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The Glossy Podcast
A fashion brand’s guide to tariff refunds, with ArentFox Schiff’s Angela Santos
00:34:47
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- [00:05]
A
Hello and welcome back to the Glossy Podcast. I'm your host, senior fashion reporter Dani Parisi. And I'm here with our international reporter, Zofia Zvyglinska. Hello, Zofia, how are you doing?
- [00:15]
B
Hey, doing good. Thank you.
- [00:17]
A
Thank you for being here this week. We are talking about a very important topic and I know this because so many people have asked me about it and just in the last week, tariff refunds, it's been about a month, just about a month since the Supreme Court ruling that struck down the IPA tariffs. And the ruling said that there should be refunds issued for the 160 something billion dollars that the US has paid in tariffs. But there was no information in the ruling saying how to do that. And there's been lawsuits and stuff. So I have had a lot of the brands that I've spoken to have been asking about how do we get these refunds? And I figured this week we should talk about it.
- [00:58]
B
I know, and you've been covering this topic for a while and I know you've got a great guest on to talk a little bit more about tariffs and refunds and I guess how brands can get them. I think there's a lot of murky legal language. So tell me a little bit more about your guest.
- [01:12]
A
Yeah, that's definitely true. A lot of people are wondering how exactly this is going to play out. This week I spoke with Angela Santos. She's a lawyer, a partner and customs practice leader for the law firm Aaron Fox Schiff, which in the US Is a big, big law firm. But Angela counsels clients on compliance with federal regulations involving the importation of merchandise, tariffs, customs duties. She leads Aaron Fox's customs practice and forced labor task force and she co leads the firm's fashion and retail group. Literally is the perfect person for this conversation. But yeah, we had a really interesting discussion about the process. She has clients who are in various stages of getting refunds. And you're right that there's a lot of murky language. But I think she does a good job of sort of explaining what brands can be doing right at this moment. And I kind of went into it thinking that this was going to be a much more arduous, difficult, onerous task for companies to get their refunds. And I still think it maybe won't be super easy, but she actually kind of made me feel, and you'll hear in the discussion that it sounds like based on the information that's come from the federal government so far, it may not be quite as complicated as we think there's been, yeah. Currently there are reports that the federal government is like 60, I think to 80% done setting up some sort of infrastructure for dispersing tariffs. There's been a lot of pressure from big companies like Costco. Also, I think 16 different states attorneys general have all added public pressure. They've written letters to Congress. There are lawsuits demanding refunds. So we talk about all that stuff. We also talk about if, after the refunds are issued, will those lawsuits go away and all sorts of stuff like that. So if you're at all interested in how to actually get tariff refunds or how the process works, this is a really good discussion.
- [03:09]
B
Sounds like a fascinating one. I'll be listening in.
- [03:13]
A
How about we wrap up our intro and let's hear my discussion with Angela. Hello, Angela. Thank you so much for being here. Thanks for joining the Glossy podcast.
- [03:25]
C
Thanks very much for having me.
- [03:27]
A
Danny, we are very happy you're here. I'm sure you're extremely busy. I imagine it's been a very busy year for you with tariffs and trade policies changing quite significantly. What has the last 12 months been like for you with your job?
- [03:43]
C
Chaotic and very, very busy. And I actually feel very badly for clients because they're constantly scrambling, trying to navigate this challenging trade landscape, trying to deal with whatever new development might happen that day. It seems like many developments and announcements happen on a Friday right before the weekend, so there's always that kind of fun. So what it has taught all of us, both our clients and our team, is to be very nimble and to be able to research and. And read through very long announcements and Federal Register notices and executive orders very, very quickly.
- [04:25]
A
Yeah, right. As people are heading home for the weekend, it comes out. Yeah, totally. Well, for our loyal listeners, Will have heard we've talked about tariffs a lot on this, and we've reported this similar sentiment from a lot of fashion brands I talked to is they would rather the tariffs or whatever it is trade policy be steep or high and stable and. And that would be preferable to it changing constantly. And I'm sure maybe you feel the same way. But, yeah, it's been very chaotic. And by the time this episode comes out, I think it'll be just about a month since the Supreme Court ruled. I think it was toward the end of February that the government's use of the International Emergency Economic Powers Act IIPA to justify tariffs was unlawful. The Trump administration has switched to other legal justifications since then, but it does seem like there's been at least some sort of dent made in the tariff plan. From your perspective, Angela, what's the current status? Are people breathing a sigh of relief, or is it still there's just as much work to do as before? What's the feeling from your clients?
