Refunds for Tariffs & Dropping FIFA Convictions

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2:02Be smart. Get WISE. Download the WISE app today or visit WISE.com. Terms and conditions apply. This is Bloomberg Law with June Grosso from Bloomberg Radio. President Trump was highly critical of the Supreme Court's decision last month, striking down the tariffs he imposed under the International Emergency Economic Powers Act, or IEPA. Wouldn't you think they would have put one sentence in there saying that keep the money or don't keep the money, right? I guess it has to get litigated for the next two years. The decision was silent on the question of refunds. It's up to the U.S. Court of International Trade to determine what refunds will be available for the almost$170 billion in global tariffs collected, how they'll be doled out and to whom.

2:57And even though the administration says its web-based portal to handle refund requests is about 70 percent complete, more than 2 ,000 lawsuits have already been filed by companies seeking refunds. And a new wrinkle last week as a Costco member sued the retailer, saying it should reimburse all customers who paid higher prices on its products because of Trump's tariffs. It's one of at least five proposed class action cases identified by Bloomberg News where a customer is suing a company to get tariff refunds. My guest is Timothy Brightbill, a partner and co-chair of the International Trade Practice at Wiley-Rhyne.

3:41Tim, the Supreme Court didn't give any specifics at all about refunds. But Judge Eaton of the Court of International Trade has said that every single cent of tariffs collected under IEPA has to be returned. Has the Trump administration agreed with that? So the Justice Department has agreed and Customs and Border Protection has agreed. It's not entirely clear that the White House has agreed. So, but the way this is proceeding now in front of Judge Eaton, when he said all importers of record whose entries were subject to IEPA duties are entitled to the benefit of the learning resources decision, that was very clear in the order that was issued on March 4th.

4:31Since then, Customs and Border Protection gave a response asking for 45 days to implement functionality for its automated service called ACE. So Judge Eaton, who originally ordered immediate refunds, rescinded that order. He then asked for weekly status reports. So Customs and Border Protection has been giving him updates. There was one on March 12th. there will be another one on March 19th. So the process is moving along. Customs is building the refund system that will be needed. And hopefully if that is created, it will be less messy than otherwise could be. So the whole process will be automated?

5:18That's the intent. Yes. So Customs, when it collects duties, has an automated system for that, that brokers and others can access. again this ACE system and so if you can re-engineer that you could potentially provide refunds in a quick and efficient and organized way which would be ideal and that would potentially make everyone's lives easier but again the system is still being built we don't know for sure what challenges or delays there might be in that but so far at least the system seems to be under control or in progress. So then if the system is in place and things are going forward, why have thousands of companies still filed lawsuits at the Court of International Trade?

6:09Well, it's a great point. And even after Judge Eaton's decision, additional companies have filed at the Court of International Trade, including some of our clients. So as I said, Customs and the Justice Department seem committed to this, but there hasn't been a 100 percent commitment from the White House and the administration about willingness to facilitate tariff refunds. So there's some uncertainty whether the government will, in fact, pay everyone that paid IEPA tariffs or if a lawsuit might be required for some reason. So I think that's why some companies are filing. In addition, and this is very much a company by company decision, but once the Supreme Court decision was made, the potential political risk became much lower and the costs of filing are not particularly great.

7:02So all of those things lead to companies continuing to file lawsuits, even while this refund automated process is being built. So the judges said that all importers of record whose entries were subject to IEPA duties are entitled to refunds regardless of whether or not they'd sued the government. But the government will not pay refunds to the final commercial customer or the individual consumer. But there are already at least five proposed class actions by customers against retailers. So for example, last Wednesday, a Costco member sued the retailer saying it should reimburse all customers who paid higher prices on its products because of the tariffs.

