Businesses can apply for customs duty refunds. Will consumers see it?
Companies are not required to share tariff refunds with customers, but some have said they plan to pass on some relief.
U.S. companies that paid now-defunct Trump administration tariffs could start receiving billions of dollars in refunds this week as federal authorities introduce a new claims system aimed at speeding up the repayment process.
The refunds stem from tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act (IEEPA) before the Supreme Court ruled in February that the administration exceeded its authority under the 1977 law.
Currently, U.S. Customs and Border Protection uses a newly developed system called Consolidated Administration and Entry Processing (CAPE) to manage potentially billions of dollars in customs refunds.
Here’s what it means for businesses to start receiving money and how it benefits consumers.
What is a cape?
CAPE was created to streamline claims for refunds of IEEPA duties that courts have determined are due, customs officials said.
Rather than processing refunds for each shipment, CAPE consolidates eligible duty refunds, including interest, into a single payment to each importer.
The agency launched Phase 1 of the system on April 20. The initial rollout only applies to some shipments that are still in final processing or have been recently processed, with more options planned for future phases.
CBP calculated the final refund and interest as of May 11 at $35.46 billion, covering 8.3 million shipments, according to Reuters. All told, up to $166 billion in tariff collections could ultimately be refunded.
Who can apply for a customs duty refund?
Only the importer listed on the shipment and the intermediary acting on his or her behalf may submit a CAPE refund declaration.
Companies set to receive refunds include major retailers such as Home Depot, Nike, Target and Walmart, MSN reported.
Once a company’s application is approved, CBP will update its records, remove any tariff provisions that have since been canceled, and recalculate the duties before issuing the refund.
CBP said valid refunds are typically issued within 60 to 90 days after the return is received, but may take longer in complex cases.
What impact does this have on consumers?
Economists argue that many companies are passing on at least some of that cost to shoppers through higher prices, but consumers who paid higher prices tied to tariffs are not eligible for direct refunds from the government.
Still, some companies have suggested that consumers may benefit indirectly. Costco previously said it would pass on the savings through lower prices and added membership value once the tariff refunds were collected. FedEx said it plans to refund customers if it acts as a customs broker.
Trade experts say widespread price cuts are unlikely in the short term because many companies have absorbed significant tariff costs over the past year and may instead use government refunds to offset the hit.
Ongoing tariff uncertainty may also limit consumer relief. The Supreme Court struck down the original IEEPA tariffs, but President Trump has since imposed temporary 10% tariffs under another trade authority, and the administration is pursuing additional tariffs that could impose new import taxes later this year.
Reporter Anthony Thompson can be reached at ajthompson@usatodayco.com or on Twitter @athompsonUSAT.