- [05:29]
C
I think there might be more. Clients were really anticipating this ruling. They thought once the Supreme Court decided against the tariffs, they were all going to get back millions of dollars and things would be calmer. But in many ways, there was actually more stability before the IEBA tariffs were ruled invalid versus now. So, as you had said, Danny, on February 20th of 2026, the Supreme Court ruled against the tariffs. But the important issue there was that SCOTUS ruled against the tariffs, but didn't say anything about tariff refunds. And so that's a whole area that's being litigated with a lot of open questions for companies. But on the same day, what happened was the administration also announced a broad swath of new tariffs to replace the IEBA tariffs and really to recreate almost the exact same tariff regime as the IEBA tariffs. So even though I think companies hoped that this ruling would bring stability, it actually brought a new onslaught of instability. So on the same day that the SCOTUS ruled against the tariffs, President Trump announced Section 122 tariffs to replace those tariffs. They're a 10% global tariff, and it grants the president authority to impose these temporary import restrictions, up to 15% tariffs or quotas for up to 150 days. And that's without congressional approval. So congressional approval can result in an additional 150 days. This tariff is intended to address severe balance of payment deficits or imminent currency depreciation. International issues with payments. President Trump invoked this provision with the thought that the trade deficits could authorize this kind of imposition. Of course, that is now the subject of litigation because a number of states, states and also a private group are actually suing the Trump administration over imposition of these tariffs. They say that the statutory conditions for the tariffs have not been met. President Trump was allowed to impose these tariffs if there was a balance of payments deficit. But I think that he has conflated trade deficits with that balance of payments deficit. And they're not the same thing. A trade deficit occurs when a country imports more goods and services than it exports. And that is true, at least on the good side. The United States imports many more goods than it exports from a number of countries, so that part is true. But a balance of payments deficit, I don't know about that. That's much broader. It covers all economic Transactions, financial capital flows, foreign investments, loans. It's not just one area of the financial world. It's really a much broader analysis. And the trade deficit is just one part of the balance of payments equation. So it's very possible that 122 could be struck down as well. So we are currently at 10%. That could go up to 15% based on price President Trump's announcements, although we haven't seen anything official in that space. But that's something we're watching very closely. And again, this would only be valid till July. So what happens after July?
- [09:35]
A
Yeah, and there were also, there were other. The IPA did not cover all of the tariffs that were already in place like that. I think it was a significant chunk of them. But there were others that were justified through other legal things. Yes, exactly. And the Trump administration. The administration, as you said, has already pivoted to even more justification. So it's more of like a patchwork system, even more than it already was. But I'm glad you mentioned the refunds because that's kind of the main thing I wanted to ask you about. I wanted to get your perspective as someone who's advising brands, and particularly fashion brands, since that's what we talk about on this podcast through the process. Like you said, there have been some big companies that were suing for refunds, I think even before the Supreme Court ruling. Since then there have been, I think multiple class action lawsuits. Most recently, we're recording this on March 16th, just for reference. Most recently the other day, there was a report that the government is currently working on creating some sort of infrastructure for getting refunds to people. I think I saw a four step process that they said is 40 to 80% done. But it feels like there are a lot of open questions about the actual process for getting refunds. So are any of your clients in the middle of that process and are they waiting for official channels or are they going straight to suing for refunds? Or what's the, what's your feeling on the landscape of how people can actually get these refunds?
- [11:01]
C
I think when the Supreme Court ruled, I had about 100 emails within minutes of, okay, when do we get our money back and how do we get our money back? And then there was several days of, well, we're not sure yet. This issue has been the subject of a number of parallel legal proceedings. The most important one is under Judge Richard Eaton. It's a case called Atmos Filtration. And this is a pretty key decision because the CIT chief judge consolidated all refund determinations under Judge Eaton. So he's the one who's going to decide how much and how every. Well, not how much, but how everybody is going to accomplish these refunds. So on March 4, he determined that CBP should issue refunds for all non finally liquidated entries without IPA tariffs. So he told the government, you need to do this right away. I don't want every company to file a lawsuit. I don't want chaos, come up with something orderly and issue refunds. The government responded and said, well, we can't do that right away. We can't just push a button and issue refunds right away. We need to have a process. So there were some hearings, they came up with this process and, and currently it's a multi step process like you said. And what happens is an importer is supposed to file a declaration in ACE. ACE is an electronic government portal that CBP or U.S. customs uses to manage, monitor, provide information about an importer's importations. And in that portal they're supposed to upload a list of the entries in which IIPA duties were paid. From there, the government is supposed to, on the back end, use ACE to validate that IIPA tariffs were paid on those entries, how much IPA tariffs were paid, and then reliquidate or process or liquidate those entries without IEA tariffs. So in other words, finalize those entries as if tariffs never existed.
