The Donald Trump administration’s potential retaliation has complicated the decision to apply for tariff refunds. Following the U.S. Supreme Court’s ruling that reciprocal tariffs were illegal, President Trump swiftly introduced a new 15% global tariff based on Section 122 of the Trade Act, leaving Korean exporters in a quandary.
The Supreme Court’s decision that imposing reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA) exceeded legal authority has opened the door for about 6,000 Korean companies to seek refunds on tariffs imposed since April 5 last year, including the 15% reciprocal tariffs and certain item-specific duties.
However, many exporters with significant North American operations are more concerned about potential retaliation than the prospect of refunds.
The Customs Service reported on Tuesday that all reciprocal tariffs imposed by the U.S. under the IEEPA are refundable. Additionally, companies can claim refunds on item-specific tariffs for steel, aluminum, and copper derivative products, excluding the value of raw materials.
The Customs Service plans to inform approximately 6,000 domestic exporters who paid reciprocal tariffs to U.S. Customs and Border Protection (CBP) under Delivered Duty Paid (DDP) terms about refund procedures and deadlines.
To be eligible, Korean exporters or their local subsidiaries must have acted as the Importer of Record (IOR) on customs declarations under DDP terms.
The refund process involves strict timelines: post-import corrections must be made within 300 days of the entry date before settlement, and objections must be filed within 180 days after settlement. If rejected, companies may need to consider litigation in the International Trade Court, making the actual refund process uncertain and burdensome.
Major exporters to North America, such as Daedong, TYM, and Kyungdong Navien, are approaching the situation cautiously, stating they haven’t made any firm decisions regarding refund applications.
These companies fear that applying for refunds could make them targets for direct or indirect retaliation from the U.S. administration.
A company spokesperson stated that while the ruling on reciprocal tariffs may have some positive aspects, other factors like Section 232 of the Trade Expansion Act still pose challenges. They’re carefully reviewing all relevant regulations and circumstances rather than reacting to short-term tariff changes.
Another industry insider warned of potential retaliatory measures, such as unexpected tax audits or increased difficulty in obtaining work visas for Korean employees of companies that apply for refunds.
President Trump’s introduction of new tariffs based on Section 122 of the Trade Act of 1974, which allows for temporary import surcharges or quotas in response to balance of payments issues, has further complicated the situation following the Supreme Court’s ruling on IEEPA-based tariffs.
An industry representative noted that the U.S. administration is poised to implement new tariffs under Section 122 immediately. They’re closely monitoring the situation as the specific application of these tariffs by product category remains unclear.