Section 122 tariffs: Refund opportunities and trade policy shifts for importers

What’s happening with tariff refunds right now?

Refunds are starting to reach importers, and some appear to be moving faster than the 60-to-90-day timeframe many companies expected. For businesses pursuing tariff recovery, that progress is significant.

However, the process involves more than submitting a file upload. CBP appears to be distinguishing between submissions that can move forward quickly (cleaner data) and those requiring additional review. A submission can move through acceptance and approval, but the period between approval and payment may still involve entry-level review.

Importers should also recognize that approval does not necessarily mean a refund is final or free from later review. CBP may revisit entries after refunds are issued, and importers need to maintain documentation support for their refund position, tariff treatment, country of origin and related duty calculations.

CAPE refund processing indicators

As of May 22, 2026, source materials noted:

• Approximately 15.8 million entries passed Consolidated Administration and Processing of Entries (CAPE) validation.
• Of those, approximately 8.5 million entries have already been liquidated or reliquidated.
• An estimated $85 billion in both potential and certified refunds have been accepted for processing CAPE. $20.6 billion have been completed using the CAPE refund component and sent to the U.S. Treasury for disbursement.
• Approximately 30% of submissions had been rejected, primarily due to data entry errors, inclusion of non-IEEPA duties, classification inconsistencies or tariff stacking issues.

Data quality remains critical. CBP can flag discrepancies when amounts, classifications, duty calculations or stacking sequences don’t align. Rounding differences, omitted duties, incorrect tariff treatment and inconsistent entry data can all create friction.

Phase two timing continues to be unresolved. Importers participating in reconciliation programs may have a more streamlined refund pathway if CBP permits IEEPA amounts to be addressed through the reconciliation system, but the scope and timing haven’t been announced.

Why does appeal risk matter for refund timing?

Appeal risk remains a major unresolved variable for importers waiting on IEEPA refunds. While refund processing may continue, ongoing litigation could affect timing, cash flow planning and recovery expectations.

Interest is another important consideration. When the government refunds duties collected without proper authority, interest can add a meaningful amount to the total recovery. While that creates a practical reason for continued processing, it doesn’t remove the legal risk.

For importers, the key isn’t to assume the process is complete once a filing is uploaded. Preserving documentation, validating data before submission, monitoring claim status and understanding how an appeal could affect timing remain important steps.

Why are some tariff refund submissions getting kicked back?

Many rejected or delayed submissions appear tied to data quality issues. Importers may be using reports that don’t match Automated Commercial Environment (ACE) data, or they may be including entries that don’t qualify for the current CAPE phase.

Country of origin remains another significant risk area. If the country of origin was misdeclared, or if the country of export was reported instead of the country of origin, the tariff implications can be substantial. This may affect Section 301 duties, Section 232 duties, country-specific IEEPA reciprocal duties and other tariff calculations associated with an entry.

Common issues to review before filing

• Entry data matches ACE records
• Entries qualify for the current refund phase
• ACH refund information has been set up
• Country of origin was entered correctly
• Section 301 or Section 232 duties were applied properly
• Tariffs were applied in the correct sequence
• Revenue reports align with underlying entry data

Being first to file provides little value if the submission is inaccurate. A thorough review before filing can help determine whether a refund claim is likely to generate a recovery, trigger an offset or reveal underpaid duties.

What do importers need to know about offsets?

Offsets are becoming an increasingly important consideration in the refund process. Some importers may expect a refund only to learn that CBP has retained a part of the amount because other duties appear to be owed or they have undisputed debts owed to any other U.S. Federal Agency.

That doesn’t necessarily mean the money is gone. It does mean the importer may need to respond, support its position and evaluate whether the offset calculation is accurate. The offset could relate to sequencing, country of origin, valuation or prior application of other tariffs.

The challenge is that an offset may come from a system-generated comparison, not a full explanation of every underlying issue. Importers should review the calculation carefully instead of assuming CBP’s offset is either correct or incorrect. Do not assume an offset is correct and having clear documentation available for review can help an importer defend or reclaim any offset amounts that may have been applied in error.

A refund tracker can show movement, but movement doesn’t equal payment. Once a refund reaches the refund process, payment may follow quickly, but importers should continue to review entry details, track offsets and maintain documentation tied to each claim.

Where do Section 122 tariffs stand?

