Earlier this year, the US Supreme Court held that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful and ordered refunds of certain overpaid duties. In response, US Customs and Border Protection established the Consolidated Administration and Processing of Entries (CAPE) system to administer refunds. However, ongoing litigation, appeals, and uncertainty surrounding eligibility and processing timelines have raised significant questions for businesses that may have indirectly absorbed tariff-related costs.
For contractors in particular, the evolving legal landscape presents an important question: if increased material costs resulting from tariffs were ultimately borne by a contractor, does the contractor have a contractual basis to recover from a tariff refund received by an upstream supplier or importer?
In this article, Christopher Drewry and Kaylin Cook examine the latest developments surrounding tariff refunds and discuss how contractual provisions, project delivery methods, and reimbursement structures may affect a contractor’s ability to recover tariff-related costs or share in any resulting refunds. They also outline key considerations contractors should evaluate now to protect their financial interests.