US Government Argues Judge Overstepped in Tariff Refund Order

The U.S. government is fighting a court order that would force U.S. Customs and Border Protection (CBP) to refund illegal tariffs to every affected company, even those that never stepped foot in a courtroom.

In a filing submitted Monday to the U.S. Court of Appeals for the Federal Circuit, government lawyers argue that the original judge overstepped his authority by issuing a universal injunction. The move seeks to overturn a February ruling by Judge Richard Eaton of the International Trade Court, who ordered the CBP to issue refunds to all businesses that paid tariffs later deemed illegal, regardless of whether they were active litigants.

The Battle Over Universal Injunctions

The government’s challenge hinges on a June 2025 Supreme Court decision regarding birthright citizenship. Attorneys argue that this precedent limited the use of universal injunctions—orders that apply a court’s decision to all affected parties rather than just the specific plaintiffs involved in the suit.

The government contends that requiring the refund of IEEPA tariffs to all importers, including non-parties, is irreconcilable with that Supreme Court ruling. Judge Richard Eaton has previously disagreed, stating that the limits on universal injunctions do not apply to this specific case.

A $100 Billion Accounting Conflict

The stakes are massive. The CBP has already processed and certified $100 billion in tariff refunds. Yet, this legal fight focuses on a specific subset of companies whose payments passed through the customs process and were finalized.

Government lawyers are now citing a Congressional rule that prohibits the CBP from reprocessing tariffs once the administrative refund process is closed. Their position is simple: companies in this position must file individual lawsuits to recover their funds.

The filing notes that the International Trade Court has already issued hundreds of such orders for importers who sought relief individually. Other importers, the government argues, can still do the same within the statute of limitations.

The Cost of Litigation for Small Firms

While the government may have the technical law on its side, legal experts warn of the practical fallout for smaller enterprises. Barry Appleton, a law professor and co-director of the International Law Center at New York Law School, told AP and Independent Español that while the government’s legal position appears stronger, small businesses might suffer.

Appleton argues that recovering funds should not be contingent on a company’s ability to pay for a legal team, particularly since the Supreme Court already determined the law used to collect the money was not authorized.

“Reembolsar un arancel ilegal no debería ser una recompensa por litigar. … Realmente no se le puede pedir a una empresa pequeña que demande por dinero que no sabe que se le debe, con un plazo del que nunca ha oído hablar”.

Barry Appleton, professor of law and co-director of the International Law Center at New York Law School, via AP