CIT Orders IEEPA Refunds, 24 States Sue Over Section 122 Tariffs, Cotton Import Fees Reversed
Court Orders CBP to Refund IEEPA Tariffs – Automatic Refunds for Unliquidated Entries, Protests Required for Liquidated: On March 4, 2026, the U.S. Court of International Trade issued a sweeping order in Atmus Filtration, Inc. v. United States directing CBP to liquidate all unliquidated entries without IEEPA duties and reliquidate entries that have been liquidated but are not yet final (within the 180-day protest window) without IEEPA duties. The order follows the Supreme Court's February 20 ruling that IEEPA tariffs were unlawful.
Who this applies to: All importers whose entries were subject to IEEPA tariffs, not just those who filed lawsuits. The order is universal in scope.
What happens now:
For unliquidated entries: CBP must liquidate without applying IEEPA duties
For liquidated but not final entries (still within 180-day protest window): Importers must file protests to secure reliquidation without IEEPA duties
Critical uncertainties:
What qualifies as "not final" liquidation (typically 180 days after liquidation, but some entries liquidated earlier than the standard 314-day timeline)
No timeline provided for when CBP must complete liquidations, re-liquidations, or issue refunds
How entries approaching final liquidation will be handled if the government appeals
No guidance yet on finally liquidated entries (past the 180-day protest deadline)
No guidance on how Privileged Foreign Goods are treated when leaving an FTZ
What importers should do now:
File protests immediately for any liquidated entries within the 180-day window requesting refunds plus interest
Set up ACE Portal account if you don't have one (CBP is experiencing processing delays)
Register for electronic ACH refunds (requires ACE account)
Continue monitoring liquidation dates and filing protests as they come due
For unliquidated entries, file Post Summary Corrections (PSCs) requesting duty refunds plus interest when CBP permits.
Gather and retain records of all IEEPA tariffs paid since April 5, 2025
Download entry records from ACE to identify affected entries
Expected appeal: The government has 60 days to appeal. Trade attorneys estimate a near 100% chance this will be appealed, and the government may ask the Federal Circuit to stay (freeze) the order. CBP has also indicated it will review entries before issuing refunds, potentially increasing scrutiny and enforcement actions.
24 States Sue to Block Section 122 Tariffs – Second Challenge After Supreme Court IEEPA Defeat: New York Attorney General Letitia James led a coalition of 24 states filing a lawsuit on March 5, 2026 to block tariffs imposed under Section 122 of the Trade Act of 1974. The lawsuit comes weeks after the Supreme Court struck down IEEPA tariffs as unlawful on February 20.
The legal argument: The states argue that after losing the IEEPA case, the administration is attempting an end run by invoking Section 122, a provision "never used at all, ever, in the history of our country" according to Oregon AG Dan Rayfield. The law allows the president to impose tariffs for up to 150 days (15% maximum) to address "large and serious balance-of-payments deficits"—a specific economic problem that can occur under fixed exchange rate systems like the gold standard.
Why states say it's illegal:
The U.S. abandoned fixed exchange rate systems half a century ago, so balance-of-payments problems no longer occur
The administration's stated rationale (trade deficit) is not a balance-of-payments deficit—the administration admitted this during the IEEPA litigation
Section 122 requirements are not met
Violates Constitutional separation of powers (Article I gives Congress, not the President, power to tax and impose tariffs)
What's at stake: The tariffs affect imports from most countries worldwide and impose a 10-15% rate. States estimate the tariffs will cost the average family thousands of dollars per year. New York state agencies alone could pay over $100 million in extra costs.
Joining NY: Attorneys general from Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, Oregon, Vermont, Virginia, Washington, Wisconsin, and the governors of Kentucky and Pennsylvania.
White House response: Spokesman Kush Desai said "the president is using his authority granted by Congress to address fundamental international payments problems and to deal with our country's large and serious balance-of-payments deficits. The administration will vigorously defend the president's action in court."
The lawsuit was filed in the U.S. Court of International Trade and seeks an order declaring the Section 122 tariffs illegal, preventing implementation, and refunding states the costs while tariffs were in effect.
USDA Reverses Cotton Import Fee Decrease – Assessment Value Increases: The USDA Agricultural Marketing Service reversed a cotton import assessment decrease that took effect March 1, 2026. The January direct final rule had lowered the assigned value of imported cotton to $0.012388 per kilogram (down from $0.013247 per kilogram).
What changed: AMS has now reversed this decrease and restored the higher assessment value. The Cotton Research and Promotion Program assesses U.S. cotton producers and importers of cotton and cotton-containing products.
Impact: Importers of cotton and cotton-containing products will pay the higher supplemental assessment based on the restored value. The assessment includes a $1-per-bale fee (equivalent to 500 pounds or 226.8 kilograms) and a supplemental assessment of 0.5% of the value of domestically produced cotton.
Context: The initial decrease was part of an annual adjustment to ensure assessments collected on imported cotton match those paid on domestically produced cotton, based on the average weighted price received by U.S. farmers for Upland cotton in 2024.
GAO Report: CPSC Needs Stronger Oversight of Toxic Substances in Imported Children's Products: The Government Accountability Office released a report on January 22, 2026 finding that the Consumer Product Safety Commission needs to strengthen oversight of lead and other toxic substances in imported children's products despite upcoming electronic filing requirements.
Key findings:
CPSC uses risk-based approaches to target children's products at U.S. ports, but millions of shipments make enforcement challenging
Starting July 2026, CPSC will require importers to electronically file (e-file) seven data elements from Children's Product Certificates, including product identification, date of manufacture, and date and place of third-party testing
CPSC has not developed an oversight plan to ensure importers file timely, accurate e-filing data
CPSC hasn't reviewed lead requirements in the required 5-year cycle
CPSC lacks written procedures for monitoring changes related to phthalates and other toxic substances
GAO's four recommendations (CPSC agreed to implement all):
Establish a plan to oversee compliance with e-filing requirements
Establish a process for using violations data to assess risks associated with independent and government labs
Review lead requirements and document a process for completing lead reviews every 5 years
Document a process for staying up-to-date on changes related to phthalates and other toxic substances
Violation trends: From fiscal years 2014 to 2024, the number of children's product violations related to toxic substances decreased overall. Lead remained the most common violation throughout this period. Over 90% of samples that violated CPSC safety standards were identified through port examinations.
Why this matters: Exposure to lead can result in slowed growth, learning and behavioral problems, and brain damage in children. Phthalates are toxic substances used to make plastics more pliable. CPSC requires manufacturers and importers to have toys and certain other children's products tested by accredited third-party labs before they can enter the U.S. market.
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