U.S. Customs and Border Protection switches on the third phase of its tariff refund system on Monday, October 6, 2026. The deployment opens the agency’s electronic refund channel to a category of import entries that has been administratively closed for months: entries that have already passed final liquidation.
The tranche is worth roughly $11.4 billion, about 6.9 percent of all duties collected under the International Emergency Economic Powers Act, according to a declaration CBP filed with the U.S. Court of International Trade on September 15. The money has been sitting out of reach since the Supreme Court struck down the IEEPA tariff program in February.
There is a catch, and it is the whole story. Phase 3 is not a general reopening. It is a court-order processing lane, and an importer who never sued cannot use it.
In short
- CAPE Phase 3 deploys October 6, 2026, opening CBP’s refund system to finally liquidated entries for the first time.
- Roughly $11.4 billion sits in that tranche, about 6.9 percent of total IEEPA duties collected.
- Eligibility is litigation-gated: the filer must be a plaintiff in a pending Court of International Trade case, hold a reliquidation order covering the entry, and have submitted an importer of record number to CBP by July 30, 2026.
- CBP has already certified about $122 billion in refunds and interest to the Treasury, out of roughly $134.7 billion accepted into the system across the first two phases.
- Non-plaintiffs have no administrative path, because CBP has told the court it lacks statutory authority to reliquidate finally liquidated entries on its own initiative.
What changes inside CBP’s refund system on October 6
The system is called CAPE, short for Consolidated Administration and Processing of Entries. CBP built it in the spring of 2026 to handle the refund wave that followed the Supreme Court’s ruling, and it has been rolled out in stages rather than all at once.
Phase 1 went live on April 20, 2026. It accepted declarations covering unliquidated entries and entries that were within 80 days of liquidation, which is to say entries where CBP’s own accounting had not yet closed. That phase moved the bulk of the money.
Phase 2 followed on June 29, 2026, extending the system to reconciliation-flagged entries that were either unliquidated or recently liquidated without a reconciliation entry on file. It dealt with a narrow technical population rather than a large pool of duties, and it mattered mostly to importers running reconciliation programs for valuation or classification.
Phase 3 is the first phase that reaches entries where liquidation is final. In customs practice that is a meaningful line, because final liquidation normally extinguishes the ability to go back and change what was owed. CBP’s position throughout the litigation has been that it cannot simply reverse those entries without being told to by a court.
Brandon Lord, CBP’s executive director of trade programs, authored the declaration that confirmed the October 6 date. The filing landed in the Court of International Trade on September 15, 2026, and it is the clearest public statement the agency has made about when this channel would open. Until that declaration, the trade bar had been working from an indefinite timetable that had already slipped once.
The staged rollout also reflects a resourcing reality. CBP was unwinding the largest single tariff program in modern US history while simultaneously administering Section 232 and Section 301 duties that remained fully in force, and it did so through an entry system that was never designed to run refunds at this volume.
Why $11.4bn was stranded in the first place
Liquidation is the administrative event that finalizes an import entry. Until it happens, the duty figure is provisional and can be corrected. Once it happens and the correction windows close, the entry is settled as a matter of customs law.
That finality is normally a feature rather than a defect. It gives both the government and the importer a point after which the books are closed, and it is what allows CBP to run an entry system handling tens of millions of transactions a year. The IEEPA unwind turned it into an obstacle, because a tariff that was collected lawfully on the day it was paid was later held to have had no statutory basis at all.
The protest window closes before most importers notice
An importer has 180 days from liquidation to file a protest. That clock runs regardless of whether anyone expects the underlying tariff to be struck down. A large share of the IEEPA duties collected in 2025 liquidated and aged out of protest well before the Supreme Court ruled in February 2026.
Post-summary corrections are the other administrative tool, and they are narrower still. They apply to entries that have not yet liquidated, which by definition excludes the Phase 3 population. For the entries now at issue, the ordinary administrative toolbox is empty.
This is why the stranded tranche skews toward the earliest months of the tariff program. Entries from the first wave of IEEPA duties had the longest time to liquidate and age out, and they are disproportionately represented in the $11.4 billion figure.
