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Australian firms looking to claw back US tariff payments they have made over the past two years could have a way to do so within weeks, but not all exporters will be eligible for a refund, legal experts say.
Businesses have been lining up to lodge claims for tariff refunds in the US Court of International Trade after the US Supreme Court ruled in February that tariffs imposed by Donald Trump under the International Emergency Economics Powers Act (IEEPA), were unlawful.
The tariff refunds were ordered by relatively low-profile Court of International Trade judge Richard Eaton in March after he presided over a single refund case involving a filtration company. The 77-year-old entered semi-retirement more than a decade ago, the Wall Street Journal reported.
Aside from big Australian companies such as Rio Tinto and Breville, US entities of smaller Australian businesses, including hair care brand Bondi Boost, have also put in claims for refunds. Bondi Boost has a US-registered entity, Bondi Boost US, LLC, which was directly slugged by the newly-voided tariffs.
Experts said the process for seeking a refund was complex and uncertain, and it was not clear how long it would take for companies to get money back from the US government.
Sydney-based Baker McKenzie partner Anne Petterd said the decision to claim a refund may not apply to Australian businesses which only export their products to the US and do not also manage the importing side.
“In many cases, it will ultimately be the decision of the importer of record in the US who paid the additional tariff,” she said.
Norton Rose Fullbright Australia partner Daniel Allman said the US government would not be issuing refunds to businesses which have indirectly borne the cost of tariffs, such as Australian businesses which have had the tariff cost passed on to them by a US importer.
“An Australian business in that situation would need to examine their agreements with the importer in the US top check whether they’re entitled under that agreement to get a refund from the importer, if and when that importer receives a refund from the government,” he said.
According to the US Customs and Border Protection (CBP), there will be an administrative process for the refunds involving an online portal which the CPB plans to have up and running by mid-April.
However, Allman warns the timeframe for businesses to get money back – and whether those refunds will eventuate at all – is unclear.
“The latest filing from CBP to the US Court of International Trade suggests that they expect the process for the first wave of refund claims to take up to 45 days,” he said. “But I would really caution that we need to wait and see if and when that system is actually operational in practice. It is possible that the US government might seek to challenge the scope of refunds, and even if that does not happen, there could be some time before all the refunds are dispersed for importers.”
And many other tariffs imposed under different legislation to the IEEPA will remain in place and will not be eligible for refunds.
Allman said Australian businesses that have filed a lawsuit ahead of the proposed portal opening are likely doing so to “get on the front foot” because the online process had not yet been finalised.
The bulk of tariff refunds would be processed through the portal once it opens, he said, with importers most likely needing to apply to receive a refund.
Petterd said some businesses might have filed lawsuits so as not to rely only on a new system being set up, while others may have done so to encourage that process to happen more quickly, or simply as a test case for a broader industry. “They can always discontinue the lawsuits [if they’re no longer needed],” she said.
Petterd said complexity and uncertainty around the refund process, as well as the need for businesses to figure out the tax implications of receiving a refund, and the costs of doing so, meant most firms were still sitting and waiting.
“If a business paid a relatively small amount in additional tariffs, it may be better to wait until the refund process is clear before spending money on a claim,” she said.
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