In short
- A ruling is pending at the US Court of International Trade on whether importers locked out of the government’s refund portal can be certified as a nationwide class in V.O.S. Selections, Inc. v. United States.
- Roughly $166 billion in duties was collected under the International Emergency Economic Powers Act before the Supreme Court struck the tariffs down on February 20, 2026, across more than 53 million entries and some 330,000 importers, according to filings summarized by trade counsel.
- About $86 billion has been refunded so far through CBP’s Court-Ordered Administrative Processing Effort, the portal known as CAPE, per the Liberty Justice Center.
- Liquidation status is the dividing line. Entries that finally liquidated before the refund machinery existed sit outside CAPE, and the government’s position is that those importers must sue individually.
- Retail exposure is real. Department stores, furniture chains, apparel importers and marketplace sellers all paid the duties, and the recovery shows up as a margin item rather than a sales item.
What the trade court is about to decide
The US Court of International Trade heard oral argument on August 6, 2026 on a motion for class certification that will determine how tens of thousands of importers recover tariffs the Supreme Court has already declared unlawful. The motion, brought under Rule 23(b)(2) in V.O.S. Selections, Inc. v. United States, asks the court to certify a mandatory nationwide class. The hearing took place in Courtroom No. 1 at One Federal Plaza in New York at 11 a.m. Eastern, according to a media alert issued by the Liberty Justice Center, which represents the plaintiffs. No decision had been published as of August 14.
The question is narrow in legal terms and very wide in commercial terms. Customs and Border Protection built an administrative refund process after the Supreme Court ruling, but access to it depends on the liquidation status of an importer’s entries. Importers whose entries were finally liquidated before that process opened are, on the government’s reading, outside it. The class motion asks the court to say that those importers should not have to file thousands of duplicative lawsuits to recover money the government has no lawful claim to keep.
For retail, this is not an abstraction. The duties were paid on furniture, apparel, footwear, consumer electronics, home goods and food, and they were absorbed into landed cost during 2025 and early 2026. Whether that money comes back through a portal in 60 to 90 days or through a multi-year appellate process changes the timing of a meaningful cash item on a lot of balance sheets. The gap between those two outcomes is what the court is being asked to close.
How $166 billion in duties became a refund problem
The scale of the collection is the reason the administrative plumbing matters so much. Across the life of the IEEPA tariffs, more than 330,000 importers paid duties on over 53 million entries, with roughly $166 billion collected in total, according to figures cited in the class certification filings and summarized by Troutman Pepper Locke. That is not a docket a court can process one plaintiff at a time.
The Supreme Court ruling that started the clock
On February 20, 2026, the Supreme Court held that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. The ruling did not merely stop future collection. It made the duties already collected unlawful exactions, which is what triggered the refund obligation in the first place.
The Court of International Trade then ordered the government to refund the unlawfully collected tariffs. The government appealed the refund order to the Federal Circuit, a proceeding that remains live. Meanwhile CBP began building CAPE, and the practical fight moved from whether refunds are owed to who can actually reach them.
Why liquidation is the dividing line
Liquidation is the customs term for the moment CBP fixes the final amount of duty owed on an entry. It is ordinarily a routine administrative event, and importers pay very little attention to it. In this dispute it has become the single most consequential fact about any given shipment.
Entries become finally liquidated when the duty determination is fixed and the window for challenging it closes. The government has limited CAPE eligibility to entries that are unliquidated or that liquidated within a short recent window, which Troutman Pepper Locke describes as roughly the preceding 80 to 90 days. Anything older sits outside the portal absent class certification or an individual lawsuit.
That produces an outcome that is hard to defend on the merits and easy to defend on the procedure. Two importers who paid the same unlawful duty on the same product in the same month can end up on completely different recovery tracks, purely because one entry liquidated a few weeks later than the other. Our earlier reporting on the CBP tariff refund rollout and its validation failures covered the operational side of that same divide.
