The U.S. Customs and Border Protection (CBP) is set to launch a phased implementation of the Comprehensive Automated Processing for Refunds (CAPE) system starting on April 20. This system will refund tariffs, including interest, that were imposed under the International Emergency Economic Powers Act (IEEPA). This development opens up unexpected profit opportunities for the consumer goods sector, particularly in K-beauty and K-fashion industries.
K-beauty companies, which often operate under Delivered Duty Paid (DDP) terms where exporters bear the tariff costs, are expected to be the primary beneficiaries.
Industry sources report that following the U.S. Supreme Court’s February ruling that deemed the Donald Trump administration’s tariffs illegal and invalid, the Court of International Trade (CIT) ordered the initiation of refund procedures for all importers. Consequently, the tariff refund system will be implemented starting on April 20.
According to data submitted by CBP to the court, the total tariff payments under the IEEPA amounted to approximately 166 billion USD as of early last month.
The Korea Customs Service has notified an estimated 6,000 domestic exporting companies that paid tariffs to CBP under DDP terms about the refund procedures and application deadlines.
The Customs Service reports that about 24,000 companies exported goods subject to mutual tariffs and item tariffs to the U.S., with approximately 6,000 of those identified as DDP exporters.
However, the eligibility and process for refunds are limited. Companies must submit the relevant import declaration numbers through the CAPE portal. CBP will then review the submissions and provide refunds, including interest, within 60 to 90 days.
To apply for refunds directly with CBP, Korean exporters or their U.S. subsidiaries must have traded under DDP terms and be listed as the Importer of Record (IOR) on the customs declaration.
The first phase of refunds will be limited to recent import declarations that are either uncleared or were cleared less than 80 days ago. Amounts already transferred to the Treasury account or those involved with anti-dumping or countervailing duties will be reviewed separately in later phases.
The impact varies significantly across different product categories. Semiconductors and electronic items, which are exempt from mutual tariffs, are excluded from refunds. Also excluded are automobiles, auto parts, and steel and aluminum products under Section 232 of the Trade Expansion Act.
For Korean companies exporting to the U.S., potential refunds will primarily cover consumer goods such as clothing, textiles, fashion items, cosmetics, and some construction materials.
Companies like A.P.R. and D’Alba Global are among those expected to benefit. If their direct sales in the U.S. are significant, the refund amounts could reach tens of billions of KRW.
A.P.R. has confirmed that it is preparing the necessary documentation to apply for tariff refunds under the CAPE process.
An A.P.R. spokesperson stated that they’re currently progressing through the necessary internal procedures related to tariff refunds. It plans to initiate the refund process in stages, aligning with the schedule for system updates related to the settlement and reporting of certain costs incurred during the import process from our Korean entity to the U.S. subsidiary.