Section 122 tariff litigation remains active and creates another layer of uncertainty. On May 7, 2026, the U.S. Court of International Trade (CIT) invalidated Proclamation No. 11012 in litigation challenging the temporary 10% ad valorem duty imposed on nearly all imports under Section 122 of the Trade Act of 1974. The injunctive relief applied only to the three named plaintiffs.

On May 12, the Federal Circuit issued a temporary stay. A ruling on the stay request could come after briefing, and Section 122 is scheduled to expire by statute on July 24, 2026.

What this means for importers

• Tariffs remain in effect for non-parties
• CBP continues collecting duties from importers not covered by the injunction
• Importers may need to evaluate whether litigation participation makes sense
• Replacement tariff actions could arrive before the July 24 expiration
• Section 301 and Section 232 alternatives remain possible pathways

The legal posture differs from IEEPA. Section 122 is a trade remedy with a clearer statutory framework, which may give the government a different appeal path. That doesn’t mean the government will prevail, but importers may not want to treat Section 122 recovery as a settled issue.

The broader planning challenge is replacement risk. Even if Section 122 expires or gets struck down more broadly, the administration could seek to maintain tariff pressure through Section 301, Section 232 or through other trade mechanisms.

How could Section 122 refunds differ from other tariff recovery efforts?

Section 122 tariff recovery may not follow the same administrative path as other tariff refund efforts. That creates uncertainty for importers that paid Section 122 tariffs and now want to preserve recovery rights.

The CIT ruling supported the import community’s challenge to the current Section 122 tariff structure, but the short-term effect remains limited. The government has appealed, and all importers must continue paying Section 122 tariffs while the appeal process continues.

The refund mechanism is the open question. There doesn’t appear to be a mature administrative framework for Section 122 recoveries in the same way importers may have expected for other tariff activity. As a result, protests, litigation strategy and liquidation timing may become more important. Though we can’t assume CAPE will be used for Section 122 refunds, it is possible that this process will be duplicated for future refunds from CBP.

For now, importers may benefit from maintaining a clean Section 122 file Including tracking entries, duties paid, liquidation dates and supporting documentation. Doing so can help position companies to act quickly as additional guidance becomes available.

What trade policy changes could affect importers next?

Trade policy is becoming less predictable and more tied to strategic leverage, critical materials, energy, manufacturing capacity and geopolitical positioning. For importers, that means tariff exposure may shift by product, country and sector.

China remains a major focus. Current negotiations could result in a temporary pause, sector-specific concessions, symbolic purchases or renewed escalation. Each outcome carries different implications for importers, manufacturers and supply chain leaders.

Potential China trade outcomes to monitor

1. A temporary pause that keeps current trade conditions mostly in place
2. Sector-specific relief or concessions, especially in areas such as automotive, agriculture, technology or financial services
3. A symbolic breakthrough tied to energy, agriculture or investment
4. A renewed escalation that increases tariff or supply chain pressure

The USMCA also deserves close attention, and the lack of any real progress with China should signal a harder stance from the U.S as they prepare to enter into the USMCA Joint Review process; a mandatory six year assessment for the three countries to evaluate the trade framework and decide whether to extend the treaty for an additional 16 years. July 1, 2026 commences the Joint Review process.

Why do elevated China tariffs still matter for importers?

Tariffs on China-origin goods remain elevated, and no broad, completed tariff reduction removes the need for planning around landed cost, duty exposure and supply chain disruption. Recent reporting indicates the United States and China reached limited trade agreements tied to Boeing aircraft, beef and poultry access, tariff-reduction discussions and rare earth export-control concerns, but those developments don’t resolve the larger tariff environment.

The current tariff environment also creates pressure around origin documentation. Goods shipped from Mexico or Canada aren’t automatically goods of Mexican or Canadian origin. If products move through another country without sufficient production, transformation or qualification, importers may still face China-origin tariff exposure.

That issue could become especially important as USMCA discussions develop. If Chinese-origin goods move through Mexico or Canada before entering the United States, future negotiations may focus more closely on origin, transshipment and enforcement.

What trade developments need close monitoring?

Importers may need to track several tariff and trade developments at once because these issues are increasingly connected.

