By Jill Hurley and Michael Zobin
Who doesn’t want a refund?
With the recent decision by the U.S. Supreme Court to strike down the use of the International Economic Emergencies Act (IEEPA) to impose tariffs, talk of duty refunds has become common parlance, and has turned many importers onto the possibility of curbing landed costs by seeking out refunds.
But not all refunds are created equal and, indeed, the IEEPA refunds represent a uniquely simplified process that is fairly low risk relative to other forms of duty refund. Typically, with refund requests, the devil is in the details, and the details are often overlooked at the importer’s peril.
Newfound Vigilance
Importers in both the U.S. and Canada should be aware their respective customs agencies are no longer simply stewards of regulatory compliance; they are revenue-generating machines and lack of compliance is precisely where they generate that revenue.
The Canada Border Services Agency (CBSA) has noted its compliance priorities in 2026 will focus on key matters, including (but not limited to):
- Free trade agreement origin verifications (e.g., the USMCA, CETA and CUKTA).
- Goods and Services (GST) tax exemptions.
- The China surtax order (particularly on electric vehicles, steel and aluminum).
- The U.S. surtax order (aluminum steel, automobiles and other goods).
- The duties relief program.
- The surtaxes on all steel and aluminum imports imposed quietly during the holiday period in 2025.
South of the 49th Parallel, U.S. Customs and Border Protection has put forward a litany of compliance focuses, including (but not limited to)
- Vigilance around the many tariffs issued over the course of 2025 (excluding the IEEPA tariffs no longer in effect) with an already palpable rise in CF28 and CF29 forms from CBP requesting more information and notifying of customs actions respectively.
- Additional vigilance can be expected over Section 232 and Section 301 tariffs anticipated for implementation throughout the year.
- Greater emphasis on enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), prohibiting entry to goods manufactured in whole or in part in the autonomous Xinjiang region of China where human rights abuses are alleged to be taking place.
What does compliance have to do with refunds?
With the emergence of tariff barriers in early 2025, many importers have been feverishly pursuing duty refunds whenever and wherever possible to offset the financial impact of the tariffs.
However, in doing so, they put their customs entries under the microscope of the relevant customs agency and that’s where things go awry.
Protested customs entries are reviewed by customs authorities not only for the elements related to the protest, but for all information within the protested entries. That’s often where non-compliance is discovered, leading not only to failed attempts to recover duties, but to subsequent customs audits—audits that are prohibitively time-consuming but also costly should instances of consistent non-compliance be found.
Before seeking refunds …
This isn’t to suggest refunds shouldn’t be pursued. It’s to emphasize that the pursuit of refunds must be balanced with the scrupulousness of an organization’s customs regime. The best way to optimize the likelihood of a refund is to ensure the data hygiene employed within the entries being challenged is airtight. That includes:
Origin: The origin of imports cannot be “guestimated” in today’s environment where tariffs, surtaxes and sanctions are specific to goods from certain origins. Incomplete or ambiguous origin information will quickly render an entry suspect in the eyes of a customs agency. This is particularly important in the U.S. for goods such as steel and aluminum and derivatives of those products, which could be exempted from tariffs if the steel is melted and poured and the aluminum is smelt and cast in the United States. Incorrectly stating melt/pour and smelt/cast origination in the U.S. or omitting the information altogether could lead to massive penalties, including a 200% tariff rate or a 40% transshipment penalty. Incorrect origin information on imports of these products into Canada could result not only in the application of the 25% surtax but also retroactive duties and a penalty of up to $25,000.
Classification: Many importers in the U.S. in particular have played fast and loose with classification, particularly since IEEPA tariffs were applied broadly, but emerging tariffs, such as those imposed under Section 232 will be tied to specific products and HS codes. Consistent classification inaccuracies will be caught in protest reviews and flagged, leading to potential retroactive duties and potentially audits.
Valuation: Customs agencies are putting far greater scrutiny over inconsistencies in valuation. Attempts to obscure the true value of imports to reduce duty outlay have the potential to lead to invasive audits that could result in retroactive duties, fines and penalties, but also place greater scrutiny on future customs entries.
Regional Value Content (RVC): This is particularly important in highly scrutinized goods, such as automobiles and auto parts. The 25% tariff imposed on these goods are neutralized when the goods qualify under the USMCA, but that qualification is highly dependent on meeting the rigorous RVC requirements of the trade deal. In these cases, if CBP identifies over-statement of North American RVC, it may not only apply the 25% tariff, it could seize the vehicles and render all subsequent entries for that vehicle as ineligible for preferential duty under the USMCA.
Careful what you wish for
These sorts of infractions are often made not out of intentional malice, but due to oversight resulting from lack of time and/or weak compliance documentation within an importer’s procurement and supply chain processes. Customs authorities, however, have little sympathy or regard for these internal challenges. To these now-revenue-generating machines, non-compliance is non-compliance. Period.
Importers eligible for duty recovery should consider carefully the process by which the original entries were submitted and the risk of non-compliance being identified within those entries before pursuing those refunds. A nominal refund could end up becoming far costlier.
Jill Hurley is Senior Director, Global Trade Consulting, U.S. at Livingston, and a non-practicing licensed attorney specializing in trade. As the practice leader, she spearheads U.S. import and export projects, offering comprehensive reviews of clients’ business models for risk assessment, crafting, and implementing import/export compliance programs, conducting audits, navigating export licensing requirements, and providing support in U.S. trade remedy matters.
Michael Zobin is Senior Director, Global Trade Consulting, Canada, at Livingston International. He works with clients to help them minimize risk and implement new processes for achieving higher levels of customs and supply chain compliance. His expertise includes supply-chain optimization; alignment with Free Trade Agreement regulatory requirements; duty deferral and drawbacks; and Customs valuation.