For Sacramento and California businesses dealing with higher operating costs, the refunds could offer much-needed financial relief. However, only businesses that meet certain legal requirements can qualify.
“The key eligibility point is that the refund goes to the importer of record,” said Alena Eckhardt, a partner at Nakachi Eckhardt & Jacobson, P.C., a law firm specializing in international trade and customs law. “If your company was the importer of record and paid IEEPA duties on your entries, you have a direct refund path.”
Businesses that purchased imported goods from domestic distributors, even if they ultimately absorbed higher prices caused by tariffs, generally cannot file a claim directly with Customs because they were not the legal importer.
“Legal incidence of a tariff matters; economic incidence does not,” Eckhardt said. “[Customs] pays the importer of record, not the party that absorbed the cost through higher prices.”
How Businesses Can Apply
To handle refunds, Customs launched CAPE ACE in April.
Importers or their customs brokers need an active ACE account, must sign up for electronic ACH refunds, and submit a CAPE declaration with eligible import entry numbers. After approval, Customs checks the entries electronically and sends out refunds, including any required interest.
Eckhardt noted that most of the biggest challenges are administrative, not legal.
“Many businesses cannot quickly identify their entries by entry number, tariff program, liquidation date and duty amount,” she said. “The cleanest approach is to run an ACE report yourself rather than relying solely on the broker’s summary.”
She also noted that businesses should not assume refunds happen automatically.
“Someone must affirmatively file a CAPE declaration,” she said. “Nothing happens by default.”
Businesses should act quickly, since filing deadlines vary based on when entries were finalized. Some importers may also need to take extra legal steps to protect their rights.
Small Businesses May Face Steeper Hurdles
The refund process is the same for all companies, but smaller businesses commonly face more challenges because they do not have dedicated trade staff, customs experts, or legal resources.
“Large companies typically import directly and are first in line for refunds,” Eckhardt said. “Smaller businesses more often buy through distributors and are not the importer of record at all.”
These businesses may need to check their contracts with suppliers to see if tariff surcharge or price-adjustment clauses allow them to recover some of the refunded money through private agreements, instead of through Customs.
Economists say that tariffs have put a heavier burden on smaller firms.
“Small businesses are hit much harder than large ones,” said Ina Simonovska, an associate professor of economics at UC Davis. “They have less negotiating power.”
Simonovska said research on the 2018-2019 tariffs found that importers usually paid the full cost at the border. However, retailers often took on some of those costs instead of passing them all to consumers.