What is the legal basis for UPS's lawsuit against CBP?

The US Supreme Court ruled in February 2024 that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. UPS is seeking court-ordered re-liquidation of entries and refunds of duties plus accrued interest, citing government assurances that refunds would be made if the tariffs were found unlawful.

Why must UPS obtain a court order to recover duties on finally liquidated entries?

According to CBP policy under Phase 3 of the Consolidated Administration and Processing of Entries (CAPE), refunds for finally liquidated entries can only be processed if the importer has obtained an order for re-liquidation from the Court of International Trade. This legal requirement differs from earlier phases (Phase 1 and Phase 2), which covered unliquidated and recently liquidated entries.

Who ultimately bears the cost of IEEPA tariffs in parcels handled by UPS?

UPS notes that while it can claim refunds as the importer of record (IOR), in many cases customers actually bore the cost of the duties. UPS has committed to passing recovered refunds to customers. By October 2024, UPS had received approximately $500 million and distributed about $230 million to customers, with $270 million still pending distribution.

What risks do importers face using delivered duty-paid (DDP) shipping terms?

The article highlights that US importers using DDP arrangements face increasing compliance and financial risks. Since duties are prepaid and passed through to customers, importers must carefully track tariff obligations, manage refund claims across multiple regulatory phases, and ensure proper documentation to recover overpaid amounts.

How does UPS's litigation affect other carriers and importers?

While UPS is leading this specific case as the IOR on these entries, the outcome could establish precedent for how CBP handles refunds on finally liquidated entries. Other carriers and importers facing similar IEEPA tariff claims may reference this case when pursuing their own refunds or negotiating with CBP.

Trade Policy & Tariffs

High Impact

UPS Sues for $500M+ Tariff Refunds After Court Ruling

Nov 10, 2026

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The signal

UPS has filed suit against US Customs and Border Protection to recover tariffs paid under the International Emergency Economic Powers Act, which the US Supreme Court ruled unlawful in February.

The integrator has already received approximately $500 million in refunds but continues pursuing additional claims covering finally liquidated entries, with about $270 million still owed to customers.

This litigation highlights the complexity of the CBP's phased refund program and raises important questions about financial recovery obligations for carriers acting as importers of record, particularly for shipments where customers bore the actual duty burden.

Companies affected by this story:

UPS

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Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

strategic

What if UPS fails to recover the full $270 million owed to customers?

Model the financial and reputational impact if court litigation results in partial or delayed refunds to customer accounts. Simulate cascading effects on customer service levels, invoice disputes, and potential chargeback volumes if refunds cannot be distributed as promised.

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What if CBP expands CAPE Phase 3 refund restrictions to earlier phases?

Scenario: CBP revises its refund policy to require court orders for all IEEPA tariff claims, including those already processed in Phases 1 and 2. Model the operational burden and cost impact if carriers must refile and re-litigate claims they believed were settled.

Run this scenario

Simulation Suggestion

strategic

What if similar trade policy reversals occur on other tariff regimes?

Model the systemic cost and operational complexity if additional tariff programs (beyond IEEPA) face legal challenges and require refund processing. Simulate the impact on compliance staffing, accounting systems, and cash flow if multiple tariff recovery efforts compete for resources simultaneously.

Run this scenario

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