If you’ve been hearing about tariff refunds and thinking “I don’t even fully understand what a tariff is,” you’re in exactly the right place. Most people — including many business owners who import goods — have only a vague sense of how tariffs actually work. That’s completely normal. The system was designed by trade lawyers and customs specialists, not everyday business people.
This guide breaks down the entire U.S. import tariff system in plain language. By the end, you’ll understand what tariffs are, who really pays them, how they’re calculated, and why this all matters for the IEEPA tariff refunds that hundreds of thousands of importers are now pursuing.
What Is a Tariff, Really?
A tariff is a tax on goods coming into a country. That’s it. When a product crosses the U.S. border — whether it’s a shipping container full of electronics from China or a pallet of auto parts from Mexico — the U.S. government charges a percentage of that product’s value as a fee for entering the country.
Think of it like a toll booth, but instead of charging per vehicle, the government charges based on what’s inside the truck and where it came from.
Here’s the part that surprises most people: the foreign company doesn’t pay the tariff. The U.S. importer does. When politicians say “we’re going to tariff China,” what they actually mean is that American companies buying products from China will pay an extra tax when those goods arrive at U.S. ports. The Chinese manufacturer doesn’t write a check to the U.S. government. Your company does.
This distinction matters enormously for the current IEEPA refund situation. When the Supreme Court struck down IEEPA tariffs in February 2026, it meant that U.S. importers — not foreign governments — were the ones who had been overcharged. That’s why the refunds go to American companies.
The Three Players in Every Import
Every time goods enter the U.S., three entities are involved:
- The exporter — the foreign company shipping the goods. They don’t interact with U.S. customs directly.
- The importer of record (IOR) — the U.S. entity legally responsible for the shipment. This is usually your company. The IOR is who CBP (Customs and Border Protection) holds responsible for duties, taxes, and compliance.
- The customs broker — a licensed professional who files the paperwork with CBP on the importer’s behalf. Think of them as your translator between your business and the government’s trade system.
The importer of record is the entity that pays the tariff, and therefore the entity entitled to any refund. If you use a freight forwarder or third-party logistics company that acts as the IOR on your entries, they — not you — would technically be the party with the refund claim. This is one of the first things to verify when assessing your recovery position.
How Tariff Rates Are Set
The U.S. doesn’t just pick a random number for tariff rates. There’s an entire classification system called the Harmonized Tariff Schedule (HTS) that assigns a specific duty rate to virtually every product imaginable.
The HTS is a massive document — thousands of pages long — maintained by the U.S. International Trade Commission. Every product that enters the country gets classified with a 10-digit HTS code. That code determines the base duty rate.
For example, a cotton t-shirt might have an HTS code of 6109.10.0012, which carries a duty rate of 16.5%. A laptop computer might fall under 8471.30.0100 with a duty rate of 0% (yes, many electronics enter duty-free under normal circumstances). A pair of leather shoes might be classified at 8-20% depending on the exact construction.
The Layers of Tariffs
Here’s where it gets complicated — and where the IEEPA situation comes in. The base HTS duty rate is just the starting point. Additional tariff programs can stack on top:
| Tariff Layer | Authority | Example |
|---|---|---|
| Base HTS duty | Congress (permanent) | 5% on plastic containers |
| Section 301 | Trade Act of 1974 | +25% on Chinese goods (trade practices) |
| Section 232 | Trade Expansion Act of 1962 | +25% on steel (national security) |
| IEEPA tariffs | IEEPA (struck down) | +20-60% on various countries |
| Antidumping duties | Commerce Dept. | Varies by product/country |
An importer bringing in steel from China could have been paying the base rate plus Section 232 duties plus Section 301 duties plus IEEPA duties — all stacking on top of each other. Only the IEEPA layer was struck down by the Supreme Court. The other tariff programs remain in effect.
The IEEPA tariffs were classified under Chapter 99 of the HTS, specifically under headings 9903.01 and 9903.02. If those codes appear on your import entries, you likely have a refund claim.
Who Actually Pays — And How
When your shipment arrives at a U.S. port, your customs broker files an entry with CBP. This is essentially a declaration that says: here’s what’s in the shipment, here’s what it’s worth, and here’s the duty we owe.