7:50That looks like a very messy lawsuit. I'm not even sure how they would work out the numbers. Yes, as predicted by Justice Barrett, it could be very messy. The importer of record, of course, is the entity that pays the tariffs, and therefore it is the importer of record who is entitled to the refunds. But that does not address the question of customers who paid higher prices. They are not necessarily entitled to those refunds directly. Now, over the weekend, the U.S. Trade Representative, Jameson Greer, said that retailers should seek to pay customers refunds. But this is why you've seen this new wrinkle of class action suits being filed against Costco and FedEx and the maker of Ray-Bans.

8:38These were some of the first companies to file suit at the Court of International Trade for the refunds in the first place. Now they are the first targets for these consumer class actions. How strong are those consumer class actions? It seems to open up the courthouse doors to just about everybody in the country who paid more because of the tariffs. Yes, this could be a very messy process. And it doesn't involve just consumers. Think about businesses that arrange with another entity to have bought certain goods for manufacturing, paid a higher price through the importer of record. Well, now the importer of record gets the money back, and yet it's the manufacturer who paid the importer of record who should ultimately get the benefit of that.

9:26So it does seem like this will be a messy process, and it is very difficult to demonstrate what percent of IEPA tariffs were passed on to customers, were passed on to consumers, in a way that would allow for orderly refunds. So again, it may be each company trying to sort this out in some way or trying to make consumers whole to the best extent possible. Is there any precedent for a lawsuit like that? You know, the customers against Costco, et cetera. This is very unusual in the trade space. I am not aware of similar sort of consumer class action suits comparable to this. But then again, when you have more than$170 billion at stake, you're going to find lawyers and law firms that might have clients who feel they are entitled to some share of that money.

10:17Once this website is up, this portal, is it going to go like one, two, three? Here's my documentation, put it through, or is it going to be more steps after that? It could be a relatively straightforward process. Again, since the importer of record is the one who paid the duties in the first place, and they have automated records through customs of all of those entries, the dates that the entries were made, and the amounts of money, including tariffs that were paid, that piece of it could be relatively straightforward when it is just reversed back to refund the tariffs to those importers of record.

10:54Anything beyond that, it gets much more complicated very quickly. Now, President Trump has moved to replace those IEPA tariffs. And there are lawsuits already challenging those 10 % tariffs, including by two dozen U.S. states. Tell us about those lawsuits. Yes, sure. So this is Section 122 of the trade laws, which is a law intended to address a balance of payments deficit. And it does allow the president to impose tariffs of up to 15 % for up to 150 days, which would be July 24th. President Trump imposed 10 % tariffs. He did threaten to go to 15%, but so far that has not happened yet. In response, quickly, you're correct, there were lawsuits filed by 24 states on March 5th, and those also were filed at the Court of International Trade and will be heard by a three-judge panel that includes the Chief Justice Mark Barnett.

12:00And the process will move quickly. There is a motion for summary judgment that was filed last Friday. There will be a hearing on April 10th. So the lower courts appear to want to move quickly, just as they did on the IEPA tariffs. Now, that being said, the tariffs are only in place until July 24th. And it's certainly not clear that you could get through all of the stages of courts and appeals before that July 24th when those tariffs would have to come off. And what is the theory of the states and others suing? Well, the basic theory is that the United States does not have a balance of payments deficit, that it has a trade deficit, but balance of payments takes into account many other factors.

12:46And when you look at those other factors, in their view, the United States does not have a balance of payments deficit or emergency that would justify these types of tariffs. Do you think that's a good argument, by the way? Personally, not speaking for my law firm or my clients, I do think it is a credible argument. And there is clearly a difference between trade deficits and balance of payments deficits. And so I expect the court is going to give the government a very hard time at this hearing on April 10th. Coming up next on the Bloomberg Law Show, I'll continue this conversation with trade attorney Tim Brightbill.

13:26President Trump has tried to replace the IEPA tariffs. We'll talk about some of the obstacles. I'm June Grosso, and you're listening to Bloomberg. This message is brought to you by Apple Card.

14:04Hello, hello. Hello, I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvind Krishna. And I asked him, how can companies use AI to its fullest potential to create smarter business? My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side. For example? If anybody has more than 10 % of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30 % more productive today with the goal of being 70 % more productive.

