Tariff refunds are beginning to reach businesses, but early data – showing rejection rates near 40% – suggests getting that money back may be harder than it looks, particularly for smaller CPG brands without legal support.
As the federal government rolls out refunds tied to tariffs under the International Emergency Economic Powers Act (IEEPA), early data suggests that accessing those funds may be more difficult than many importers expected, according to one expert.
The Trump administration initially imposed tariffs under IEEPA, which was struck down by the Supreme Court. After that ruling, President Trump pivoted to a global tariff under Section 122 of the Trade Act, which was rejected by the US Court of International Trade.
“The most recent data that we have is still a couple weeks old,” and there is limited transparency about the submission process to know why, said Matthew Seligman, principal at Grayhawk Law, who works with clients on navigating the refund process.
“All we have is the declaration that’s filed by Customs and Border Control officials” every few weeks, he explained.
Yet, based on what information is available, rejected submissions are likely caused by two factors: Importer user error when filing or Customs and Border Control (CBP) errors.
Navigating the CAPE system comes with accessibility challenges
CBP opened the Consolidated Administration and Processing of Entries (CAPE) online tariff refund portal on April 20 in response to the Supreme Court ruling the IEEPA tariffs were illegal.
The platform will process $166 billion in IEEPA tariffs in phases. Refunds will be issued to importers as single electronic payments and with interest if applicable, according to CPB.
Even if some of those rejections stem from user mistakes, the pattern suggests a broader imbalance between large and small importers, Seligman notes.
Unlike multinational CPG companies that have an in-house legal team or lawyers on retainers, small and medium-sized businesses are either navigating the refund process on their own or seeking outside counsel.
The accessibility gap in legal aid makes even a seemingly straightforward process harder to execute correctly, suggested Seligman.
He explained, “The CAPE declaration itself isn’t incredibly involved, but getting to that point without any errors may well be difficult for a lot of importers.”
A short window with high stakes
Timing is one of the biggest constraints. Businesses have just 80 days after liquidation to file through CAPE, otherwise they lose refund eligibility. Liquidation is when CBP finalizes an importer’s duties, which starts the clock on refund eligibility.
“It has to be done right, quickly,” Seligman emphasized.
Rejected filings can burn critical time, especially given the uncertainty around timing to confirm a properly created CAPE account and process a refund.
CBP’s authority 19 USC 1501 statute states that the agency has unilateral authority to revise any entry within 90 days. The statute suggests the possible reason why the government chose an 80-day deadline, “just to give them a 10-day buffer,” Seligman notes.
As that window closes, the implications are steeper for businesses: Outside the CAPE deadline, companies may have to pursue legal action to recover funds, Seligman notes.
Catch up tariff turmoil
The impact of Trump's tariffs is fast moving and far-reaching. Stay on top of the issues with our ongoing coverage.
Post-Liberation Day tariff fight shifts to refunds, courts and Congress - The post-Liberation Day tariff fight now centers on refunds and who ultimately keeps the money
Tariffs on trial: Pending rulnig could impact supply costs and grocery prices - Burlap & Barrel's challenge to the Trump administration's tariffs in the US Court of International Trade could define how far presidents can stretch decades-old trade statues
Supreme Court strikes down Trump's tariff policy - The decision is likely to spark a wave of law suits from business across the food and beverage industry and beyond
The real tariff impact on food is still ahead - here is what to expect - Industry data shows manufacturers have delayed price hikes through promotions and portfolio pricing, but analysts warn those tools will weaken as tariff costs finally flow through in 2026
The first hurdle: Setting up ACE accounts
Before businesses can even file, they must set up an Automated Commercial Environment (ACE) account – something Seligman says is often overlooked and inconsistently processed.
“Nothing can be done until that,” he emphasized.
But timelines vary widely with Seligman noting one client setting up an ACE account in 15 minutes, while it took another client two months.
Yet, after setup, delays can continue and users can experience delays in support when calling for help.
“Even if somebody does something perfectly … there can be delays before it becomes active. And you can’t file a CAPE declaration until you have an active ACE account,” he said.
Given those constraints, speed matters. “Make sure you start. Procrastination is your enemy here,” he warned.
Help can help – but comes with risks
While the CAPE process is less complex and costly than litigation, Seligman said the data shows many businesses are struggling to get it right.
“I’m not saying that absolutely 100% everybody needs a lawyer,” he said. “But I think the high rejection rates are showing that … people can get tripped up.”
At the same time, not all help is equal. “Initially, there was a flood of unskilled people who saw a lot of dollar signs … and wanted to charge exorbitant prices,” he said, citing some service providers charging up to 30% of a client’s refund which he describes as unethical.
Coverage is narrowing – and not universal
Another key limitation: CAPE only applies to IEEPA tariffs, and its scope is shrinking.
“We’re now entering a period of time where the huge dollar values … passes out of CAPE eligibility every day,” Seligman said, as more entries move beyond the 80-day window.
For other tariffs, like Section 122, the pathway is far more restrictive.
Section 122 was implemented as temporary, broad import tariffs by the president. Unlike IEEPA refunds that can be issued to importers who paid those tariffs, the only way for businesses to pursue a Section 122 refund is to file a lawsuit, which raises the barrier to entry significantly, according to Seligman.
“There is no universal refund process” under Section 122 tariffs “and there will not be,” Seligman said.
One example is the case The State of Oregon, et al, vs. the United States, et al, and Burlap & Barrel, Inc, et al, vs. the United States et al, where the US Court of International Trade ruled in favor of the plaintiffs and rejected the use of Section 122. Plaintiffs represented in the case are expected to receive refunds.
For New York-based spice importer Burlap & Barrel, the cost of pursuing legal action against President Trump was not lost on them, according to the company’s Co-founder Ori Zohar.
The brand relied on the pro-bono work of non-profit legal aid Liberty Justice Center to help it navigate the lawsuit and ultimately win the case.
A risk of inaction
Given the intricacies of the refund process, some smaller businesses may decide not to pursue them at all, said Seligman.
Some may misunderstand the system and assume universal refunds will be issued on their own.
Others may delay action altogether due to the complexity of the process.
“Nobody … likes submitting receipts for reimbursement … and that’s what this is. It’s even kind of a worse version of that,” Seligman said.
But unlike expenses, missed deadlines are final. “You can’t submit your receipts after a year,” he added.
However, for businesses struggling to operate from IEEPA tariffs, if they can navigate the process successfully, the payoff can be “a lifeline,” Seligman said.
“It’s precisely those types of businesses that are being hurt the most,” he added.