Developments to monitor

• Whether the bilateral trade and investment council convenes and implementation details emerge
• Whether China eases rare earth export controls affecting critical mineral-dependent supply chains
• Whether chip export controls shift further, including advanced technology permitted for China
• Whether Section 122 expires on July 24, 2026, or gets replaced through Section 301, Section 232 or another framework
• Whether USMCA negotiations create new restrictions tied to China-origin goods moving through Mexico or Canada
• Whether the Section 301 four-year review results in new tariffs, renewed exclusions or modified coverage

Section 301 deserves fresh attention. Earlier reviews preserved many tariffs, changed treatment for certain goods and adjusted exclusions. The next review could affect importers sourcing from China and other major trading partners involved in related trade investigations.

Section 232 also remains relevant, especially for strategic sectors such as steel, aluminum, copper, automotive, advanced manufacturing and critical inputs. Replacement tariff activity could arrive through several channels, which makes scenario planning more important than watching one remedy in isolation.

How can importers use ACE to file protests?

ACE gives importers the ability to file and manage their own protests when they have the right account access, authority and internal controls.

A protest can help preserve an importer’s rights, pause liquidation in certain situations and create time to evaluate classification, valuation, origin, exclusion applicability and duty recovery issues. It can also support correction efforts before entries become final.

To use protest filing capability, importers need an active ACE portal account. Appropriate Trade Account Owner (TAO) or Proxy Account Owner approval may also be required. Before enabling filing authority, companies need internal controls that define who can file, what review is required, what documentation must be retained and how deadlines get tracked.

ACE protest filing capabilities

• File and manage protests electronically through the ACE portal
• Track protest status and CBP actions in real time
• Upload supporting documentation directly to CBP
• Centralize protest activity within the importer’s compliance program

This capability doesn’t replace legal or customs advice in complex matters. It does give importers with internal expertise a way to manage certain protest activity directly and reduce reliance on brokers for issues the company understands well.

When does protest filing capability create strategic value?

Protest filing capability can create value when importers need control, speed, documentation and visibility. That can be especially useful in periods of tariff uncertainty, when refund rights, liquidation timing and duty exposure can change quickly.

Strategic benefits for importers

• Preserve legal and financial rights when liquidation timing matters
• Improve duty recovery opportunities tied to overpaid duties, taxes and fees
• Support corrections for classification, valuation, origin and exclusion issues
• Increase compliance visibility through centralized protest tracking
• Improve audit readiness through stronger documentation retention
• Reduce coordination delays when internal expertise exists
• Strengthen trade risk management by identifying recurring import compliance trends

The strongest use case is simple: importers that understand the factual and compliance basis for a protest may be able to act more quickly and economically when filing authority sits inside the business.

That said, protest filing isn’t just a technical portal function. Companies need governance. Protest authority belongs inside a broader customs compliance framework that includes review procedures, documentation standards, deadline controls and escalation paths for higher-risk issues.

What practical steps can importers take now?

Importers need a process that covers both refund recovery and future compliance risk. The same entry data that supports a refund can also reveal origin, value, classification or tariff application issues.

Start with the data. Review ACE reports, broker records, invoices, country of origin, tariff sequencing and duty calculations before submitting refund requests. If the review shows that the company may owe more than it recovers, that needs to factor into the filing decision.

For entries approaching liquidation deadlines, protests may help preserve rights. If an entry is already inside the refund submission process, a Post Summary Correction (PSC) may not be available until that process concludes. In those cases, the company may need to address the issue later through another compliance path, potentially including a prior disclosure depending on the facts.

Reconciliation also needs careful attention. If CBP allows certain tariff issues to be handled through reconciliation, importers will need strong underlying entry support. Reconciliation is a compliance privilege, and weak source data can create exposure during review.

Refund and ACE items to review

• Whether the importer has ACE access and knows who controls the account
• Whether outdated users, former employees, prior brokers or old consultants still have permissions
• Whether the correct email address is tied to the importer’s CBP Form 5106 record
• Whether CBP Form 4811 is needed because a third party receives payment
• Whether refunds are routed to the importer, broker, drawback filer or another party
• Whether the importer of record (IOR) is the party entitled to receive the refund
• Whether ACH payment setup aligns with refund expectations
• Whether Post Summary Correction authority exists for the relevant filing scenario
• Whether liquidation notices are being monitored through scheduled ACE reports
• Whether offsets reveal unpaid or underpaid Section 301, Section 232 or other duties

The practical takeaway is simple: don’t treat refund recovery as a cash exercise alone. Treat it as a compliance review, a documentation project and a trade policy monitoring process at the same time.