U.S. customs agency seeks court path to refund $166B in illegal tariffs

U.S. Customs and Border Protection is set to appear before a federal trade judge in Manhattan on Tuesday to determine how to distribute more than $166 billion in refunds owed to importers after the Supreme Court struck down emergency tariffs as illegal, The Korea Times reported.

The outcome of Tuesday's hearing could determine whether thousands of small importers — including Korean-American businesses across Orange County and greater Southern California — can recover tariff payments without the cost and burden of individual federal lawsuits.

The Supreme Court in 2025 struck down tariffs President Donald Trump had imposed under emergency economic authority, triggering one of the largest refund processes in U.S. trade history. CBP has since completed $22 billion in refunds — forwarding those funds to the Treasury — and accepted Phase 1 claims totaling nearly $90 billion, according to The Korea Times. Total Phase 1 refunds are estimated at $127 billion.

Judge Richard Eaton of the Court of International Trade framed Tuesday's hearing as negotiations rather than traditional litigation. "All of the substantive law in this case has either been decided by the Supreme Court, or is the subject of settled law. All that remains are, what might be termed, settlement negotiations," Eaton wrote in a June 3 letter that appeared on the court docket, The Korea Times reported.

Importers have asked Eaton to certify a class covering all companies that paid the illegal duties. Certification would allow a single court order to apply to all eligible claimants, bypassing the need for each business to bring its own federal lawsuit.

A second, more complex phase involves tariffs already "liquidated" under customs law. CBP currently lacks administrative authority to refund liquidated tariffs unless the individual importer files suit first, The Korea Times reported — a requirement that creates a stiff financial barrier for smaller businesses.

Smaller importers, including many Korean-American wholesale and retail operations in Orange and Los Angeles counties, face the possibility that legal fees for individual suits could exceed the amount they might recover, effectively pricing them out of the refund process entirely.

A federal appeals court has separately issued a temporary stay of an earlier order that would have required the CBP commissioner to appear personally before Judge Eaton, according to The Korea Times.

With $166 billion in illegal tariffs identified, $22 billion already refunded and nearly $90 billion in Phase 1 claims accepted, Tuesday's Manhattan hearing may prove pivotal — particularly for the small businesses that paid the steepest price and now face the highest hurdles to get their money back.