Navigating Tariff Refunds Will Help Importers Prepare for ‘Everything That Comes After’, Experts Say

Importers haven’t crossed the finish line yet when it comes to getting their money back—nor have they escaped the potential burden of hefty new tariffs on dozens of United States trading partners.​Importers haven’t crossed the finish line yet when it comes to getting their money back—nor have they escaped the potential burden of hefty new tariffs on dozens of United States trading partners. 

Customs and Border Protection (CBP) in April launched its official online portal for importers seeking relief in the form of refunds from the Trump administration’s now-defunct International Emergency Economic Powers Act (IEEPA) tariffs, drawing tens of thousands of refund declarations within its first week.

While CBP stated that the first refunds will start to roll out during the second week of May, experts featured in the American Apparel and Footwear Association’s (AAFA) webinar on navigating the refund process on Monday indicated that importers haven’t crossed the finish line yet when it comes to getting their money back—nor have they escaped the potential burden of hefty new tariffs on dozens of United States trading partners, which could be just around the corner.

“[The U.S. Trade Representative] and Treasury have mentioned that they see additional trade measures replacing the IEEPA tariffs. So you can almost expect, potentially, a one-to-one application of further duties,” said Jack Maher, team lead for customer success management at AI-driven supply chain management platform Altana.

Currently, importers face a 10 percent global tariff on imported goods under Section 122 of the Trade Act of 1974, and two Section 301 investigations into forced labor in supply chains and industrial excess capacity are well underway. The administration’s goal is to replace the former duties when they expire in July with far steeper tariffs “which certainly fall into scope for apparel and footwear manufacturers.”

Importers focused on the here and now (and the money that’s on the table in the form of refunds) could see complications stemming from those investigations, especially when sourcing from certain countries now being probed by the USTR.

“What we’re seeing… is this influx of requests for additional information from customs, particularly on goods coming in from Vietnam. And I don’t think that we’re going to see that lessening anytime soon,” said Nicole Bivens Collinson, managing principal of the operating  committee on international trade and government relations at Sandler, Travis & Rosenberg, P.A.

Vietnam, a key producer of footwear and apparel that receives many inputs and materials from China, is one of the 60 countries subject to the forced labor Section 301 investigation. Importers sourcing from the country would do well to do their due diligence to make sure that rules of origin and country of origin laws are being followed to a T, or they could run into complications in the form of inquiries from customs that could delay refunds through the Consolidated Administration and Processing of Entries (CAPE) portal, she believes.

“There’ll be growing intensity and scrutiny on these products as we are seeing shifting trade trends, trade flows. And I think customs is going to monitor those, using its own internal software to kind of ping and highlight… certain products coming in from certain countries,” she said—especially those that deal closely with China.

Collinson noted that the apparel industry in particular “might have a little bit of a leg up on many other industries,” however, when it comes to supply chain traceability. The sector, which has been subject to the Uyghur Forced Labor Prevention Act (UFLPA) since it came into effect in June of 2022, has developed a more systemic visibility into the different tiers of its supply chain in order to comply with that law.

Maher said that Altana customers have noted imported products being sourced from Vietnam being met with CF 28 forms, which are formal requests from customs for more information and documentation for specific shipments.

“It is reasonable to assume that Vietnam could also be a source of further scrutiny, especially as they’re looking to potential connections from transshipment via China, and also connections of raw materials that can be tied to forced labor,” he said, so it’s “very important to be able to validate and verify country of origin for your submissions.”

“There are no easy answers to a very dynamic trade environment,” Maher added.

While apparel companies are indeed well-versed in documenting the origins of their shipments for compliance purposes, Andrea Cory, Altana’s product marketing manager, emphasized that “gathering all that information, for most apparel brands we talk to, is not as easy as just pressing a button.”

“Oftentimes compliance teams are pulling data from five different places… classification lives in spreadsheets and broker files, origin documentation lives in supplier email threads, entry data lives in broker portals and ACE exports,” she said, referring to the Automated Commercial Environment, CBP’s import and export processing system.

When it comes to tariff refunds—the biggest current consideration for most importers—ready access to such information is essential, Maher added.

For the entries eligible for refunds during Phase one of the CAPE rollout, he said “it’s very important to be able to understand what your potential blast radius and impact is” in terms of information required for CBP. “If there were to be potential requests for information or audits,” importers must be able to validate their submissions. They should be reaching out to their customs brokers proactively for the information if they don’t have it at their fingertips already.

Cory seemed to characterize mastery of IEEPA tariff refund process as a necessary exercise given the continued uncertainty of the trade environment.

“IEEPA recovery is really this forcing function for you all to build an architecture that helps you handle everything that comes after,” she said, pointing to the looming expiration of the Section 122 tariffs in July, the yet-unknown outcome of the Section 301 investigations, the official review of the U.S.-Mexico-Canada agreement this summer, and growing rule-of-origin scrutiny. “Tariff volatility certainly isn’t ending,” she added.