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Today, the Court of International Trade ("CIT") held a lengthy hearing involving the top commercial trade official at U.S. Customs & Border Protection ("CBP"), Executive Assistant Commissioner ("EAC") Susan Thomas. Today's hearing was part of the CIT's "order to show cause" ("OSC") issued to the government on May 27, 2026. The OSC asked the government to explain and provide reasons to the CIT as to why the CIT should not lift the stay of its previous orders issued on April 7th and 17th, which had ordered the government to proceed to refund all IEEPA tariffs to all importers.
While the hearing ended without the CIT lifting the stay of its April orders, the CIT explored with EAC Thomas the reasons why CBP could not simply refund all IEEPA money to all importers. EAC Thomas explained that CBP fully intends to comply with all statutes and court orders and that CBP had expended much time and effort into developing an efficient refund system, aka "CAPE." EAC Thomas reiterated that CBP intends to continue to roll out subsequent phases of CAPE, with the next major phase ("Phase 2") intended to start on Monday June 29, 2026.
According to EAC Thomas, Phase 1 of CAPE has led to CBP accepting claims for refunds of about $90 billion out of the total $166 billion in IEEPA tariffs CBP has collected. Of that amount, CBP has approved and transmitted to the Treasury Department for refund, about $23 billion. Underscoring the herculean task that CAPE is performing, EAC Thomas noted that in the entirety of the last fiscal year CBP processed only 338,000 entries with tariff refunds of any type, whereas in the first 6 weeks of CAPE Phase 1, CBP has processed IEEPA refunds on nearly 8.5 million entries.
EAC Thomas confirmed that "Phase 2" of CAPE will cover importers who (a) have flagged entries for reconciliation where such entries are unliquidated or have liquidated within 80 days of the filing of the CAPE Phase 2 refund claim, and (b) have not yet filed the reconciliation entry for such entries (both (a) and (b) would need to be true to be eligible for CAPE Phase 2). Assuming the June 29, 2026 start date holds, this represents important relief for importers who have been sidelined from participating in CAPE Phase 1 thus far - assuming, of course, such importers have not yet filed their 09 reconciliation entry. EAC Thomas estimates that when CAPE Phase 2 opens, another 2.8 million entries can be processed for refund with the potential to refund another $28.7 billion in IEEPA tariff refunds. Together, and according to EAC Thomas, CAPE Phase 1 and Phase 2 will allow CBP to process for refunds nearly $130 billion out of the total $166 billion in IEEPA tariffs that were collected.
CAPE Phase 2, while surely welcome news, is not a panacea for importers who have been flagging their entries for reconciliation. For example, consider the importer who has flagged its entries for value and not yet reported those value adjustments. Assume further that this importer files its CAPE Phase 2 claim on the opening day of CAPE Phase 2, i.e., on June 29, 2026. Lastly, assume that this importer had all of its entries on a 314 day liquidation cycle and that it had been paying IEEPA tariffs since the very first IEEPA tariffs entered into force back in February 2025.
The upshot of CAPE Phase 2 for this importer is that this importer will be able to file for a refund of the IEEPA tariffs it paid on its imports from roughly May 31, 2025 until February 2026 (when the IEEPA tariffs ceased being charged by CBP). This is because an entry filed on May 31, 2025 likely liquidated circa April 10, 2026 (314 days later) and 80 days from April 10, 2026 (the CAPE Phase 2 filing limitation) is June 29, 2026.
By contrast, this importer's flagged reconciliation entries from February 2025 (the start date of the IEEPA tariffs) until May 30, 2025 will not be recoverable - at least in CAPE Phase 2. This is because a May 30, 2025 entry likely liquidated on April 9, 2026 and April 9, 2026 is 81 days before June 29, 2026, thus violating the "liquidation no more than 80 days before filing the CAPE refund claim rule". For these entries, the importer will have to wait for a subsequent phase of CAPE. That said, some refunds are better than no refunds. Yet, the "no refund" portion may very well be a significant amount of money for this importer.
EAC Thomas further confirmed today that CBP intends to open a CAPE Phase 3 sometime toward the end of July 2026. Here, too, there will be limits. This phase of CAPE will cover entries that (a) are finally liquidated (defined by CBP to mean more than 80 days past liquidation) AND (b) were filed by a plaintiff who has a pending refund lawsuit. While less specifics are available about how CAPE Phase 3 will work, the vision for CAPE Phase 3 underscores, in our view, the importance of every importer filing its own refund lawsuit. The approximately 4,000 or so plaintiffs who have sued will, if CBP sticks to its word, likely have ALL of their IEEPA tariffs refunded to them regardless of liquidation status - either through current CAPE Phase 1 filings or through this later CAPE Phase 3 filing. The benefit of CAPE filings, whether Phase 1, 2 or 3, is relatively rapid issuance of refunds.
By contrast, importers who have not filed a refund lawsuit remain the most exposed to not receiving a refund and, even if they receive full refunds, they will have the slowest processing of their refunds. For starters, while the CIT is urging and maneuvering to have the government refund all IEEPA tariffs to all importers, the Department of Justice reiterated today that it believes the CIT erred and that the CIT cannot order the government to refund money to non-plaintiffs. Whether the CIT or the Department of Justice is correct on this will be fought out at the Court of Appeals for the Federal Circuit. It remains to be seen what the Federal Circuit will decide on this issue. Whatever the Federal Circuit decides, appeals take time - around one year. Given the government's intransigence over not wanting to pay refunds of IEEPA tariffs on finally liquidated entries pertaining to importers who have not filed their own refund lawsuit, this group of importers will likely have to wait one plus years before seeing refunds, if at all.
The "no refunds to non-plaintiffs" issue could possibly be resolved by efforts to certify a class action. While a class certification motion is pending at the CIT, and certification of a class would seem to make every importer be a party, instead of a non-party, thereby addressing the government's concern that the CIT cannot order refunds to non-parties, Senior Judge Eaton declined to address class certification today.
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