Canadian Businesses Get New Route to Reclaim Trump Tariffs Ruled Illegal

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For Canadian companies that spent the past year absorbing U.S. import duties, the legal victory against Donald Trump’s emergency tariffs is finally turning into a practical recovery process. U.S. Customs and Border Protection has already opened one refund channel, and a second phase scheduled for June 29 is expected to bring more complicated customs entries into the system.

The opportunity is significant, but it is not automatic. Eligibility usually depends on who was listed as the importer of record, how each shipment was entered and whether customs deadlines have already passed. At the same time, the Trump administration is appealing the order that extended refunds beyond the companies that sued. That leaves Canadian exporters with a rare opening: money may be recoverable, but only for businesses that can identify the right entries and act before procedural rules close the door.

The Court Drew a Line Around Emergency Power

The turning point came on February 20, 2026, when the U.S. Supreme Court ruled 6–3 that the International Emergency Economic Powers Act did not authorize the president to impose tariffs. The decision covered the broad emergency duties Trump had used against Canada, Mexico, China and many other trading partners. For Canadian goods, the disputed measures had included a 25% tariff on many products and a lower 10% rate on energy resources when collections began in March 2025. Days later, goods qualifying for duty-free treatment under CUSMA were exempted, leaving non-qualifying shipments exposed.

The ruling did not declare every Trump tariff invalid. It addressed a specific legal tool: IEEPA, a 1977 emergency-powers law that had historically been used to restrict transactions or freeze property rather than create a sweeping import-tax system. The majority concluded that the statute’s power to “regulate” imports was not a clear delegation of Congress’s tariff authority. That distinction matters because it defines the refund pool. A Canadian company can only use the new process for duties collected under the invalidated IEEPA measures, not every charge added during the wider trade conflict.

Phase 2 Opens the Door Wider

The newest opportunity arrives on June 29, when Customs and Border Protection is scheduled to launch Phase 2 of its Consolidated Administration and Processing of Entries system, known as CAPE. Phase 1 began on April 20 and concentrated on relatively straightforward entries that had not yet been finalized, or had been finalized only recently. Phase 2 is designed to handle reconciliation entries, which are used when an importer expects to correct values, classifications, origin information or other customs data after the original shipment was filed.

That expansion is more than a technical software update. At a June court hearing, customs officials estimated that Phase 2 could cover about 2.8 million additional entries representing roughly US$28.7 billion in potential refunds. Combined with the first phase, the system could reach close to US$130 billion of the approximately US$166 billion collected under IEEPA. For a Canadian manufacturer that entered goods under a reconciliation program, the change may finally create an administrative route that did not exist in April. Still, the qualifying conditions are narrow, and businesses must confirm that the related reconciliation entry has not already been filed and that the underlying entries remain within the permitted liquidation window.

The Importer of Record Holds the Key

The company that felt the tariff economically is not always the company legally entitled to the refund. U.S. customs rules direct repayment to the importer of record, the party identified on the entry paperwork as responsible for the shipment and its duties. Some Canadian exporters sell on a delivered-duty-paid basis and act as non-resident importers in the United States. Those businesses may be able to file directly. Others sell to an American distributor or customer that becomes the importer of record. In that arrangement, the U.S. buyer—not the Canadian seller—normally controls the claim.

This can produce an awkward result. A Canadian supplier may have lowered its price to help an American customer absorb a 25% tariff, yet the customer may still be the party receiving the customs refund. Couriers and brokers can add another layer. When a courier, broker or logistics provider appeared as the importer of record, the repayment may go to that entity, leaving the Canadian business to rely on its service agreement or a separate reimbursement arrangement. Before estimating a recovery, companies need to inspect the actual entry documents rather than invoices alone. The name on CBP Form 7501 is often more important than who ultimately bore the commercial cost.

CAPE Turns Refunds Into a Filing Exercise

CAPE was built to process thousands of entries in batches rather than forcing Customs and Border Protection to correct each shipment individually. An importer of record, or the licensed customs broker that filed the original entries, accesses the CAPE tab through the Automated Commercial Environment portal and uploads a comma-separated file. A single declaration may contain as many as 9,999 entry numbers. The system checks whether each entry exists, whether an IEEPA tariff code appears on it and whether the person submitting the request has authority to act.

Accepted entries are recalculated as though the IEEPA duty had never been owed. Customs then consolidates eligible amounts, adds interest where required and issues a lump-sum payment after checking for unpaid customs debts. CBP says valid refunds for standard unliquidated entries will generally be issued within 60 to 90 days after a declaration is accepted, unless a compliance concern triggers further review. That makes preparation crucial. Incorrectly formatted entry numbers, missing banking details or entries tied to open protests, drawback claims or other special programs can delay or block acceptance. The process is digital, but it still depends on clean historical customs records.