What CAPE covers and what it leaves out
CBP has opened CAPE in phases, each widening eligibility rather than replacing the last. Phase 1 opened on April 20, 2026 and covered unliquidated entries plus entries within roughly 80 days of liquidation, according to Holland & Knight. Phase 2 opened on June 29, 2026 and extended to entries flagged for reconciliation where the reconciliation entry had not yet been filed.
The throughput numbers published by BDO, current to July 31, 2026, give a sense of how much of the problem the portal has actually absorbed. More than 75,000 CAPE declarations had been submitted. Around 25.1 million entries passed validation and were accepted for processing, while roughly 5.02 million entries failed entry validation testing. Some 17.69 million validated entries had already been liquidated without IEEPA tariffs and moved into the refund process.
| CAPE phase | Opened | Who it covers | Left out |
|---|---|---|---|
| Phase 1 | April 20, 2026 | Unliquidated entries; entries within roughly 80 days of liquidation | Anything finally liquidated earlier |
| Phase 2 | June 29, 2026 | Entries flagged for reconciliation where the reconciliation entry is not yet filed | Finally liquidated entries with no reconciliation flag |
| Later phases | Announced but not fully scoped | Expanding categories of entries as CBP validates them | The finally liquidated population remains the disputed bucket |
| Individual CIT suit | Available throughout | Any importer that files its own action and obtains a court order | Importers that have not filed and are not in a certified class |
Set the published totals side by side and the shape of the gap becomes visible. BDO reports approximately $128.68 billion in potential and certified refunds accepted for processing in CAPE as of July 31. The Liberty Justice Center puts actual refunds paid at over $86 billion. Against roughly $166 billion collected, simple arithmetic on those published figures leaves something in the order of $37 billion that has not entered the CAPE pipeline at all, a rough estimate rather than an official tally, and it is that population the class motion is aimed at.
The two tracks importers are now on
An importer today sits on one of two tracks, and the track was mostly assigned by calendar rather than by choice. The administrative track runs through CAPE and pays out on a stated timeline of roughly 60 to 90 days after acceptance, though BDO notes that some early refunds landed within weeks. The judicial track runs through an individual action at the Court of International Trade and is measured in years once appeals are counted.
The file-now advice from trade counsel
In late July, Holland & Knight published an alert reading a CIT order as confirming that only importers that filed individual CIT actions have a court-ordered mechanism for refunds on finally liquidated entries. Its practical recommendation to non-filers was blunt: file a protective action at the CIT if you have not already done so. Several other firms have issued materially similar guidance.
The same alert flagged a 180-day protest deadline as a live constraint, warning that entries more than 180 days past liquidation without a timely protest may be ineligible, and advising importers to evaluate whether a protective protest should be filed. That is a deadline that runs quietly in the background of every entry. It does not wait for the class ruling.
What a mandatory class would change
Rule 23(b)(2) certification is not a damages class in the familiar consumer sense. It is the mechanism for injunctive or declaratory relief where a defendant has acted on grounds that apply generally to the whole class. Here the requested relief is essentially an order making CAPE, or an equivalent process, available to importers regardless of when their entries liquidated.
If the court certifies, the practical effect is that an importer that never filed suit could be swept into the same administrative recovery as one that did. If the court declines, the sorting stands: filers recover, non-filers wait on the Federal Circuit appeal or start their own cases. Either outcome will almost certainly be appealed by the losing side.
| Recovery route | Who qualifies | Typical timeline | Main risk |
|---|---|---|---|
| CAPE administrative claim | Unliquidated and recently liquidated entries | Roughly 60–90 days after acceptance | Entry validation failures push claims back out of the queue |
| Individual CIT action | Any importer that files, including finally liquidated entries | Multi-year with appeals | Legal cost may exceed the refund on small exposures |
| Certified Rule 23(b)(2) class | Importers ineligible for CAPE, if certified | Unknown; depends on the ruling and appeal | Certification may be denied or reversed on appeal |
| Protective protest | Entries still inside the 180-day protest window | Preserves rights rather than paying out | Missing the window may forfeit the claim entirely |
Why this matters to retailers, not just customs brokers
Tariff refunds have already started showing up in retail earnings as a discrete, named line. Dillard’s reported a $37.2 million IEEPA tariff refund in its most recent quarter, a figure large enough to move the reported profit number materially, as covered in our report on Dillard’s tariff refund and its 34% profit jump. That is one mid-cap department store. The same mechanism sits on the books of every large importer of record in US retail.