Scale compounds the problem. With roughly 27.2 million entries touched by the refund process, even a small percentage falling into the finally liquidated bucket produces a population too large for case-by-case handling to be efficient. That is the structural argument behind the pending class-certification motions.
Why the Supreme Court ruling did not automatically unlock the money
The Court decided Learning Resources, Inc. v. Trump, consolidated with Trump v. V.O.S. Selections, Inc., on February 20, 2026. The vote was 6 to 3, with Chief Justice Roberts writing for a majority that included Justices Sotomayor, Kagan, Gorsuch, Barrett and Jackson. Justices Thomas, Kavanaugh and Alito dissented.
The holding was that IEEPA does not authorize the president to impose tariffs on imports. What the opinion did not do was address remedies, including whether and how importers get their money back. That question went back down to the lower courts, and it is still being fought over eight months later.
The practical result is a two-track world. Entries that were still open moved relatively quickly through Phases 1 and 2. Entries that had closed needed a court to order CBP to reopen them, one case at a time. We examined the size of that stranded population in our earlier analysis of why a large share of IEEPA tariff refunds is likely to go unclaimed.
Who qualifies on day one, and who does not
Trade counsel advising importers have converged on three conditions, and all three must be satisfied. Failing any one of them means the Phase 3 lane is closed to that entry, no matter how clearly the duties were collected without authority.
The three conditions
First, the entry must have completed final liquidation. Entries still inside the 80-day window belong in the Phase 1 lane and should already have been filed there.
Second, the filer must be a plaintiff in a pending Court of International Trade case seeking IEEPA refunds. This is the condition that excludes the overwhelming majority of US importers, most of whom never filed suit and had no particular reason to expect they would need to.
Third, the entry must fall within the scope of a court reliquidation order. A lawsuit alone is not enough: the court has to have actually ordered the specific entries reopened, which means the scope of the order matters as much as its existence.
The July 30 cut-off on importer of record numbers
CBP layered an operational requirement on top of the legal ones. Plaintiffs who submitted a valid importer of record number to the agency by July 30, 2026, are the ones who can begin participating on October 6.
Importers who filed suit later are not permanently excluded, but they are not in the first wave. CBP has signalled that processing will continue on a rolling basis as additional reliquidation orders and IOR numbers come in.
Practitioners also report that the Court of International Trade has been entering individual reliquidation orders quickly, within roughly a week or two of a suit being filed. That is unusually fast for customs litigation, and it reflects the fact that the merits question has already been decided at the highest level. What is left in each individual case is paperwork rather than argument.
How much CBP has already paid out
The numbers CBP has disclosed to the court give an unusually clear picture of the scale of this unwind. More than 286,000 CAPE declarations have been submitted, with over 201,000 accepted, covering approximately 27.2 million individual entries.
Roughly $134.7 billion in potential and certified refunds has been accepted into the system. Of that, approximately $122 billion including interest has been certified and transmitted to the Treasury for payment, as of the agency’s September reporting.
About $1.3 billion is stuck for a mundane reason. CBP reports 20,184 refunds on hold because the recipient has not supplied banking information for electronic funds transfer. That is a filing problem, not a legal one, and it is fixable by enrolling in electronic refunds through the Automated Commercial Environment.
| Phase | Live date | Entries covered | Who can file |
|---|---|---|---|
| Phase 1 | April 20, 2026 | Unliquidated entries and entries within 80 days of liquidation | Any importer of record |
| Phase 2 | June 29, 2026 | Reconciliation-flagged entries, unliquidated or recently liquidated with no reconciliation entry filed | Any importer of record |
| Phase 3 | October 6, 2026 | Finally liquidated entries, liquidated more than 80 days prior | CIT plaintiffs with a reliquidation order and an IOR number filed by July 30, 2026 |
The phase structure explains why the headline totals look so large while $11.4 billion remains outstanding. The easy population, meaning entries CBP could reopen without a court telling it to, has largely been processed. What is left is the legally contested remainder, and it is contested precisely because the agency says it needs judicial cover to touch it.
