For Tim Avanzato and the team at Lanca Sales, Monday marked the start of a high-stakes digital scramble to recover tariffs paid after US President Donald Trump imposed steep duties on almost all imports, including from China, last year.
While the New Jersey-based company that imports and exports food packaging has become accustomed to operating under tariffs and adjusting its business around them, Avanzato, who handles global trade and logistics at the firm, said the refund process has introduced a fresh layer of confusion and administrative burden.
“We were just starting to get used to them, you know what I mean, like, we changed our pricing,” he said, while appreciating the US government’s rolling out of a “common sense procedure” for refunds quickly.
Avanzato noted that the tariffs were “a shock to the system for everybody”.
“And then they take them away. That adds a whole other set of headaches, because how are we getting the money back? How do you do this?”
Lanca Sales is now among the first wave of companies navigating the new refund system. It is working through a customs broker to handle the refunds for a small fee.
“I don’t know how complicated the system might be. It can be as simple as pressing a button,” he said. “I don’t think it’s going to be that simple.” Avanzato added that the business thought it was best for industry experts to handle it on their behalf.
“This way we’ll get our refund, and we’ll be within compliance for everything,” Avanzato said. He had expected to receive the refunds sooner rather than later, though he declined to disclose the amount anticipated. “If it’s within 45-90 days, we would be very happy with that.”
Around US$165 billion in refunds claimed, owed to 330,000 US importers
Following the US Supreme Court’s February ruling that tariffs Trump imposed under executive emergency powers were unlawful, the US Customs and Border Protection (CBP) opened an online portal on Monday to begin processing an estimated US$165 billion in refunds owed to 330,000 American importers. A bulk of the claims stem from the duties placed on Chinese goods.
Learning Resources, an Illinois-based toy manufacturer that took the US government to court last year over the use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs, also filed its refund requests.
Rick Woldenberg, CEO of Learning Resources, told the South China Morning Post that the claims went “smoothly”.
“We filed about 5,000 entries and requested a refund of more than US$10 million,” he said in an email. He added that the company also had other entries that it expects to submit in later stages of the refund process.
Monday’s Phase One launch is limited. Import data over three months old, under review, tied to a drawback claim or part of an active legal protest cannot access the portal yet.
Victor Schwartz, founder of VOS Selections, a New York-based wine importer and distributor who was the lead plaintiff in the IEEPA case, said the process was no different than filing taxes online. He called it “very organised”.
However, he highlighted that the refunds were in no way a “windfall” for importers because “that money is immediately going out to pay suppliers or to the new tariffs”.
“It is important that we won and that going forward this administration will have a more limited channel to impose tariffs,” Schwartz added.
Trump did not take the Supreme Court ruling lying down. Within hours of the decision on IEEPA tariffs, he lashed out at the justices and called the ruling a “disgrace” and an “embarrassment.”
He then followed that up with a new Executive Order invoking Section 122 of the Trade Act of 1974. This law allows a temporary 150-day “import surcharge” of up to 15 per cent to address balance-of-payments deficits.
While he threatened to impose the maximum levy allowed, the EO set a 10 per cent global tariff instead. The Section 122 tariffs have also been challenged at the International Trade Court in New York, which last year ruled against the IEEPA tariffs, by a group of small businesses and 24 US states.
Monday’s launch marks ‘big victory for small businesses’
Ori Zohar, the co-founder of Burlap & Barrel, a spice importer and lead plaintiff in the 122 tariffs case, described Monday as a day marking “a big victory for small businesses, which started with the Supreme Court deeming the IEEPA tariffs illegal”.
“Burlap & Barrel is due a few hundred thousand dollars in refunds plus interest, which we are ready to file for,” he said in a statement to the SCMP.
He noted that the new Consolidated Administration and Processing of Entries or Cape system is a big upgrade over the previous refund process.
“This will be the biggest stress test the system has ever seen, handling the largest volume of tariff refunds in American history,” Zohar said, adding that his firm has started registering to file for tariff refunds but is waiting a few days to avoid the initial system load.
Trump has also directed the US Trade Representative to launch major new investigations under Section 301 of the Trade Act. This provision targets unfair trade practices.
The probes focus on manufacturing overcapacity in foreign countries that harms American businesses across 60 economies, including China. -- SOUTH CHINA MORNING POST