The accounting treatment is what makes the class ruling matter to investors rather than only to compliance teams. A refund that is probable and estimable can be recognized; one that depends on unresolved litigation generally cannot. The class ruling is precisely the event that can move a large population of claims from the second category to the first.
The balance sheet mechanics
For most retailers the IEEPA duties were capitalized into inventory cost and then flowed through cost of goods sold as that inventory was sold. That means the refund does not simply reverse a prior expense on a matching line. It typically lands as other income or as a reduction of current period costs, which is why it can distort gross margin comparisons for a quarter or two.
Auditors and the SEC have been paying attention to how these amounts are disclosed. Morgan Lewis flagged disclosure and litigation risk for retailers as a specific consequence of the refund uncertainty, including the risk of consumer claims alleging that tariff costs were passed through to shoppers and should now be returned. That second-order exposure is not resolved by winning a refund.
The consumer class action theory is straightforward even if its legal footing is not. Retailers that added visible tariff surcharges at checkout, or that publicly attributed price rises to the duties, created a paper trail linking a specific cost to a specific price. If the underlying duty is refunded, plaintiffs argue the surcharge should follow it back to the shopper.
Retailers that folded the duty into blended pricing without itemizing it face a weaker version of the same claim, because tracing becomes far harder. That is an uncomfortable finding for merchants who chose transparency, and it is one reason some finance teams pushed back on itemized tariff line items at the time. The litigation is early and no court has ruled on the theory.
Marketplace sellers and the importer of record question
Third-party sellers face a version of this problem with an extra layer of complexity. The right to a refund follows the importer of record, not the party that ultimately sold the goods. A seller who bought DDP from an overseas supplier, or who used a freight forwarder’s importer of record service, may have no direct claim at all.
That distinction is worth checking rather than assuming. It is the same structural question that surfaced when parcel flows shifted after the de minimis changes, when sellers discovered that moving to US domestic fulfillment also moved the importer of record. Where the importer of record sits determines who holds the asset.
Marketplaces themselves are generally not the importer of record for third-party inventory, which puts the refund claim with the seller rather than the platform. Sellers that used a 3PL’s import service will find the claim sitting with the 3PL. Recovering it then becomes a commercial negotiation rather than a customs filing, and the contracts governing those arrangements rarely anticipated a refund of this size.
What the government argues, and why it is not frivolous
The Department of Justice has opposed class certification, and its argument is procedural rather than a defense of the tariffs themselves. The government contends that it lacks authority to reopen finally liquidated entries through CAPE without individual court orders, because finality of liquidation is a statutory feature of the customs system rather than an administrative convenience. On that reading, CBP is not withholding refunds so much as lacking a lawful mechanism to pay them.
The second strand is about the reach of judicial relief. The government cites Trump v. CASA, Inc., 606 U.S. 831 (2025), for the proposition that a court cannot grant relief extending beyond the named plaintiffs, according to the summary published by Troutman Pepper Locke. That is the same universal-injunction question that has run through several recent disputes, arriving here in a customs setting.
The awkward position CBP is in
CBP is not a party with an obvious interest in keeping the money. It is an agency operating a statutory system that was designed to make duty determinations final, applying that system to a situation the system never contemplated. Building CAPE at all, and reaching over 25 million entries inside four months, is a substantial administrative undertaking by any standard.
The validation statistics show where the strain is. Roughly 5.02 million entries failed entry validation testing as of July 31, which is a large absolute number even against 25.1 million accepted. Each failure is an importer waiting, and the reasons range from broker data errors to genuine ambiguity about which duties on a mixed entry were IEEPA duties.
Neither argument is a technicality invented for this case. Finality of liquidation exists so that the government can close its books, and the limits on non-party relief are a genuinely contested area of federal practice. The plaintiffs’ answer is that the equities are extreme when the money at stake was collected under a statute the Supreme Court has already said conferred no such power.