- [13:28]
A
Like retroactively?
- [13:30]
C
Exactly, yeah, yeah, retroactively. And ACE is supposed to, in the background, validate all that information, recalculate all those duties owed and verify the information. And then the Treasury Department is supposed to issue the refunds electronically. So customs has mandated that all importers have to apply for an ACH refund account, an electronic ACH refund account through ACE, in order to obtain any kind of refunds, including iepa. So that's the current process. It's still in the process of development, it still needs a lot of programming. So we're still early on here, but it's at least a positive development. But there are still a number of open questions here.
- [14:21]
A
Yeah, it's interesting. When the Supreme Court ruling first came out, I spoke to a few people in the day it happened so hours afterwards. Obviously there were even more open questions at the time. And the feeling I got from talking to a few lawyers and also supply chain experts and others was that there might be a lot of hoops basically to jump through for anyone wanting to get refunds. It might be really annoying, it might be really tedious, and they want to do It. Right. I understand that it's complicated, so some amount of hoop jumping is probably inevitable. But I was wondering as I was talking to people if it's worth it for everybody, if the amount of effort you're going to put into getting those refunds is worth whatever amount you're going to get back. I'm sure it depends on lots of different factors, but do you have any thoughts on who and when it might be worth it to pursue those refunds and when?
- [15:15]
C
Maybe not sure if this process that CBP is proposing is actually the true process. It's not that heavy of a lift. Importers have a record of their importations. It's a statutory requirement that they have these types of records. They mostly know how much they paid because they paid it. So if it's true that all they need to do is upload a list of these entries, I think all importers should do it because it's not a heavy lift. But I don't think that's going to be the end of the story because import. We don't know how long this is actually going to take, this process. Even though they say it's 45 days, we don't know how long it will take for the government to actually issue refunds. Even if it starts this process, we don't know if the refunds will be correct. So it's simultaneously important that importers protest their entries to ensure that they preserve their rights to the refunds and that if the refunds are wrong or if the government takes much longer than this, 45 days to issue refunds and issue this process, then their refunds are still preserved and their ability to secure refunds are still preserved.
- [16:38]
A
Yeah. Though when you were describing the system, I was thinking it sounds not quite as bad as I think some people were maybe predicting. And like I said, in those first couple hours, some of the people I was talking to were predicting something much more byzantine and different too. Yeah, yeah, yeah. It sounds like, like you said, if it's as simple as it sounds, then there's no reason not to. It should be pretty straightforward. So like we said, there were a couple class action suits, a couple bigger lawsuits that were filed before the Supreme Court ruling came out. This is maybe asking you to speculate a little bit if you're okay with that. But if the system is fairly simple, fairly straightforward, and not too difficult to get the refunds that people are owed, what would that mean for any existing or pending lawsuits? Like would. Might those be dropped or would they still keep going through the court? Systems. I'm not 100% sure.
- [17:32]
C
Yeah, it's unclear because there's about 2,000 importers who have already filed case cases. Some of them were related to preliminary injunctions and invalidating the tariffs and getting the tariffs back. Those cases have all been stayed pending, not only the results in the Supreme Court case, but the results in this Atmos filtration case and the the decision under Judge Eaton regarding the tariff refunds. So right now those are all stayed, meaning there's no movement, there's no hearings, there's no additional briefing on those and it's pending what happens here in terms of the tariff refunds. So I keep receiving questions about whether companies should file cases in order to preserve their rights. We don't know that a case is going to be necessary. It seems from Judge Eaton's ruling and some of his statements that he really does not want importers to file individual cases. 2,000 cases have been filed, but there are 300,000 plus importers. So the courts would just be inundated if they had to really address 300,000 separate lawsuits. So that's why he's trying to come up with an orderly process that can be done without a lot of pain on everyone's part. So I don't know that a taste is immediately necessary. We'll see what happens here, how much the government drags their feet, etc. But I think there's time for a case regardless because there are a couple statutory provisions which allow for the cases. One is 1581 I and that has a two year statute of limitations from the cause of injury in order to file a case. So for most companies, even if you are looking at the most conservative start date, that would be February 2025, which means there would be a statute of limitations of February 2027. So that's one theory. Another is we're recommending that folks file protests to preserve their rights. If Customs denies those protests and says that no, you can't get those refunds back notwithstanding the Supreme Court decision, then importers also have an avenue through the denial under 1581 a in order to reach the Court of International Trade. And you would have 180 days from the date of the denial to reach the Court of International Trade. So I know everyone says that Americans are litigious, but we're actually saying that you don't. We don't think you need to file a court case now. We should watch and see what happens. It's not wrong to file a court case if you want to do belt and suspenders approach. But it is very likely that we can watch and see what is happening in terms of the administrative process so that you don't have to rush to filing a court case.
