IEEPA Tariff Refunds: CAPE, Court Developments, and Next Steps

1. The Legal Turning Point: Supreme Court and CIT Orders

On February 20, 2026, the Supreme Court of the United States issued a landmark decision in Learning Resources, Inc. v. Trump, holding that the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs. This decision effectively invalidated the legal foundation for IEEPA-based tariffs.

Following this ruling, the U.S. Court of International Trade (CIT), led by Judge Richard Eaton, issued a series of orders to operationalize refunds:

• Directed CBP to liquidate or reliquidate entries without IEEPA duties

• Clarified that refund eligibility extends beyond named plaintiffs

• Required CBP to develop a system capable of handling large-scale refunds

• Subsequently amended orders to address operational constraints and implementation timing

While the legal right to refunds is now largely established, the mechanism for executing those refunds remains under development.

2. Why This Matters: The Expanding Litigation Landscape

The IEEPA tariff issue has triggered one of the largest waves of trade litigation in recent years.

• The Supreme Court case Learning Resources, Inc. v. Trump serves as the central precedent

• CIT cases, including V.O.S. Selections, Inc. v. United States, are shaping refund enforcement and scope

• Thousands of additional lawsuits have been filed by importers seeking recovery of duties

This expanding litigation landscape underscores two key realities:

• Refund entitlement is broad but still evolving in scope

• Certain categories—particularly de minimis (informal) entries—remain unresolved and subject to future legal or legislative action

In short, while the legal battle has largely been won, the implementation battle is still ongoing.

3. How Refunds Will Work: CAPE System Explained

To implement refunds at scale, CBP is developing the Consolidated Administration and Processing of Entries (CAPE) system within ACE.

CAPE is intended to:

• Enable automated processing of IEEPA tariff refunds

• Support mass claims handling and validation

• Facilitate liquidation/reliquidation and refund issuance

The need for CAPE is driven by the sheer scale of the issue:

• Hundreds of thousands of importers affected

• Billions of dollars in duties collected

• Manual processing deemed impractical

CAPE is the critical infrastructure that will determine how quickly and effectively refunds are issued.

4. Where Things Stand Today: CAPE Progress and Phase 1 Scope

CBP has provided multiple updates to the CIT on CAPE development, with Phase 1 now taking shape.

Phase 1 – Covered Scope

• Unliquidated entries

• Liquidated but not final entries (within protest window)

• Standard formal entries processed in ACE

Phase 1 – Not Covered (or Limited Scope)

• Finally liquidated entries (timing and mechanism still evolving)

• Informal/de minimis entries

• Entries subject to:

  • AD/CVD

  • Suspension or extended review

  • Special entry types (e.g., drawback, warehouse)

Key takeaway:
CAPE Phase 1 is targeted, not comprehensive, leaving notable gaps—especially for informal entries.

5. What Importers Must Do Now

Given the evolving refund framework, importers should take immediate and strategic action:

(1) Identify and Segment Exposure

Categorize entries into:

• Unliquidated

• Liquidated but not final

• Finally liquidated

• De minimis (track separately)

(2) Preserve Refund Rights

• File protests within 180 days where applicable

• Closely monitor liquidation timelines

• Avoid losing rights due to procedural deadlines

(3) Prepare for CAPE Implementation

• Ensure systems are ready for electronic refund processing (e.g., ACH and Electronic Refund setup)

• Compile:

  • Entry summaries

  • Duty payment records

  • Liquidation status reports (e.g., ACE ES-003)

(4) Track Excluded Categories Separately

• De minimis and other excluded entries should be:

  • Documented in detail

  • Positioned for future recovery opportunities

(5) Stay Ahead of Regulatory and Legal Developments

• Monitor:

  • CAPE scope expansion

  • Additional CIT orders

  • Potential legislative actions

Preparedness will determine who recovers first—and who misses the opportunity.

6. Final Thought: From Legal Victory to Operational Reality

The invalidation of IEEPA tariffs represents a major legal victory for importers. However, the path from legal entitlement to actual refunds is complex and still unfolding.

CAPE will be central to this process, but it is not yet a complete solution. Key gaps—particularly for de minimis and other excluded entries—remain unresolved and may require further administrative, legislative, or judicial action.

TradeSmart Insight:
IEEPA tariff recovery should be treated as a multi-phase strategic initiative, not a one-time filing exercise. Importers that take a proactive, organized, and informed approach will be best positioned to navigate the evolving landscape and maximize recovery outcomes.