14:52Yeah. So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process, because the biggest change is not technology. It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit ibm.com slash smarttalks.

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16:01President Donald Trump took to Truth Social on Sunday night, contending that he has an absolute right to impose tariffs and criticizing the Supreme Court's decision, striking down the tariffs he imposed under the International Emergency Economic Powers Act, or IEPA. Quote,

16:50tariffs? Well, and again, the goal is to have something in place by the time that these Section 122 tariffs would expire in late July. So last week, the U.S. Trade Representative announced two new sets of investigations under Section 301 of the trade laws. Section 301 is the same law that the first Trump administration used to impose tariffs on hundreds of billions of dollars of goods coming in from China, and those tariffs are still in place. So the two investigations that were announced are related, first of all, to structural overcapacity and overproduction. And these are country-specific. So the U.S.

17:34trade representative is going to investigate structural excess capacity or production in 27 countries, and then followed a day or two later by another investigation into forced labor practices, and in particular, what other countries are doing to prevent goods that are made with forced labor from being imported or sent on to the United States. That investigation is going to cover 60 countries. There will be a very accelerated time frame for these. So there will be comments that are due starting almost now and due by April 15th. And then the U.S. trade representative will have hearings on the forced labor issue beginning April 28th and on the structural overcapacity beginning May 5th.

18:27So, again, we have an accelerated time frame to try and have some of these investigations concluded by the late July time frame. Are there other national security investigations underway? Those are still underway as well. A number of Section 232 investigations. This was the tool in the toolbox that has been used to impose tariffs on steel and aluminum imports from a number of countries. Those tariffs are still in place. But there are a variety of ongoing Section 232 investigations covering everything from critical minerals to pharmaceuticals to solar polysilicon and related products like solar cells and modules.

19:10So here, the Commerce Department has to do a report on whether imports are a threat to national security. And the president has ultimate discretion as to what remedy to put in place. When we were talking about the tariffs under IEPA, it seemed as if most experts were saying, well, the president could use this, the president could use that. But it seems like everything that the president is using is under either investigation or some long term process. Well, I would say that the courts have upheld generally the president's ability to use these national security tariffs under Section 232, as well as the Section 301 tariffs, depending on the situation.

19:53So there is more discretion for the president in these circumstances, as opposed to the IEPA tariffs, where Chief Justice Roberts concluded that IEPA does not give the president this unbounded power to unilaterally impose tariffs. In fact, he found that that view would represent a transformative expansion of the president's authority over tariff policy. So I think there are tools in the toolbox that the courts have upheld. Doesn't mean they will necessarily uphold the use of them in these situations. Was there anything in that Supreme Court decision that you found very surprising? Well, I think the decision was in line with our expectations as far as when we thought it would come out.

20:39We thought it would be a 5-4 or a 6-3 decision. I do think the chief justice writing the main opinion and finding that all tariffs under IEPA were illegal, not just some tariffs, like maybe the fentanyl tariffs were legal, but the worldwide reciprocal tariffs were not. And then I also thought it was very interesting to see the debate on the major questions doctrine where Justice Gorsuch made a full defense of that doctrine and credited that for why he voted the way he did. Whereas Justice Amy Coney Barrett basically said this is a textual issue. If you read the text of IEPA, it does not allow tariffs.

21:18So you don't have to get into the major questions doctrine. President Trump recently said it's going to take five years before all this refund stuff gets settled out. I mean, what's your prediction or assessment of how long this is going to take, this process? I think it will be a relatively orderly process for getting money back to importers of record. But I agree that if the goal is to get money back to consumers, that will be longer and messier and could take quite some time. But the building blocks of this custom system seem to be moving along. We're keeping an eye on it. The judge is keeping an eye on it.

21:56That part seems manageable. It's really how to get the refunds back to those who may have paid higher prices that will be a real challenge. And Tim, what's your take on the big picture for trade? The only thing I would say is that trade as a whole remains chaotic. It remains among the top interests of this president and this administration. And it is balanced against the clear importance of affordability as a midterm election year issue and a presidential election issue. So the balance between tariffs and affordability will continue to define this debate this year and running through to the presidential elections.

