A lawsuit by Costco to preserve its rights to refunds in the event the US Supreme Court rules that roughly half the tariffs imposed by the Trump administration are illegal is expected to set off a wave of similar suits by other companies.

Companies generally have 180 days after imported goods are "liquidated" to protest and ask US Customs for refunds. Duties are usually collected when goods enter the United States. The US tariff schedules are complicated. US Customs has a period of time to determine the final tariff amount. "Liquidation" is the date any adjustment is made or the original duty assessed becomes final, and in practice usually occurs within 314 days after the date of entry into the United States.

Costco joined a growing list of companies, including Kawasaki Motors and Bumble Bee Foods, that are filing placeholder suits in the US Court of International Trade before time runs out on potential refund claims. The Costco suit, filed on November 28, did not ask for a specific dollar amount.

Companies interested in preserving refunds should take two practical steps now even if they do not end up filing suit.

Decision Looming

The US Supreme Court heard oral arguments on November 5 about whether President Trump has authority under the International Emergency Economic Powers Act to impose tariffs on goods from other countries by Truth Social post or executive order or whether a more involved process is required.

At stake are the reciprocal tariffs of 10% to 50% that are being imposed on imports from almost every country, as well as the special tariffs on Canada, Mexico and China to address fentanyl trafficking. The 50% tariffs on Brazil in retaliation for prosecuting former president Jair Bolsonaro and on India to stop Russian oil sales are not directly at issue, but the court’s ruling could also affect them.

The US is collecting about $30 billion a month in tariffs, with about half that potentially subject to refunds.

If the Supreme Court invalidates the tariffs, the decision is unlikely to lead to immediate refunds for the thousands of affected importers. The court is more likely to send the case back to the lower courts to determine the appropriate remedies.

The US Court of International Trade and the US appeals court that oversees it might establish a new administrative refund process or rely on existing administrative remedies. It is also possible they will be sympathetic to the argument the government has made that retroactive refunds of the billions of dollars in tariffs that have already been paid would have catastrophic economic consequences and, as such, any relief should be solely prospective. In that scenario, while the government would stop collecting the affected tariffs, there would be no refunds of duties that have already been paid.

Practical Steps

Companies interested in preserving their rights to refunds should take the following steps. It may be possible to preserve rights without a court filing.

First, check equipment procurement and construction contracts to determine whether tariff costs were expressly allocated, embedded in the contract price or passed through to the buyer, and whether the parties agreed on who retains rights to pursue duty refunds. Any refund claim would be made by the importer of record. It is a good idea to put language in equipment procurement contracts obligating the vendors to seek refunds and to pass through any refunds, even for known tariffs that were included in the equipment price.

Next, determine whether the imported equipment has already been liquidated or, if not, when the liquidation will become final. Once an entry has been liquidated, it will become significantly more complicated, if not impossible, to obtain a refund of any tariffs paid on that entry.

The best strategy for imported goods that are expected to remain unliquidated when the Supreme Court decision is released is to wait for the decision and then submit a simple "post-summary correction" (PSC) adjusting the tariffs owed on the entries. PSC filings must generally be submitted within 300 days after the entry date and no later than 15 days before the scheduled liquidation date, whichever occurs first. PSC submissions are made to US Customs and Border Protection.   

Many importers may not have that luxury. For entries that are nearing liquidation, importers should ask US Customs to suspend liquidation of the relevant entries in order to preserve the importer’s ability to pursue refunds in the event the Supreme Court decides the tariffs are invalid. Our experience has been consistent with word on the street that US Customs has been rejecting such requests. Liquidation extensions are discretionary. However, such a request is a necessary procedural step before going to court to preserve refund rights on unliquidated entries.

For entries where Customs has denied a request to suspend liquidation, the importer can file suit in the US Court of International Trade challenging the validity of the tariffs and requesting a refund of all duties paid.

Alternatively, the importer can allow the entries to liquidate and then file a protest challenging the validity of the tariffs, but this may ultimately prove ineffective.

Filing suit before liquidation may be the only path for an importer to guarantee that its rights to a refund will be preserved. Such suits are an involved and often costly process. 

For entries that have already been liquidated, the only administrative remedy is to file a protest with US Customs within 180 days after the liquidation challenging the validity of the tariffs and requesting the outcome be stayed pending the resolution of the Supreme Court case. Customs has broad authority to reject protests where the protester is challenging a purely “ministerial” application of tariffs that are required by law to be imposed.   

If the protest is denied, then the importer would have to file a civil action before the US Court of International Trade within 180 days after the protest denial notice.

There are two statutory provisions under which the court could take the case.

For a variety of procedural reasons, parties seeking to challenge collection of a tariff under the broader of the two statutes (28 USC § 1581(a) and (i)) prefer to do so prior to liquidation, and that is what we have seen Costco and others do.

It is technically possible to file a similar claim after liquidation, so long as the claim is brought within the earlier of 180 days after the protest denial notice or two years after the executive action being challenged (for example, for the reciprocal tariffs by April 2, 2027).  

The most important immediate task for importers is to identify the liquidation dates for all imported goods. If no entries are nearing liquidation, it may be most advantageous for the importer simply to wait to see whether the Supreme Court decision is issued prior to liquidation. The decision could be issued anytime between later this month and before next summer when the court releases most major decisions.