What the refunds have already done to retail earnings
For large US retailers the IEEPA refunds have been among the most consequential line items of the 2026 reporting year. Several of them booked sums large enough to move quarterly earnings per share by a wide margin, and in at least one case the refund was the difference between a flat quarter and a strong one.
Walmart has received substantially all of a $2.9 billion refund and has said it is routing the money into price investment. Target recognized $994 million of pretax tariff refunds, which added $752 million to net earnings and $1.65 to earnings per share in the quarter.
Home Depot collected $730 million in a single lump sum arriving near the end of June, of which $685 million was applied against cost of goods rather than dropped to the bottom line, per the company’s disclosures. Costco booked $184 million in its fiscal fourth quarter, comprising $174 million of refunds plus $10 million of interest, and directed the proceeds into produce and meat price cuts.
Best Buy’s numbers are smaller but illustrate the drip pattern that most importers should expect. The company recorded $34 million of IEEPA refunds in the second quarter of fiscal 2027, then disclosed a further $41 million refunded on September 2, 2026. Lowe’s has similarly described its refund as offsetting higher input costs rather than funding a discrete initiative.
| Retailer | IEEPA refund disclosed | Reported treatment |
|---|---|---|
| Walmart | $2.9bn, substantially all received | Reinvested into price cuts |
| Target | $994m pretax, $752m net | Added $1.65 to quarterly EPS |
| Home Depot | $730m in one quarter | $685m offset against cost of goods |
| Costco | $184m ($174m refund, $10m interest) | Routed to produce and meat pricing |
| Best Buy | $34m in Q2 FY27, plus $41m on Sept 2, 2026 | Recognized against tariff costs |
The pattern across those disclosures is worth noting. Where the refund was applied against cost of goods, as at Home Depot, it suppressed reported gross margin pressure rather than creating visible profit. Where it was recognized as a discrete benefit, as at Target, it produced an eye-catching EPS number that will not repeat.
Those windfalls have not been free of consequences. A wave of consumer class actions now argues that retailers who collected tariff surcharges from shoppers and then received refunds from the government should hand the difference back, a theory tested most visibly in the class action filed over Target’s $994m refund. Dozens of similar suits are pending across more than 20 federal districts.
There is a further wrinkle for importers who use customs brokers rather than filing in their own name. The refund flows to the importer of record, which means a company that imported under a broker-held or affiliate IOR number may find its claim sitting in a different corporate entity than the one that absorbed the duty cost. Reconciling that mismatch is a prerequisite to filing, not an afterthought.
The two routes out for everyone else
Phase 3 covers plaintiffs. The far larger question of what happens to importers who never sued is being decided on two separate tracks, and neither has resolved.
The government’s appeal at the Federal Circuit
The Court of International Trade had issued what amounted to a universal refund order, directing relief for importers generally rather than only for the parties before it. The Department of Justice appealed that order in June 2026 and filed its opening brief on August 10, 2026.
DOJ’s position rests on two planks. The first is that the trade court exceeded its authority by ordering universal relief for non-parties, invoking the Supreme Court’s decision in Trump v. CASA, Inc., 606 U.S. 831 (2025), which curtailed nationwide injunctions. The second is statutory: that CBP has no authority to reliquidate finally liquidated entries absent an importer-specific court order.
The government’s own brief narrows the stakes usefully. If the Federal Circuit vacates the universal injunctions, exactly one group is left without a remedy: importers with finally liquidated entries who have not filed suit. That group has no administrative fallback, because the agency has already told the court it cannot act unilaterally.
The same court is handling the parallel fight over the Section 301 forced-labor duties, where a written ruling is expected within weeks. Trade counsel have been blunt with clients: in the current posture, the only reliable way into the refund queue is to become a plaintiff.
The class-certification motions
There is a second route that would spare thousands of importers from each filing their own suit. Two class certification motions are pending at the Court of International Trade, and both were argued over the summer.
