Overview
On October 8, 2026, the US Court of International Trade (CIT) cleared a significant procedural hurdle for the provision of refunds of duties unlawfully collected under the International Emergency Economic Powers Act (IEEPA). The recent developments in the IEEPA refund litigation have centered on two significant issues: (1) proposed class certification that could potentially extend relief to importers that have not filed their own lawsuits, and (2) CBP's implementation of Phase 3 of the Consolidated Administration and Processing of Entries (CAPE) refund process for finally liquidated entries. Each is discussed in further detail below.
Background
The litigation stems from tariffs imposed by President Trump under IEEPA. On February 20, 2026, the Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs.
After the Supreme Court's decision, the US Court of Appeals for the Federal Circuit (Federal Circuit) issued its mandate on March 2, 2026. Two days later, the CIT began issuing orders directing US Customs and Border Protection (CBP) to liquidate or reliquidate entries without the IEEPA duties. In response, CBP began processing refunds through the new CAPE system. In July 2026, the CIT’s orders were eventually expanded to include even “finally liquidated” entries and were entered in more than 4,000 separate importer lawsuits.
The CIT emphasized that the remedy in those cases was straightforward: entries subject to IEEPA tariffs were to be liquidated or reliquidated without the unlawful duties, resulting in refunds of the excess duties deposited with CBP. In response, the government argued that the CIT did not have the authority to order liquidation for importers who have not sued the government for refunds, i.e., non-plaintiff importers, under the Supreme Court's decision in Trump v. CASA, Inc., which prohibits nationwide injunctions. The government later appealed the portion of the orders requiring liquidation and reliquidation for importers who have not challenged the duties at the CIT, and that appeal remains pending before the Federal Circuit.
At the time the initial refund orders were issued, CBP estimated that approximately $166 billion in unlawfully collected IEEPA duties had been imposed on approximately 53 million entries involving roughly 330,000 importers of record. As of early October 2026, approximately $136.6 billion in potential and certified refunds have been accepted for processing in CAPE, and of that amount, approximately $126 billion in duties plus interest has been refunded to importers.
Importer Class Certification
Plaintiffs in both V.O.S. Selections, Inc. v. United States and Freestyle World, Inc. v. United States sought certification of a class pursuant to CIT Rule 23, covering importers whose IEEPA refund claims were ineligible for processing through the CAPE system. The motions were filed in response to the government's argument that refunds for finally liquidated entries can be issued only to importers that have obtained court-specific relief.
Although CAPE has refunded most IEEPA duties, the court found that many importers, particularly smaller businesses, had not filed CAPE declarations or otherwise pursued relief through the CIT. Additionally, some categories of entries, including many finally liquidated entries of non-plaintiffs, were not fully covered by CAPE absent a court order. As a result, the court estimated that roughly $30 billion in unlawfully collected duties could remain in the Treasury if no further action were taken (i.e., if the CIT could not grant relief for these importers).
On October 8, 2026, in Freestyle World, the CIT granted the plaintiff's motion for class certification to allow a nationwide class of importers to pursue refunds of duties collected under the unlawful IEEPA tariff actions. Class actions are exceedingly rare before the CIT, making the court's certification of a nationwide importer class particularly noteworthy.
The court found that the case is appropriate for treatment as a class action because it involves a large number of importers who were affected by the same IEEPA tariffs and whose claims raise the same legal question: whether those duties should be refunded following the Supreme Court's decision invalidating the tariffs. The court also found that the named plaintiff, Freestyle World, Inc., is similarly situated to other affected importers and can represent their interests in the litigation.
The court further determined that class certification was appropriate because the primary relief sought is an order directing CBP to remove the unlawful IEEPA duties from affected entries. While importers would ultimately receive refunds as a result, the court viewed those refunds as a consequence of CBP's implementation of the court's order rather than the primary focus of the case. It is possible that the government may appeal the class-certification decision, which could result in additional litigation regarding the viability of the certified class.
CAPE Phase 3 Refund Process
Separately, Phase 3 of the CAPE system officially launched on October 6, 2026. Unlike Phase 1, which covered unliquidated entries and entries within a limited period after liquidation, and Phase 2, which addressed certain reconciliation entries, Phase 3 is designed to process refunds for finally liquidated entries. CBP has stated that Phase 3 currently applies only to importers that are plaintiffs in pending CIT litigation and for whom the CIT has issued reliquidation orders. Importers that provided valid importer-of-record information to CBP by July 30, 2026, became eligible to submit Phase 3 CAPE declarations beginning October 6.
Accordingly, at present, Phase 3 appears to provide a clear refund mechanism only for litigating plaintiffs with court-ordered reliquidation. Although the CIT has certified the appropriate class, the court has not provided a substantive ruling that would expand the scope of relief to non-litigants or class-members.
Next steps:
Importers seeking refunds, and especially those who have not done so to date, can take the following steps in light of these recent developments:
- File a complaint at the CIT – Although the CIT has certified the class for non-plaintiff importers, the most expeditious means to seek refunds is to file your own complaint at the CIT and participate in the CAPE Phase 3 refund process.
- Evaluate whether entries are covered by the certified class – The CIT explained that only importers who paid duties under the challenged IEEPA tariff orders between February 1, 2025 and February 19, 2026 are eligible to be part of the class. Although no steps are necessary for inclusion in the class at this point, importers should follow this litigation to see if any affirmative steps need to be taken at a later point to join the class.
- The certified class excludes importers that previously filed individual actions seeking recovery of IEEPA duties. Companies with their own litigation generally must pursue relief through their existing case.
- Review eligibility for CAPE Phase 3 – CBP implemented CAPE Phase 3 to allow importers covered by court orders, including those in the thousands of individual IEEPA cases, to submit declarations and obtain refunds through the automated CAPE process. Importers should continue to assess whether any of their entries flagged for reconciliation or unliquidated entries and entries within 80 days of liquidation are eligible for Phase 1 or Phase 2 of CAPE’s refund process.
- Coordinate with customs counsel and your customs broker – Because the interaction between the certified class, individual litigation, and CAPE processing continues to evolve, importers should verify the most advantageous avenue for obtaining refunds and preserving rights as additional court rulings and CBP guidance are issued.
- AD/CVD liability for suspended entries – For entries subject to AD/CVD proceedings, where liquidation is suspended pending Department of Commerce instructions, CBP has not yet provided specific guidance. While CAPE may account for the removal of IEEPA duties, the actual liquidation of the entry and issuance of any refund are expected to remain suspended until Commerce issues liquidation instructions.
Steptoe's International Trade team is closely monitoring the refund process. If you need support evaluating what these developments mean for your business, or support with filing a CIT complaint or other guidance navigating this refund process, our team is ready to help.
