UPS sues CBP to recover IEEPA tariff refunds, $270m still owed to customers

UPS has sued US Customs and Border Protection to force the re-liquidation of entries carrying tariffs the Supreme Court ruled unlawful in February, with some $500m already received and $270m still owed to customers.

The lawsuit, filed at the US Court of International Trade on Friday, asks the court to compel CBP to re-liquidate entries and issue refunds plus accrued interest on duties collected under the International Emergency Economic Powers Act (IEEPA). United Parcel Service Oasis Supply Corp and UPS Supply Chain Solutions joined the parent company as plaintiffs.

The claim covers entries for which UPS acted as importer of record, which lets the integrator claim refunds directly from CBP. In many cases, though, UPS didn't bear the cost — its customers did. The company says it will pass any recovered funds on to them. To put that in perspective: of the roughly $500m CBP has already refunded under the tariff refund programme, UPS's latest quarterly filings show only about $230m had reached customers by early October. Nearly $270m remains in the gap.

Why the court order matters

The sticking point is CBP's phased refund scheme, the Consolidated Administration and Processing of Entries (CAPE). Phase 1 opened in April and covered unliquidated entries plus certain entries liquidated within the previous 80 days. Phase 2 followed in June. Phase 3 opened last month.

Phase 3 is where the money is, but there's a catch. It covers finally liquidated entries — the bulk of the outstanding claims — and CBP maintains it can only process refunds once the importer has obtained a re-liquidation order from the Court of International Trade. In plain terms: Customs won't pay on closed entries until a judge tells it to. Hence the lawsuit, which explicitly seeks re-liquidation of entries "including those that have already been finally liquidated."

UPS points to earlier government assurances that refunds, including interest, would follow if the IEEPA tariffs were found unlawful. Its claim, the company says, is intended to preserve its own and its customers' rights to recover the money. The Supreme Court obliged on the first half of that bargain in February. The recovery is now a matter of procedure, timing and paperwork.

What does this change for shippers?

For importers that paid IEEPA duties — particularly those buying on Delivered Duty Paid terms, where the supplier or its carrier fronts the tariff — the case signals the practical route to recovery on finally liquidated entries. If you were the importer of record, you'll need your own court order or a claim riding on one like UPS's. If a carrier or forwarder was the IOR, the question becomes whether they'll chase the refund and remit it, as UPS has committed to do.

The pace so far has been deliberate. Some $230m of UPS's $500m took months to flow through to customers, and Phase 3 only opened last month. Interest accrues while the queue moves, which softens the wait — slightly.

Expect the Court of International Trade's handling of re-liquidation petitions to set the template for how the remaining IEEPA refunds, across all importers, finally get paid.