The payment process works like this:
Step 1: Entry filing. Your broker submits an entry summary (the official form is called a CF-7501) within 10 business days of the goods arriving. This document lists every product in the shipment, its HTS classification, its value, and the calculated duty.
Step 2: Estimated duty deposit. You pay the estimated duties at the time of filing. This is essentially a deposit — CBP hasn’t verified anything yet. They’re taking your word (and your broker’s expertise) that the classification and value are correct.
Step 3: CBP review. Behind the scenes, CBP reviews the entry. They might accept it as filed, or they might flag it for examination. Most entries clear without issues, but the review process continues even after your goods are released.
Step 4: Liquidation. This is the step most importers don’t know about. Months after your goods arrived and you paid your duties, CBP officially “liquidates” the entry — meaning they finalize it. Liquidation typically happens about 314 days after the entry was filed. Once an entry is liquidated, it’s essentially closed out.
Liquidation status is critically important for IEEPA recovery because it determines which refund path you’ll use. Unliquidated entries can be corrected directly. Liquidated entries require a formal protest within 180 days.
Get your free Impact Assessment →
The Money Flow: Following the Dollars
Let’s trace what happens to tariff money with a real example.
Say your company imports $100,000 worth of consumer electronics from Vietnam. Under normal circumstances, the base duty might be 0-3%. But during the IEEPA tariff period, Vietnam was hit with a reciprocal tariff of 46% (later adjusted to 10% during a pause, then reinstated at various rates).
On that $100,000 shipment at 46%, your company would have paid $46,000 in IEEPA duties alone — on top of any base duties.
That money went straight to the U.S. Treasury. It didn’t go to Vietnam. It didn’t go to any retaliatory fund. It went into the general revenue of the federal government. In fiscal year 2025, tariff collections more than doubled from prior years, largely because of IEEPA duties.
Now that the Supreme Court has ruled those tariffs were unlawful, that $46,000 — plus statutory interest — should be coming back to your company. Multiply that by every shipment over the 12-month IEEPA period, and you can see how claims can reach six, seven, or even eight figures.
How Tariff Authority Works in the U.S.
This is the constitutional question at the heart of the IEEPA case. The U.S. Constitution gives Congress — not the President — the power to “lay and collect Taxes, Duties, Imposts and Excises.” That’s Article I, Section 8. The power to tax imports belongs to Congress.
Over the decades, Congress has delegated some of that authority to the President through specific laws:
- Section 301 of the Trade Act of 1974 lets the President impose tariffs in response to unfair trade practices, after an investigation by the U.S. Trade Representative.
- Section 232 of the Trade Expansion Act of 1962 allows tariffs when imports threaten national security, after a Commerce Department investigation.
- IEEPA (International Emergency Economic Powers Act of 1977) gives the President broad powers to deal with “unusual and extraordinary threats” to national security — but the Supreme Court ruled this doesn’t include tariff authority.
The key distinction is that Congress never explicitly gave the President the power to impose tariffs through IEEPA. The law talks about blocking transactions, freezing assets, and restricting economic activity — but it never mentions duties, imposts, or tariffs. That’s why the Court struck them down.
For a deeper dive into what IEEPA actually says and why it matters, see our guide to the IEEPA law.
What Makes a Tariff “Legal” vs. “Illegal”
Not all tariffs are created equal. The tariffs that remain in effect after the Supreme Court ruling are the ones that were imposed under laws that explicitly authorize tariff actions. Section 301 tariffs on China? Still valid — that law specifically mentions duties. Section 232 tariffs on steel and aluminum? Still valid — same reason.
The IEEPA tariffs failed because the President used an emergency powers law that was never designed for trade policy. It’s like using a driver’s license as proof of age to buy a house — it proves who you are, but it’s not the right document for the transaction.
This legal distinction is why you need to understand exactly which tariffs you paid on each entry. If your imports from China included both Section 301 duties and IEEPA duties, only the IEEPA portion is refundable. Your customs broker can help you separate these layers, and an Impact Assessment will calculate the exact IEEPA exposure across your entire portfolio.
How This All Connects to Your Refund
If you’re an importer who brought goods into the U.S. between February 4, 2025, and February 24, 2026, and those goods were subject to IEEPA tariffs, you overpaid. The government collected money it had no legal authority to collect.
