When courts struck down the International Emergency Economic Powers Act (IEEPA) tariffs in February, importers suddenly had an opportunity to recover some of the duties they paid. But outside of FedEx, UPS and DHL, getting that money back is far less straightforward.
Smaller international carriers generally lack standardized refund processes, leaving merchants to navigate a patchwork of carrier-specific policies, liquidation deadlines and customs rules, according to Rathna Sharad, founder and CEO of cross-border shipping and trade compliance platform FlavorCloud.
“Outside of the global carriers, it is very nebulous because they don’t have standard policies,” Sharad said. “It is very ad hoc, and it depends on every carrier’s terms…unless you’re working with the big carriers like FedEx, DHL and UPS, you likely aren’t going to see standardized processes.”
Even before merchants determine whether they’re eligible for a refund, they’re working against the clock.
Sharad estimates roughly 63 percent of IEEPA duties paid are still recoverable, but only if importers meet U.S. customs’ liquidation deadlines. After roughly 80 days, importers generally must shift to filing a customs protest with U.S. Customs and Border Protection (CBP), a process that carries its own 180-day deadline.
“The process itself is not straightforward,” Sharad told Sourcing Journal, noting that the remaining 37 percent falls outside any recovery window.
Recovery is further limited by who served as the importer of record (IOR). Much of cross-border e-commerce operates under a Delivered Duty Unpaid (DDU) model, where the consumer—not the merchant—is the importer of record. In those cases, merchants generally have no ability to pursue refunds.
“The vast majority of cross-border transactions, especially in the DTC context, are DDU,” Sharad said. “The consumer becomes the IOR. In those cases, there is no recourse.”
Only two parties can submit claims through CBP’s Automated Commercial Environment (ACE): the importer of record or the customs broker that handled the transaction.
This helps explain why the largest global carriers have an advantage. FedEx, UPS and DHL frequently act as the importer of record themselves, giving them direct access to customs systems and allowing them to submit refund requests on behalf of merchants.
While Sharad said refund policies vary among the carriers, FlavorCloud hasn’t encountered cases where the major providers refused to pass eligible refunds back to customers.
“The larger global carriers have access to these customs systems, and they act as importer of record in a lot of these transactions,” Sharad said. “They have a more standardized kind of process, and they can actually request the refunds on behalf of the merchants.”
Outside that group, however, merchants are often left navigating carrier-specific processes that may differ significantly from one provider to another.
What importers should do
For companies looking to recover duties already paid, Sharad said the first step is determining who served as the importer of record and whether the potential refund justifies the administrative effort.
“It really is about understanding what the transactions were, who was the IOR on those, did you use a broker, and then figuring out if the value is significant enough that you want to go after it,” she said.
Looking ahead, Sharad said merchants should pay close attention to who serves as the importer of record on future shipments.
For many direct-to-consumer shipments using a Delivered Duty Unpaid (DDU) model, the end consumer serves as the importer of record, leaving merchants without a path to recover tariff refunds. For B2B shipments, Sharad recommends ensuring either the merchant or its customs broker serves as the importer of record.
Compliance becomes more critical
Beyond the refund process itself, Sharad said the recent tariff upheaval has forced merchants to pay much closer attention to trade compliance.
“There’s been a real awakening in terms of understanding the complexities of regulatory compliance,” Sharad said. “Merchants have to deeply understand their data and they have to invest in compliance and must have the right technology partners so that you can do this in a scalable way.”
That includes maintaining accurate commodity descriptions, Harmonized System (HS) codes, valuation data and country-of-origin information as governments increasingly scrutinize customs declarations. The information is becoming increasingly important as customs agencies rely more heavily on automated systems to identify discrepancies in import filings.
Sharad said regulators are also using AI to identify inaccurate filings and repeat offenders more quickly, making accurate customs data increasingly important as tariff policies continue evolving.
FlavorCloud only updates tariff rates after new rules officially take effect rather than when proposals are announced, but Sharad expects governments worldwide to continue tightening customs enforcement.
“Understanding data and investing in AI technology so that it scales is becoming critical for brands around the world,” she said. “It’s certainly happening right now in the U.S. and the EU, but we know that’s going to happen in other countries as well.”
