Tariff Litigation Update: IEEPA Refunds, Section 122, and Section 301 Forced-Labor Tariffs
Three major tariff disputes are moving through the U.S. Court of International Trade (CIT) and the U.S. Court of Appeals for the Federal Circuit. For importers, the most immediate development is the October 6 launch of CAPE Phase 3, which creates a path for certain CIT plaintiffs to seek refunds of IEEPA tariffs paid on finally liquidated entries.
IEEPA Tariff Litigation: CAPE Phase 3 Is Now Open for Certain CIT Plaintiffs
On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs.
That decision resolved the central question concerning the legality of the IEEPA tariffs, but it did not end the dispute over how importers will recover tariffs already paid.
Following the decision, U.S. Customs and Border Protection (CBP) developed a new refund mechanism within the Automated Commercial Environment (ACE), known as the Consolidated Administration and Processing of Entries (CAPE). The system allows CBP to process large volumes of IEEPA refund requests electronically.
CAPE has been implemented in phases:
Phase 1, launched April 20, generally covers unliquidated entries and entries that had been liquidated recently enough for CBP to reliquidate them under its existing statutory authority.
Phase 2, launched June 29, expanded the process to certain entries flagged for reconciliation where a reconciliation entry had not yet been filed.
Phase 3, which became available beginning October 6, 2026, addresses finally liquidated entries for CIT plaintiffs whose entries are covered by a court order directing reliquidation.
Why Phase 3 Matters
Liquidation is CBP's final determination of the duties owed on an entry. Once the statutory period for CBP to reliquidate an entry has expired, CBP generally cannot simply reopen the entry and issue a refund on its own authority.
That creates an important distinction between importers with relatively recent or still-unliquidated entries and importers whose entries became final before the Supreme Court resolved the IEEPA issue.
The CIT has entered orders directing CBP to reliquidate entries subject to IEEPA duties, including entries that have already become final. The government, however, has challenged the extent to which such relief can be extended to importers that did not bring their own actions before the CIT. That issue remains before the Federal Circuit on appeal.
For now, CBP's position is that CAPE Phase 3 is available to qualifying CIT plaintiffs whose finally liquidated entries are covered by a court-ordered reliquidation.
CBP advised the CIT that plaintiffs who submitted a valid Importer of Record (IOR) number to CBP by July 30, 2026 could begin submitting Phase 3 CAPE declarations on October 6. Counsel representing plaintiffs in the IEEPA tariff litigation were generally contacted as part of this process and asked to provide their clients’ IOR information to CBP so that the agency could identify the relevant importers and entries for potential reliquidation and refunds.
What Should Importers Do?
Importers that paid IEEPA tariffs should first determine which entries have already been refunded and whether any finally liquidated entries remain outstanding.
For importers that are already plaintiffs in IEEPA litigation before the CIT, CAPE Phase 3 provides the current mechanism for seeking refunds on qualifying finally liquidated entries covered by a court-ordered reliquidation.
For importers that are not CIT plaintiffs, the availability and scope of refunds for finally liquidated entries remain the subject of ongoing litigation. Those importers may continue to wait for the appellate courts to resolve the issue, or they may evaluate whether filing their own action at the CIT would allow them to pursue plaintiff-specific relief and, if appropriate, participate in the CAPE Phase 3 process.
Accordingly, businesses with significant unrecovered IEEPA duties should review:
the entries on which IEEPA duties were paid;
the liquidation status and dates of those entries;
refunds already received through CAPE;
finally liquidated entries for which refunds remain outstanding; and
whether they are already covered by a CIT action and reliquidation order, or whether additional CIT litigation should be considered.
Importers should not assume that receiving some IEEPA refunds through CAPE means that all potentially refundable duties have been recovered.
Section 122 Tariffs: CIT Decision Remains on Appeal
Immediately after the IEEPA tariff collection ended, the Administration imposed a temporary 10% tariff under Section 122 of the Trade Act of 1974.
Section 122 permits the President, subject to statutory limitations, to impose temporary import surcharges to address certain serious international balance-of-payments problems. The 10% tariff imposed under Proclamation No. 11012 took effect on February 24, 2026, and remained in effect through July 24, 2026.
The tariff was challenged before the CIT in Oregon v. United States and Burlap and Barrel, Inc. v. United States.
On May 7, a three-judge CIT panel ruled 2-1 that the proclamation was unlawful, concluding that the justification the Administration relied on did not satisfy the statutory requirements of Section 122. The court entered relief for the successful plaintiffs and directed that Section 122 duties paid by the importer plaintiffs be refunded with interest.
The government appealed.
On June 11, the Federal Circuit granted a stay pending appeal, which prevents the CIT judgment from taking effect while the appellate court considers the case.
The appeal remains pending.
Why this matters for importers: Businesses that paid Section 122 duties between February 24 and July 24 should retain entry-level records showing the duties paid and continue monitoring the appeal. Depending on the litigation’s outcome and the scope of any remedy, the case could create another significant tariff refund opportunity.
Section 301 Forced-Labor Tariffs: CIT Requests Additional Briefing
A third major tariff challenge is now moving rapidly through the CIT.
On July 24, 2026, following investigations conducted by the Office of the U.S. Trade Representative (USTR), the United States began collecting new tariffs under Section 301 of the Trade Act of 1974 based on USTR's determination that approximately 60 economies had failed to impose or effectively enforce prohibitions on imports produced with forced labor.
The tariffs generally range from 10% to 12.5%, with different treatment applicable to certain trading partners and products.
Several importers and a group of states challenged those tariffs at the CIT. The cases are being coordinated as In re Section 301 Forced Labor Cases, with Learning Resources serving as the sample case for merits litigation.
The plaintiffs broadly argue that Section 301 does not authorize USTR to impose near-global tariffs in this manner and challenge whether USTR adequately established the statutory connection between each foreign country's conduct, a burden on U.S. commerce, and the tariffs selected as the responsive action.
The government maintains that USTR's investigations and determinations fall within the authority Congress granted under Section 301.
A three-judge CIT panel heard oral argument on September 30, 2026. The Court has not yet issued a decision, and the tariffs remain in effect.
Following oral argument, the Court requested additional briefing on legal issues that arose during the hearing, with supplemental briefs due October 16.
For importers, this litigation is worth watching closely. The IEEPA litigation illustrates an important practical point: when tariffs are later invalidated, entry liquidation status, procedural posture, and whether an importer preserved its rights can materially affect the refund process.
Businesses currently paying the new Section 301 forced-labor tariffs should therefore maintain accurate entry-level records identifying the additional duties being paid and monitor the liquidation status of affected entries while the litigation proceeds.
YLK Insight
The current tariff litigation is increasingly moving from broad questions about presidential tariff authority to a second, equally important question:
If a tariff is ultimately held unlawful, which importers are actually entitled to recover the money they paid, and what must they do to obtain it?
The IEEPA litigation provides the clearest example. Although the Supreme Court resolved the underlying statutory issue months ago, the refund process remains active, and the distinction between open entries, recently liquidated entries, and finally liquidated entries has become critical.
With CAPE Phase 3 now open for qualifying CIT plaintiffs, importers that paid IEEPA tariffs should review their entry history and determine whether any refunds remain outstanding. Importers that also paid Section 122 or the new Section 301 forced-labor tariffs should likewise maintain detailed entry and liquidation records as those cases continue through the courts.
YLK Trade Law will continue monitoring these cases and provide updates as the CIT, Federal Circuit, and CBP issue further decisions and refund guidance.