- [20:39]
A
Can you say anything about where your clients are in the process or has there been any progress made toward getting a refund? Is everyone kind of still at the starting line for the process or has there been movement made?
- [20:52]
C
Many of our clients are in the process of preserving their rights to refunds in that they're collecting their import data, their ACE data, their broker data, and identifying the entries where IEBA tariffs were paid. What they're not able to do yet is submit for a refund because that mechanism hasn't been developed yet. But they're doing the background work because we are doing these protests in parallel. And it's the same information that they'll likely need to upload into this ACE portal for the refunds. So we do have a lot of companies that are doing it. I would encourage companies to start that process now because it can take time to get an ACE account. It can take time to pull your data because there's just so much traffic on the ACE portal right now. Many of our. We have trade analysts who help with that, and they're doing it really early in the morning or really late at night just to pull their data.
- [21:54]
A
Yeah. And you're working with fashion brands that I imagine import from all sorts of different countries that. Yeah. With all the different tariff rates and
- [22:04]
C
sometimes all the countries that are the subject of, for example, the 301 investigation. Every single one. So, yes, it's the same process for everyone right now, no matter what country you're importing from.
- [22:17]
A
Got it. Like I said, I talked to some people right after the ruling came out, and I asked them, what can fashion brands be doing right now? And a lot of people said, this decision just came out, we're not sure. But one thing I heard was preserve your records and be prepared. Do you agree that that's still kind of a paramount thing? And then is there anything else you would advise? Fashion brands, specifically fashion brands, but any. Any brand maybe, or company that's affected by this to be doing or thinking about or just wanting to keep in mind.
- [22:51]
C
Sure. That's 100% right, Denny. Companies really do need to keep track of their data, keep track of what they have paid, not only for the IPA tariffs, but the new tariff regimes that are currently in place and being developed, because there's going to be a lot of litigation around all of these. And we don't know which ones are going to be ULT refunded or not. So you're right that clients should be or companies should be obtaining their ACE data, obtaining their import data. They should be tracking for liquidations, meaning when the entry becomes final, they should be filing protests before the 180 day deadline. Importers should have access to not only their ACE account, but they should apply for ACH refund so that they can get their IPA tariffs back. That's the only way you're going to be able to get those back. Unfortunately, I have to tell companies that they just need to be aware that these tariffs are going to be here for a while. They're not going away. Even if IPA has been invalidated, Even if Section 122 is invalidated, there are other tariff regimes that have been announced or authorities that have been announced. I forgot to mention that the government has also announced a couple section 301 tariff investigations. Do you remember those from the first Trump administration?
- [24:23]
A
Yep.
- [24:24]
C
I think everybody was traumatized by the China Section 301 tariff investigations back in 2018, which imposed China tariffs between 7.5% to 100% on most Chinese goods. Now the government is invoking that same authority, Section 301, for two different investigations. The first one is they announced an investigation into 16 economies over structural excess capacity in manufacturing, saying that they're unreasonable, discrimination, discriminatory, and that they burden or restrict US commerce. Essentially what the USTR, this is, the US Trade Representative is saying is that the US's key trading partners have developed production capacity that isn't really related to domestic or global demand and that has led to overproduction, that has led to large US trade deficits and excess industrial capacity. And that's affecting the US's ability to onshore or encourage domestic manufacturing. And that targets a whole number of different industries and that includes, you know, plastics and glass and electronics. Thankfully, those investigations don't target fashion retail quite as much. But there's a trickle down effect to all of this. Somehow it reaches the industry even when it's unintended, like the 232 tariffs. Yeah, so that's something to watch. The second investigation is also important. On March 12, the USTR launched a Section 301 investigation into 60 economies over their failure to enforce or implement forced labor bans. This is an area that has been quite important to the US for quite some time. The Uyghur Forced Labor Prevention act, all the detentions and exclusions. But this investigation is pretty broad and really targets most of The US trading partners, including Canada, Mexico, the eu, Japan, South Korea, many, many, many more. And that really looks to what have these governments done to prevent forced labor from being used to produce goods and to ensure that those types of products don't enter the market. And that's really, it has to do with undercutting production costs by using forced labor. And so they're able to really dig into the market because their labor costs are lower. So that's something else we're watching. But because of all these new tariff authorities that are being invoked and the fact that whenever one is struck down, there seems to be another one waiting in the wings, it tells us that these tariffs are going to be around. We have to do something in order to handle them and mitigate their effects. So what we're telling companies to do is not only address these tariffs but also find ways to mitigate their effects. And there are a number of legal authorities that companies can use. You might have heard of first sale, you might have heard of buying agency legal tariff engineering, which is changing a product. So the underlying tariff classification result is different, leveraging free trade agreements. So for example, USMCA goods or CAFTA Dr. Goods that are textiles are exempt from the Section 122 tariffs. So that can be a huge benefit because you don't have the underlying normal MFN tariffs. And then you also aren't subject to these section 122 tariffs. So really looking for opportunities for carve outs for any way to legally lower the duty liability is what we're telling companies to do. And they've, they've become quite creative within the bounds of the law as to what they're doing. That can also include changing supply chains, changing the origin of goods. Under the IEBER tariff regime, there were separate country specific rates. I have a feeling that that could happen again after this Section 122 regime, which is temporary under the Section 301 regime. That's sort of an opportunity for USTR and the Trump administration to go back to that country specific rate regime.