The tariff bill that replaced IEEPA
One reason the refund question has not simplified retail’s cost picture is that the duties themselves largely did not go away. They were rebuilt on different statutory authorities within months of the Supreme Court ruling, which means importers are pursuing refunds on old entries while paying new duties on current ones.
A 10% global tariff was implemented under Section 122 of the Trade Act of 1974, a balance-of-payments authority capped at 150 days. That cap expired on July 24, 2026 without a congressional extension. USTR’s Section 301 action landed at the same moment, applying additional duties of 10% or 12.5% across 60 economies over failures to prohibit imports made with forced labor, covering economies that account for around 99.4% of US imports.
| Authority | Rate | Scope | Status |
|---|---|---|---|
| IEEPA | Varied | Broad, country-based | Struck down February 20, 2026; refunds in progress |
| Section 122, Trade Act of 1974 | 10% | Global surcharge | Expired July 24, 2026 at the 150-day statutory cap |
| Section 301, Trade Act of 1974 | 10% or 12.5% | 60 economies, forced labor findings | In force since July 24, 2026 |
| Section 338, Tariff Act of 1930 | 50% | Selected Canadian goods | Scheduled for August 19, 2026 |
The Section 301 action also contemplates a textile mechanism that would let a volume of apparel and textile imports enter at a reduced or zero Section 301 rate, tied to each partner’s purchases of US cotton and textile inputs. USTR determined that establishing tariff-rate quotas for Bangladesh, Cambodia, Indonesia and Malaysia was not feasible immediately but would be feasible by September 1, 2026, with the mechanism and its start date to be set in a separate notice. Apparel importers should treat that notice as a date to watch.
Layered on top is the Section 338 action against Canada, an additional 50% duty on selected goods scheduled to take effect at 12:01 a.m. Eastern on August 19, 2026, which we covered in detail in our report on the 50% US tariffs on Canadian goods and what retailers face. Together these actions mean the tariff line in a retailer’s P&L is not shrinking, whatever happens with the refunds.
What happens next, and the dates to watch
The immediate event is the CIT’s certification ruling, which practitioners expected shortly after the August 6 argument. There is no published deadline for the court, and complex certification decisions can take weeks. Whichever way it goes, an appeal to the Federal Circuit is the near-certain next step.
Running alongside it is the government’s appeal of the underlying refund order, already before the Federal Circuit. That appeal does not stop CAPE from paying out, but it does mean the legal foundation of the refunds is not yet final. BDO’s assessment is that judicial resolution for finally liquidated entries likely extends beyond 2026, with the possibility of another trip to the Supreme Court.
Dates that matter over the next six weeks
- August 19, 2026: Section 338 duties on selected Canadian goods take effect at 12:01 a.m. Eastern.
- September 1, 2026: the date by which USTR determined the Section 301 textile tariff-rate quota mechanism becomes feasible.
- Rolling: the 180-day protest window on each entry, which runs per entry rather than on a single calendar date.
- Pending: the CIT certification ruling and the Federal Circuit appeal of the refund order.
What retailers and sellers should do before the ruling
The consistent advice from trade counsel across several firms is that waiting for the class ruling is the one option with an asymmetric downside. Certification would sweep in non-filers, but denial would leave them exactly where they are, minus whatever protest windows closed in the meantime. The cost of preserving a claim is low relative to the size of the typical exposure.
Four practical steps come up repeatedly in the published guidance. First, quantify IEEPA exposure by entry, not by supplier or by year, because eligibility is determined entry by entry. Second, pull liquidation dates for every affected entry and sort them against the CAPE eligibility window and the 180-day protest window.
Third, evaluate protective filings, both protests at CBP and, where the exposure justifies it, a protective action at the Court of International Trade. Fourth, confirm who the importer of record actually was on each entry, particularly for goods bought DDP or shipped through a forwarder’s import service. The party with the claim is not always the party that felt the cost.
