Cheers to That! Tariff Refund Opportunity for Alcohol Companies

Like many industries, alcohol importers and suppliers have been forced to track a tariff landscape that is shifting almost minute by minute and pay exponentially increasing tariffs. However, there is currently an opportunity to recover some tariffs paid starting February 2025.

Why Alcohol Companies Are Heavily Impacted

Given the geographically distinctive nature of many alcohol products and the lack of domestic substitutes (e.g., there is no such thing as a domestically produced champagne), alcohol frequently becomes a disproportionate target of tariff policy. Politically, the category is often seen as a low‑resistance lever for trade pressure, as evidenced by Trump’s threat early last year to impose a 200% tariff on all alcohol imported from the EU, or the Canadian boycott on US alcohol products in response to Trump’s tariffs against the country. For alcohol importers and manufacturers, these tariffs have introduced yet another layer of uncertainty and cost at a time when alcohol sales are sputtering and inflation has driven up expenses for almost everything.

The importation of alcohol products, or the ingredients and raw materials used to produce them, requires payment of a series of duties and fees. These may include, but are not limited to, base customs duties under the Harmonized Tariff Schedule of the United States (HTSUS), federal excise tax on imported alcohol, additional tariffs assessed on all goods coming from certain countries, tariffs assessed on certain specified commodities (e.g., aluminum), or other special tariffs imposed under varying legal theories by the current Administration. At one time, this included tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Given recent litigation developments affecting IEEPA‑based duties, alcohol importers and producers should assess whether previously paid IEEPA duties may be refundable and what steps are needed to preserve those claims.

Tariffs Refunds Available!

In February, the US Supreme Court held that the president exceeded his authority under IEEPA in imposing broad import tariffs, halting the assessment of IEEPA‑based tariffs. Since that February decision, US Customs and Border Protection (CBP) has rolled out the Consolidated Administration and Processing of Entries (CAPE) tool, a streamlined portal for obtaining IEEPA refunds within the Automated Commercial Environment (ACE). 

The portal allows importers to reclaim duties paid under the IEEPA. Phase 1 of CAPE covers certain standard entries that are unliquidated or within 80 days of liquidation. For alcohol companies that may be entitled to refunds for IEEPA-based tariffs, the refund process requires careful preparation and attention to procedural requirements. Importers should consider the following steps:

1. Ensure that your company has an ACE importer account. This requires a US address. It is taking upwards of a month to apply for a new account. We are assisting companies with troubleshooting the application process.
2. Set up ACH bank information for refunds. This requires a US bank account. If you do not have a US bank account, the customs broker that filed the underlying entries may be able to accept the refunds on your behalf.
3. Compile a list of entries that are eligible for IEEPA refunds under Phase 1 and prepare to submit in the format required by CBP.
4. Continue to track entries that will be eligible for refunds under subsequent phases and preserve your right to refunds by filing protective protests for entries that are nearing the 180-day protest deadline, as the timeline for subsequent phases of the refund process is uncertain.
5. Review entries carefully before filing for accuracy (e.g., ensure no duplicative entries).
6. Ensure that there are no other compliance concerns with entries (e.g., origin, tariff classification, value), as that could trigger additional review by CBP.
7. Determine how refunds may impact obligations to other stakeholders like customers and suppliers that may have shared in the tariff burden.
8. Track refunds for accuracy.
9. Be cautious about issuing any public statements regarding the IEEPA tariff refunds, as several companies have been the subject of class action suits claiming unjust enrichment. 

What to Watch

Although CBP reported in a court filing that CAPE has already accepted for processing $85 billion in potential and certified refunds, the US Department of Justice (DOJ) is taking steps to upend this process. On June 2, the Trump Administration submitted an appeal challenging an earlier ruling that allowed all US importers the ability to seek tariff refunds, not just those who sued the Administration related to the IEEPA tariffs. The DOJ argued that the court exceeded its authority in ordering CBP to issue refunds to importers of finally liquidated entries (i.e., entries that are beyond the 90-day CBP voluntary liquidation period and have not been protested) who have not individually sued, stating that “CBP has no authority to reliquidate or refund money without a court order.” 

As a practical matter, for many importers, “finally liquidated” entries likely accounts for a small percentage of overall shipments. However, we are closely monitoring developments in the appeals to determine how it may impact our clients. 

How We Can Help

Our Customs and Import Compliance team assists companies with all the above refund steps and continues to counsel clients regarding tariff developments and tariff mitigation strategies. 

For more information, please contact the authors of this alert or your ArentFox Schiff relationship attorney.