The refund process isn’t automatic, though. You need to take specific steps depending on the status of your entries:
- Unliquidated entries can be corrected through a Post-Summary Correction (PSC) filed by your customs broker.
- Liquidated entries within 180 days require a formal protest with CBP.
- Liquidated entries outside 180 days may require litigation in the Court of International Trade.
- All entries can potentially be converted to immediate capital through claim assignment if you’d rather not wait for the government to process refunds.
Each of these four recovery paths has different timelines, costs, and requirements. The right approach depends on your specific situation — how many entries you have, their liquidation status, your cash flow needs, and how much complexity you’re willing to manage.
Common Tariff Mistakes Importers Make
Now that you understand the mechanics, let’s talk about where things go wrong. These mistakes are surprisingly common, and any one of them can complicate your IEEPA recovery:
Not Separating IEEPA Duties from Other Duties
Many importers look at their total duty payments and assume the entire amount is refundable. It’s not. Only the IEEPA-specific tariff lines — those classified under HTS 9903.01 and 9903.02 — are covered by the Supreme Court ruling. If you’re importing from China, you likely also pay Section 301 duties that aren’t going anywhere. Separating these layers requires looking at the line-item detail on each entry, not just the totals.
Assuming Tariff Costs Are Just a “Cost of Doing Business”
Before the Supreme Court ruling, many importers absorbed IEEPA tariffs as an unavoidable cost. They adjusted pricing, squeezed margins, or switched suppliers. Now that the tariffs have been struck down, some of these importers aren’t pursuing refunds because they’ve already “moved on.” This is leaving real money — potentially six or seven figures — unclaimed. The refund doesn’t care whether you already adjusted your business. You paid. You’re owed.
Not Knowing Who the Importer of Record Is
As we discussed earlier, the IOR is the entity entitled to the refund. But some importers — especially those using full-service logistics providers or trading companies — don’t actually know whether they or their service provider is the IOR on their entries. This is the first thing to verify. If a third party is the IOR, you need to work with them to recover the IEEPA duties.
Ignoring the Timeline
The 180-day protest window is a hard deadline. Entries that liquidated in December 2025 have protest windows closing around June 2026. If you’re reading this in April 2026, that’s just two months away for the earliest entries. Every week of delay narrows your options.
Relying Solely on CBP to “Figure It Out”
CBP is processing refunds, but they’re not doing it proactively for every importer. The system requires you to take action — filing PSCs, submitting protests, or pursuing other paths. Waiting for CBP to send you a check without filing anything is not a strategy.
The Bigger Picture: Tariffs and Your Business
Understanding tariffs isn’t just useful for recovering IEEPA refunds. It’s essential knowledge for anyone who sources products internationally. Tariff rates affect your landed cost, your pricing, your margins, and your competitive position. The companies that understand tariffs well are the ones that can adapt fastest when rates change — and the IEEPA episode showed just how quickly they can change.
Going forward, the tariff landscape is more settled than it was during 2025, but it’s not static. Section 301 tariffs on China could be modified. New trade agreements could reduce or eliminate duties on certain products. And Congress may create new tariff authorities in response to the Supreme Court’s ruling.
The importers who come out ahead are the ones who treat tariff management as an ongoing discipline — not a one-time problem to solve. Keep your classification accurate. Monitor rate changes. Maintain clean records. And when the rules change in your favor — as they did with the IEEPA ruling — move quickly to capitalize.
What to Do Right Now
If you’ve made it this far, you now understand more about tariffs than most people in business. Here’s how to put that knowledge to work:
First, identify your exposure. Pull your import records for the February 2025 through February 2026 period. Look for HTS codes starting with 9903.01 or 9903.02. Your customs broker can run this report from the ACE portal.
Second, check your liquidation dates. For each affected entry, find out whether it’s been liquidated and when. This determines your deadline and your recovery path.
Third, understand your total claim value. Add up all IEEPA duties paid across all entries. Include the statutory interest that accrues at roughly 4-5% annually. This is likely a much larger number than you’d expect.
Fourth, get professional guidance. The recovery process has real deadlines — particularly the 180-day protest window — and the wrong approach can cost you part or all of your claim.
The fastest way to get clarity on your specific situation is to request an Impact Assessment. It maps every affected entry, calculates your estimated refund with interest, identifies approaching deadlines, and recommends the optimal recovery strategy.
