China, and future use of Section 301 to counter China is likely to increase.

Section 338 allows the U.S. to immediately impose tariffs up to 50% on entities discriminating against U.S. trade, and can be used to address “unreasonable” charges, taxes, regulations, or restrictions. This section also has no legal restrictions and warrants vigilance.