Documentation is the constraint that bites hardest in practice. CBP’s own validation statistics show roughly 5.02 million entries failing validation testing, which is a data quality problem before it is a legal one. Retailers that kept clean entry summaries and broker records are recovering faster than those reconstructing them now. The same customs data discipline is becoming load-bearing elsewhere, as we noted in our piece on marketplace safety enforcement running through customs data.
The court’s own docket and calendar are published on the US Court of International Trade website for importers tracking the case directly.
How this reshapes tariff planning for the rest of 2026
The strategic lesson running through 2026 is that tariff authority is now modular. When one statute failed, the duties were reconstructed on three others within months, at comparable aggregate cost to importers. Planning around the legal vulnerability of any single authority has turned out to be a poor use of management attention.
What has proven more useful is the customs operating discipline itself: knowing the importer of record, tracking liquidation dates, keeping entry data clean enough to survive validation, and treating protest deadlines as real deadlines. Those capabilities paid off in this refund cycle and will pay off in the next one, whatever authority it is built on. Retailers heading into a reporting run that includes Walmart’s Q2 results and its tariff pass-through commentary will be judged on how well they managed both sides of that ledger.
The refund is real money and it is coming back, for most importers, on most entries. The open question the trade court is about to answer is whether the last and most awkward tranche comes back through a portal or through a courthouse.
Frequently asked questions
What is CAPE and who can use it?
CAPE stands for the Court-Ordered Administrative Processing Effort, the CBP portal built to process IEEPA tariff refunds after the Supreme Court ruling. Phase 1 opened on April 20, 2026 for unliquidated entries and entries within roughly 80 days of liquidation. Phase 2 opened on June 29, 2026 for entries flagged for reconciliation where the reconciliation entry had not yet been filed.
Why are some importers excluded from the refund portal?
Eligibility turns on liquidation status. Entries that were finally liquidated before the refund machinery existed fall outside the portal, and the government’s position is that it lacks authority to reopen them administratively without an individual court order. That is the exclusion the class certification motion is designed to address.
How much has actually been refunded so far?
The Liberty Justice Center put refunds paid at over $86 billion as of early August 2026. BDO reported approximately $128.68 billion in potential and certified refunds accepted for processing in CAPE as of July 31, 2026, against roughly $166 billion collected in total under IEEPA.
What is a Rule 23(b)(2) class and why does it matter here?
It is the federal class mechanism for injunctive or declaratory relief where the defendant has acted on grounds applying generally to the class, rather than for individual damages awards. Certification here would mean the court could order a refund process available to all affected importers, not only the named plaintiffs. The government argues that relief cannot extend beyond the named parties, citing Trump v. CASA, Inc.
Should a retailer file a protective action now?
Several trade law firms, including Holland & Knight, have advised non-filing importers to file a protective action at the Court of International Trade rather than wait on the class ruling. The reasoning is that filers already have a confirmed court-ordered mechanism while non-filers depend on unresolved appellate and class proceedings. This is general reporting on published guidance and not legal advice for any specific importer.
Does the 180-day protest deadline still apply?
Yes, and it runs per entry rather than on a single fixed date. Published guidance warns that entries more than 180 days past liquidation without a timely protest may be ineligible for refunds, and recommends evaluating whether a protective protest should be filed. That clock does not pause for the class ruling.
Did the tariffs themselves actually go away?
Largely not. A 10% global surcharge was imposed under Section 122 of the Trade Act of 1974 and expired at its 150-day cap on July 24, 2026, with a Section 301 action applying 10% or 12.5% duties across 60 economies taking effect the same day. A separate Section 338 action imposing an additional 50% on selected Canadian goods is scheduled for August 19, 2026.
Who owns the refund when goods were bought DDP?
The right to a refund follows the importer of record. A retailer or marketplace seller who bought delivered duty paid, or who used a forwarder’s importer of record service, may not hold the claim even though the duty cost was embedded in the price paid. Checking the entry documentation is the only reliable way to establish this.
When will the Court of International Trade rule?
No deadline has been published. Practitioners expected a ruling shortly after the August 6, 2026 oral argument, and as of August 14 no decision had been announced. Whichever party loses is widely expected to appeal to the Federal Circuit.