V.O.S. Selections, Inc. v. United States (Court No. 25-00066) was argued on August 6, 2026. The Liberty Justice Center is seeking certification of a nationwide class under Rule 23(b)(2), which if granted would sweep in importers with outstanding IEEPA refund claims who are not currently eligible for CAPE processing.
Freestyle World, Inc. v. United States (Court No. 26-01088) was argued on August 19, 2026 and raises a parallel certification question. Between them the two motions represent the main alternative to individual litigation for smaller importers.
Practitioners are not counselling clients to wait for them. The government is widely expected to appeal any favourable certification ruling to the Federal Circuit, and a final resolution may not arrive before the end of 2026. An importer who waits for a class and does not get one has lost the intervening months for nothing.
What importers are being told to do this week
The advisory guidance published by customs firms through late September converges on a consistent sequence. It is worth reading as a description of what the market is actually doing rather than as legal advice.
- File suit, and file it now. The threshold step is a jurisdictional action at the Court of International Trade under 28 U.S.C. 1581(i). Firms have emphasised the speed of the court’s response, with individual reliquidation orders reportedly issuing within a week or two of filing, and refunds following within weeks of the order.
- Identify entries past the protest window. The target population is entries that have liquidated, aged past the 180-day protest window, and still carry IEEPA duties that were never recovered. Entries filed through multiple brokers, or under more than one importer of record number, are the ones that commonly get missed.
- Do not withdraw existing protests. Firms have issued a specific warning here: IEEPA-only protests should not be withdrawn until the importer actually holds an individual reliquidation order. Withdrawing early forfeits a preserved position in exchange for nothing.
- Fix the banking details. The $1.3 billion sitting on hold across 20,184 refunds is a reminder that the last mile is administrative. Enrolment in electronic refunds through ACE is how CBP transmits the money, and an importer without current ACH details simply does not get paid.
- Reconcile the entry data before filing. Because the reliquidation order defines scope, an incomplete entry list at the point of filing can leave recoverable duties outside the order. Brokers are being asked to produce full liquidation histories rather than summary duty totals.
None of this is costless. Filing a 1581(i) action requires trade counsel, and for an importer whose stranded IEEPA exposure runs to five figures rather than seven, the legal spend may approach the recovery. That calculus is exactly what the pending class-certification motions would change.
Smaller importers face a different version of the same problem. A mid-sized apparel or houseware importer with a few hundred thousand dollars of stranded IEEPA duties sits in an awkward band: large enough that the money matters to a full-year result, small enough that a bespoke litigation budget is hard to justify against an uncertain timeline.
Why February 2027 is the deadline that actually binds
The October 6 date is a system availability date, not a legal cut-off. The harder constraint sits further out, and it is the one that should concentrate attention.
Statute of limitations deadlines on the earliest IEEPA entries begin arriving as early as February 2027, according to advisories published in September. Once those run, the claim is gone regardless of what the Federal Circuit decides about universal relief or what the trade court decides about class certification.
That compresses the decision window considerably. An importer weighing whether to spend money on trade counsel has roughly one fiscal quarter to make the call, and the calculus gets worse the longer it waits.
Refunds also carry statutory interest, which means delay has a quantifiable cost beyond the risk of losing the claim outright. Costco’s disclosure of $10 million of interest on $174 million of refunds gives a rough sense of the accrual on a mid-sized position.
What Phase 3 does not fix for retail importers
It would be a mistake to read the refund unwind as the end of the tariff story for retail importers. The IEEPA program is gone, but the duty burden has been substantially rebuilt through other statutes, and in aggregate the 2026 landed-cost picture is not meaningfully better than the 2025 one.
Section 301 forced-labor duties of 10 percent and 12.5 percent took effect on July 24, 2026 and reach more than 99 percent of US goods imports by value. The American Action Forum has estimated the annual cost of that program at roughly $58.3 billion.
Section 232 duties on steel, aluminium, copper, timber and lumber derivatives continue to apply, with a step-up on several wooden product categories deferred to January 1, 2027. De minimis treatment has been suspended for all countries since August 2025, removing the duty-free channel that handled an estimated 1.36 billion shipments a year.
