U.S. Customs and Border Protection told a federal judge on Friday that it cannot comply with his order to begin refunding roughly $166 billion in reciprocal tariffs collected under President Trump's use of the International Emergency Economic Powers Act. The agency says its systems simply aren't built for a refund operation of this magnitude.
Judge Richard Eaton of the U.S. Court of International Trade in New York had ordered CBP on Wednesday to calculate the cost of importing goods without the tariffs and to begin issuing refunds, with interest, to importers who paid the IEEPA duties. CBP's response: not yet, and maybe not for another 45 days.
The filing lands in the middle of a high-stakes legal and logistical standoff that followed the Supreme Court's 6-3 ruling on Feb. 20 in Learning Resources, Inc. v. Trump, which invalidated the tariffs.
The numbers alone explain why CBP pushed back. CNBC reports that Brandon Lord, executive director of the trade programs directorate at CBP's Office of Trade, stated in a filing that as of Wednesday, more than 330,000 importers had made over 53 million entries under the IEEPA tariffs. Processing those individually could mean more than 54 million separate refunds.
CBP's filing laid out the operational reality in stark terms:
"In light of the Court's March 5, 2026 amended order, CBP is now facing an unprecedented volume of refunds. Its existing administrative procedures and technology are not well suited to a task of this scale and will require manual work that will prevent personnel from fully carrying out the agency's trade enforcement mission."
The agency went further, warning that diverting staff to process refunds would compromise national security operations:
"Personnel would be redirected from responsibilities that serve to mitigate imminent threats to national security and economic security."
That's not a bureaucratic excuse. It's a border agency telling a court that forcing it to become a refund processing center will pull agents and resources away from actual enforcement. Whether the judge finds that persuasive is another matter.
Rather than throwing up its hands entirely, CBP offered a plan. The agency said it is developing new functionality within its ACE system that would consolidate refunds on an importer basis rather than processing each entry individually. According to the filing, CBP "is confident that it can develop and implement" a process "that will streamline and consolidate refunds and interest payments on an importer basis." The agency estimated the upgraded system would save over 4 million hours of employee work.
CBP told the court it is "making all possible efforts to have this new ACE functionality ready for use in 45 days," which would push initial refunds to late April at the earliest. The agency also noted the new system "will require minimal submission from importers," a detail that matters to the hundreds of thousands of businesses waiting on money they may be owed.
That's a reasonable timeline for retooling a system that was never designed to reverse-engineer 53 million tariff entries. Whether the court sees it that way depends on how Judge Eaton weighs logistical reality against legal obligation.
Eaton, who has been designated as the only Court of International Trade judge to hear lawsuits from importers seeking refunds, signaled skepticism before CBP even filed its response. His remarks on Wednesday cut straight through the agency's operational concerns:
"Customs knows how to do this. They do it every day. They liquidate entries and make refunds."
He has a point, narrowly. CBP does process refunds routinely. But "routinely" and "54 million at once" occupy different galaxies. The judge's framing treats this as a standard customs function scaled up. CBP's framing treats it as an entirely different operation that would cannibalize its core mission.
Both can be partially right. The question is which framing controls the outcome.
Eaton was set to hold a hearing on Friday on the refund issue. The Trump administration retains the option to appeal his order to the U.S. Court of Appeals for the Federal Circuit, which would likely pause the refund process while the appeal proceeds.
The broader picture here is worth noting. The Supreme Court's 6-3 ruling struck down the use of IEEPA as the legal basis for reciprocal tariffs on imports from most countries in the world. That decision settled the legal question. What it didn't settle is the practical one: what happens to $166 billion already collected from importers like Atmus Filtration and hundreds of thousands of others?
Courts are comfortable issuing orders. They are less comfortable with the mechanics of executing them. A judge can declare that refunds must flow. He cannot conjure the infrastructure to make it happen overnight.
CBP is telling the court it needs 45 days and a system overhaul. The judge is telling CBP it already knows how to do its job. Somewhere between those two positions, 330,000 importers are waiting to find out when their money comes back.
