On Tuesday, the Justice Department submitted the appeal notice in the US trade court. Lawyers for the government had previously indicated they would pursue the refund dispute, claiming that Judge Richard Eaton does not have the authority to mandate refunds for importers who paid the tariffs but have not initiated a lawsuit.
Additionally, on Tuesday, the Justice Department also contested Eaton’s order that Customs and Border Protection Commissioner Rodney Scott must testify in person at an upcoming hearing regarding the government’s refund efforts.
In a ruling dated May 29, Eaton dismissed the Justice Department’s argument that the case did not meet the “extraordinary circumstances” necessary to compel a high-ranking official to appear in court.
Both matters are slated for review by the US Court of Appeals for the Federal Circuit. The losing party could potentially take the tariff dispute back to the Supreme Court, which did not resolve the refund issue when it ruled against the government in February.
In another court filing on Tuesday, Justice Department attorneys requested that the Federal Circuit make a decision regarding Scott’s testimony by Friday, allowing officials ample time to determine if they need to seek the justices’ intervention before the June 9 hearing.
The customs agency has stated that it is currently working to repay around $85 billion through an online claims portal established after the Supreme Court’s ruling against the government.
The administration maintains that the system was created under its “own authorities,” asserting that Eaton cannot mandate refunds for importers whose tariff payments became final unless they are actively engaged in litigation.
The Justice Department has referenced a Supreme Court decision from the previous year in a different case that restricted federal judges’ ability to issue nationwide or “universal” injunctions affecting individuals or entities not involved in legal proceedings.
For months, trade lawyers have raised concerns that the Trump administration’s refund approach might place too heavy a burden on importers to take action, noting that many small businesses may lack the financial means or expertise to file claims in the new portal or proceed with court action.
Eaton was assigned to oversee thousands of refund lawsuits filed in the New York-based trade court over the past year. Following the Supreme Court’s nullification of President Donald Trump’s imposition of levies under a 1977 emergency powers law, Eaton issued orders directing customs officials to recalculate tariffs for all imports and refund the difference.
The judge temporarily halted his order to provide the customs agency necessary time to develop the refund claims portal. The launch of the portal was relatively smooth in April; however, the government informed the court that it was unable to process certain complicated entries, including those for finalized tariff payments—an automatic procedure that occurs on a rolling basis.
The customs agency has not provided a timeline for later stages of the refund process. In late May, Eaton set a date for a hearing to discuss whether to lift the suspension on his order and compel the government to resolve how to reimburse all importers.
In a court filing several days later, the Justice Department indicated it would pursue an appeal concerning Eaton’s refund order as well as the directive for Scott to testify on June 9.
Generally, it is challenging for judges to require executive branch officials to provide testimony. In the tariff case, government attorneys argued that there were senior officials better informed than Scott about the details of the refund process, who would be more suited to discuss the “impracticality” of immediately complying with Eaton’s comprehensive order to recalculate all tariffs paid under Trump’s policies and refund the difference.
Eaton swiftly rejected the Justice Department’s motion for reconsideration of Scott’s testimony, stating that he needed to hear from a “policy maker and administrator” regarding the Trump administration’s intentions to refund all collected tariffs and how it plans to execute that.
The judge acknowledged he was “fully aware” of “separation of powers concerns” in compelling an executive official to testify, noting that he had “taken these matters into account in denying the government’s motion.”
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In a 6-3 ruling in February, the Supreme Court determined that Trump’s application of the International Emergency Economic Powers Act was unlawful. However, the justices did not address the issue of refunds, remanding it to lower courts for resolution.
In a dissenting opinion, Justice Brett Kavanaugh cautioned that any refund process was “likely to be a ‘mess,’” referring to comments made during the case’s oral arguments.
It remains unclear how many of the approximately 330,000 importers who paid the disputed tariffs would need to file lawsuits in the trade court to be eligible for refunds according to the Justice Department’s stance.
The case is V.O.S. Selections v. United States, 25-cv-66, US Court of International Trade (New York).