Merchandise processing fees rose on October 1, 2026, with the minimum moving to $34.58 and the maximum to $670.86, while the ad valorem rate held at 0.3464 percent. For a retail importer running high-volume, low-value entries, the fee floor is the number that bites hardest.
The question of where the refunded money ultimately lands is also unresolved. Several large chains have signalled price investment, but the balance between consumer pass-through and shareholder returns has shifted, a pattern we traced in our analysis of why the tariff-refund windfall is likely to end in buybacks rather than price cuts.
What to watch after October 6
Three markers will determine whether Phase 3 is a meaningful unlock or a narrow technical release. The first is throughput: how many reliquidation orders CBP actually processes in the first few weeks, and whether the agency’s stated rolling cadence holds once the initial queue clears.
The second is the Federal Circuit. A ruling that preserves the universal order would make Phase 3 largely moot by opening a path for everyone. A ruling that vacates it would make litigation the only route and would likely trigger a filing rush against the February 2027 clock.
The third is the certification docket. If either V.O.S. Selections or Freestyle World produces a certified class, the economics of individual filing change immediately for small and mid-sized importers who cannot justify the legal spend on their own.
For now the operative fact is simple. On Monday an $11.4 billion window opens, and it is a window that only opens from the inside.
Frequently asked questions
What exactly is CAPE Phase 3?
CAPE stands for Consolidated Administration and Processing of Entries, the system CBP built to administer refunds of tariffs imposed under the International Emergency Economic Powers Act. Phase 3, deploying October 6, 2026, is the first phase that accepts refund requests on entries that have already been finally liquidated, meaning liquidated more than 80 days prior.
Can my company file in Phase 3 if we never sued?
No. Phase 3 requires the filer to be a plaintiff in a pending Court of International Trade case, to hold a court reliquidation order covering the entries, and to have submitted a valid importer of record number to CBP by July 30, 2026. CBP has told the court it lacks statutory authority to reliquidate finally liquidated entries without an importer-specific order.
How much money is involved?
Approximately $11.4 billion sits in finally liquidated entries, about 6.9 percent of total IEEPA duties collected. CBP has separately accepted roughly $134.7 billion into CAPE across the earlier phases and certified around $122 billion including interest to the Treasury for payment.
Why did the Supreme Court ruling not trigger automatic refunds?
The Court held on February 20, 2026 in Learning Resources, Inc. v. Trump that IEEPA does not authorize the president to impose tariffs, but the opinion did not address remedies. Whether and how importers recover the duties was left to the lower courts, and that question is still being litigated at the Federal Circuit and the Court of International Trade.
What is the Federal Circuit appeal about?
The Department of Justice appealed the Court of International Trade’s universal refund order in June 2026 and filed its opening brief on August 10. It argues the trade court exceeded its authority by ordering relief for non-parties, citing Trump v. CASA, Inc., and that CBP cannot reliquidate finally liquidated entries absent an importer-specific court order.
Should an importer wait for a class action instead of filing individually?
Trade counsel have generally advised against waiting. Two certification motions are pending, argued on August 6 and August 19, 2026, but the government is expected to appeal any favourable ruling and final resolution may slip past the end of 2026. Statute of limitations deadlines on the earliest entries begin arriving as soon as February 2027.
Do refunds include interest?
Yes. CBP’s reported certification total of roughly $122 billion is stated as including interest, and individual company disclosures confirm the pattern. Costco, for example, reported $184 million comprising $174 million of refunds and $10 million of interest.
Why are some refunds stuck at CBP?
CBP reports approximately $1.3 billion on hold across 20,184 refunds because the recipient has not supplied banking information for electronic funds transfer. Enrolling in electronic refunds through the Automated Commercial Environment resolves it.
Does the refund unwind mean tariff costs are falling for retailers?
Not materially. Section 301 forced-labor duties of 10 percent and 12.5 percent took effect July 24, 2026 across more than 99 percent of US goods imports, Section 232 duties continue with a step-up deferred to January 1, 2027, de minimis has been suspended since August 2025, and merchandise processing fee minimums rose on October 1, 2026.