In earlier trade alerts, we encouraged importers to track the liquidation status of their entries and to consider filing protests with CBP when appropriate. Recently, several companies, including in the well-publicized Costco lawsuit at the Court of International Trade, have taken a different route: filing their own cases to challenge IEEPA tariffs and secure refunds.
In this issue, we break down why Costco chose this strategy and why, for some importers, it may offer the most reliable path to preserving refund rights.
The Gist of the Legal Theory
Courts can award refunds when the government acts unlawfully.
But liquidation creates finality. Under the statute, once CBP liquidates an entry, importers have 180 days to protest. After that point, liquidation becomes “final,” and refund options narrow.
Liquidation is CBP’s official closing of the books on an import entry
Liquidation typically occurs around 314 days after entry.
This sets up a tension: the legal expectation of finality versus the courts’ authority to correct unlawful government action.
The Risk
For IEEPA tariffs, there is a two-year statute of limitations to bring a legal challenge. On its face, that should preserve the court’s ability to grant refunds, liquidated or not.
However, a handful of cases with unusual fact patterns have introduced some uncertainty. This is the concern that gives rise to what we refer to as the “Costco Problem.”
The “Costco Problem,” Explained
The risk emerges when both of the following occur:
Your entries liquidate, and
More than 180 days pass before a Supreme Court decision invalidating the tariffs.
In that scenario, CBP, or even the courts, could argue they lack the authority to issue refunds because liquidation has already become final, even if the duties were ultimately collected unlawfully.
To be clear:
Courts allowing the government to keep unconstitutional duties is highly unlikely.
But recent political and legal developments have made it unwise to rely on likelihood alone.
Why Some Importers Are Filing Suit Now
By filing a lawsuit and attempting to pause the liquidation process, importers keep the government from arguing that the entries are “final.” Costco appears to be taking this approach to ensure every refund pathway remains open.
What You Should Consider Now
If you have entries subject to IEEPA tariffs that are approaching liquidation, and you want to take the most conservative approach and guarantee you are preserving all of your refund rights, now is the time to evaluate your options.
We can review your liquidation timeline and advise whether protests, suspension requests, or litigation may be appropriate based on your circumstances.