Customs Deadlines Can Decide Who Gets Paid

The most dangerous part of the refund process is the customs clock. An entry remains “unliquidated” until CBP completes its final duty calculation. Once it liquidates, the importer generally has 180 days to file a protest. CAPE Phase 1 was built with an even tighter administrative cutoff: entries more than 80 days beyond liquidation were rejected from that phase, giving customs time to act within its separate reliquidation authority. Phase 2 adds new categories, but it does not erase the statutory deadlines that continue to run in the background.

Older entries are therefore the centre of the legal dispute. The Court of International Trade ordered refunds for unliquidated, liquidated and finally liquidated entries, but the administration argues that customs finality rules prevent broad repayment once protest periods have expired, especially for importers that never filed their own lawsuit. CBP has discussed a later Phase 3 for more difficult claims, potentially by late July, but its planned scope is tied to the appeal and may favour companies already before the trade court. Businesses approaching a protest deadline cannot safely assume that a future software phase will preserve their rights. A missed date may turn a strong refund claim into expensive litigation—or no recovery at all.

A $166-Billion Repayment Operation Is Already Moving

The numbers help explain why the refund system has been rolled out in stages. Customs officials have estimated that approximately US$166 billion in IEEPA duties was collected across tens of millions of import entries. At a June 9 hearing, the agency reported that Phase 1 claims covered about US$90 billion and that roughly US$23 billion had already been approved and transmitted to the U.S. Treasury for payment. The government has said more than US$95 billion was in the processing queue, making this one of the largest customs repayment exercises the agency has ever attempted.

For individual companies, even a small slice can be meaningful. A business that paid a 25% emergency duty on a US$100,000 shipment would have deposited US$25,000 before considering brokerage, financing or downstream pricing effects. Multiply that across weekly shipments and the refund can become working capital for payroll, equipment or inventory. The commercial benefit may not remain entirely with the importer, however. Contracts may require refunds to be shared with customers, suppliers or logistics providers, and some companies may choose to lower prices to protect market share. Recovering the cash is only the first accounting question; deciding who ultimately owns the benefit can be just as important.

Washington Is Still Fighting the Broadest Refund Order

Refunds are moving, but the legal battle is not finished. In early June, the U.S. Department of Justice appealed the Court of International Trade’s order requiring CBP to refund IEEPA duties to all importers, including companies that were not parties to the original lawsuits. The administration is expected to argue that the trade court created an impermissible universal remedy and cannot reopen finally liquidated entries for businesses that did not preserve claims through protests or litigation.

The importers have a different argument. They contend that the trade court has nationwide responsibility for uniform customs administration and that the Supreme Court already resolved the central issue by finding the tariffs unauthorized. From that perspective, allowing the government to keep identical unlawful duties from some importers but return them to others would create the inconsistency the specialized court is supposed to prevent. The appeal matters most for older and finalized entries. Phase 1 payments have continued, and Phase 2 remains scheduled to launch, but Canadian firms with disputed entries face a two-track reality: the administrative system may pay straightforward claims while the Federal Circuit decides whether the broadest group of importers is entitled to relief.

Other Tariffs Did Not Disappear

The refund opening should not be mistaken for the end of U.S. tariff pressure. The Supreme Court decision concerned IEEPA duties. It did not remove sector-based tariffs imposed under other laws, including measures affecting steel, aluminum, copper, automobiles and certain derivative products. Those charges require separate analysis and cannot be folded into an IEEPA CAPE declaration simply because they appeared on the same customs entry.

The administration also replaced the invalidated emergency tariffs with a temporary 10% import surcharge under Section 122 of the Trade Act. A trade court later ruled that measure unlawful for the companies that challenged it, but an appeals court allowed collections to continue while the case proceeds. The surcharge is scheduled to expire on July 24 unless Congress extends it, and CUSMA-qualifying goods have generally been exempt. None of those Section 122 payments are covered by the current IEEPA refund system. A Canadian business can therefore receive money back on an old IEEPA line while continuing to pay a different tariff on a new shipment. The legal basis changed; the border cost did not necessarily vanish.

Canadian Companies Need a Two-Track Recovery Plan

The strongest starting point is a shipment-level audit. Companies should identify every U.S. entry carrying an IEEPA Chapter 99 tariff code, confirm the importer of record and sort the entries by liquidation date. Core records include CBP Form 7501 entry summaries, duty-payment confirmations, commercial invoices, packing lists and bills of lading or airway bills. The original customs broker should also be contacted, because only the importer of record or the broker that filed the entry can submit a CAPE declaration.

The second track is deadline protection. Businesses should separate entries eligible for CAPE from those affected by reconciliation, drawback, protests, final liquidation or court proceedings. They should also verify ACE access and electronic refund banking information before filing. Contract reviews may reveal whether recovered money must be passed to customers or shared with another party, while accounting advice can determine how interest and refunds should be recorded. The process is technical, but the business logic is simple: establish who owns the claim, document what was paid and preserve every deadline. For Canadian exporters operating on thin margins, that discipline could turn an old tariff expense into a substantial cash recovery.

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