- [29:30]
A
Yeah. And despite all the unpredictability we've talked about, a lot of the fashion companies I have spoken to do seem like they've gotten somewhat used to making big changes on short notice. I mean, one thing that just happened a day or two before we're recording this. Did you see the Trump executive order about Made in America labels? It's a little vague, but it's basically just directing all relevant agencies to be more strict about labeling something Made in America. I haven't seen that translate into any specific policy directives or anything yet. It's more just like a prioritization kind of order. But first of all, does that fall within your work for Aaron Fox Schiff and what do you make of that executive order?
- [30:14]
C
Yeah, we do Made in America labeling and country of origin reviews also because of course, there's a premium on this made in America marking or labeling. So most of my work is under U.S. customs and Border Protection statutory provisions. But there is a connection between the made in America labeling, which is under the Federal Trade Commission, and cbp. Because if a good is made in a foreign country, then it must be labeled with the country of origin, and that would be under customs purview. If it's a US Product, then customs does not require a country of origin label, and the FTC doesn't also require country of origin label. But if you say you're made in America or made in the United States, you better be made in the United States. And it's a really high threshold. So for an unqualified claim, just like made in usa, all of virtually all of that product has to be made in the United States. So if you have a shirt, it can't just be considered a made in the United States shirt because it was cut and sewn in the United States. The fabric, the yarn, the fibers should be made in the United States as well. So it's a pretty high threshold, particularly for fashion and retail, where most of the raw material components are usually imported.
- [31:45]
A
Yeah, no, I think that makes a lot of sense. It does feel like it kind of overlaps a little bit, but it is, it's consistent with the the administration giving sort of wide and broad directives pretty regularly. I'm sure your clients are grateful to have you consulting with them. I know you've given us quite a bit to think about in terms of things fashion brands specifically should be thinking about. Do you have any final thoughts or anything else you want to add for fashion in particular? I know a lot of the things we're talking about applies to anyone who imports, but anything particular to fashion you want to add before we wrap up?
- [32:25]
C
I think fashion companies are a little bit more versatile than other industries because they've just been hit by various different regulatory requirements over the years, and they should continue to do that. So you have to continue to monitor the developments in this space, be able to quickly pivot. And I know it's very difficult in the fashion and retail space, but have diverse supply chains and don't put all your eggs in one basket in terms of country of origin or country of production. Have sort of a diversified supply chain where you can handle changes with the tariff situation fairly quickly. So if you're producing in India, you might also want to produce in Cambodia, or if you're producing in China, you might also want to produce in Vietnam just to make sure that you have alternative solutions in the event of an action that might be detrimental to your bottom line.
- [33:32]
A
Yeah, it feels like diversification was a good answer to Covid and a good answer to tariffs, and maybe now a good answer to the Strait of Hormuz being closed by war in the Middle East. So been crisis after crisis for our industry and the world, obviously. But thank you so much, Angela. Thank you for answering all of our questions and sharing your expertise. By the way, Angela is a great follow on LinkedIn. You post pretty regularly about a lot of the stuff we're talking about. I've seen a lot of interesting stuff related to trade and imports and tariffs from your LinkedIn profile and Aaron Fox posts. You know, you guys do white papers and things like that too. So thank you. Thank you for coming on the Glossy Podcast and answering all of our questions.
- [34:17]
C
Thank you so much, Dani.
- [34:24]
A
And thank you for listening to the Glossy Podcast. Don't forget to give us a rating and a review on Apple Podcasts or Spotify wherever you listen to this, because that helps us out so much. And don't forget to subscribe to the Glossy Podcast to hear interviews with industry insiders and we can review segments where we break down the news. The new episodes come out every Friday. Until the next time. Thanks for listening.