22:38Always a pleasure to have you on, Tim. Thanks so much. That's Timothy Brightbill, co-chair of the International Trade Practice at Wiley-Rhyne. Hello, hello. I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvind Krishna. And I asked him, how can companies use AI to its fullest potential to create smarter business? My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side. For example? If anybody has more than 10 % of what they had for customer service 10 years ago, they're already five years behind.

23:25If anybody is not using AI to make their developers who write software 30 % more productive today, with the goal of being 70 % more productive, so we are not asking our clients to be the first experiment on it we say you can leverage what we did we are happy to bring out all our learnings including what needs to change in the process because the biggest change is not technology it's getting people to accept that there's a different way to do things to listen to the full conversation visit ibm.com slash smart talks

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24:45You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments with expertise, personal attention, and independent agents who focus on relationships, not transactions. The Cincinnati Insurance Companies. Let them make your bad day better. Find an agent at c-i-n-f-i-n dot com.

25:20please welcome the very first winner of the fifa peace prize the 45th and 47th president of the united states of america mr donald j trump please

25:39thank you very much this is truly one of the great honors of my life you may remember back Back in December, when FIFA President Gianni Infantino awarded President Donald Trump the newly created FIFA Peace Prize. Days later, the U.S. Solicitor General ordered Brooklyn prosecutors to drop two FIFA bribery convictions. In 2023, a jury had handed down guilty verdicts against Herman Lopez and the sports marketing group Full Playby for money laundering and wire fraud in connection with a scheme to bribe international soccer officials for World Cup broadcasting rights. The highly unusual move of prosecutors asking a judge to overturn guilty verdicts could lead to the reversal of convictions in dozens of other international soccer corruption cases, as well as the return of hundreds of millions of dollars in recovered penalties.

26:40So a Brooklyn federal judge is requiring the Justice Department to provide a legal basis for dropping the long-running international soccer corruption case and explain the impact on related convictions and penalties. Joining me is Bloomberg legal reporter Patricia Hurtano, who's been following this legal saga for years. Patty, tell us how we got to this point in this long-running investigation and prosecution. Two federal juries convicted three sports marketing executives and soccer bosses, they had different titles, in a massive bribery scheme for paying bribes or accepting bribes for sports marketing tied to soccer and FIFA, international soccer.

27:28It was part of a huge case unveiled by then Attorney General Loretta Lynch in 2015 to much fanfare. And people may remember that all the soccer barons were collected in a Barlack five-star hotel in Switzerland. And the FBI and law enforcement raided it and took them away in handcuffs. There was a huge trial in 2017 and resulted in the conviction of two of those soccer officials. And then they appealed. And then there was a trial in 2023 of a former 21st Century Fox executive and alleged bribe paying and receiving. And a company called Full Play was also convicted. So then goes the story, the appeal of the first two executives, they appealed it and their convictions were upheld.

28:22And then we get to the story where the 21st Century Fox executive is named Hernan Lopez. and he had hired a squad of good lawyers and they challenged and challenged the case. And then out of the blue, the judge dismisses his conviction, anticipating how the Supreme Court would rule. And it took everyone by surprise and the government by surprise and they challenged it and they went to the Second Circuit and they won. The circuit reinstated the conviction. He continued to challenge it, and he was taking it to the Supreme Court. And then suddenly, everyone was very shocked. Literally days before Christmas of last year, the government and the solicitor general said they weren't going to appeal this case.

29:14So basically, it put the case back into the posture of a conviction for Hernán López, and full play will no longer be challenged. Nothing to see here, Supreme Court judges. The government is pulling away from this prosecution. So reporting from my colleague and I in B-Law determined that the Trump administration ordered the Eastern District to pull the plug on their prosecution. The order you reported from the Solicitor General to pull the prosecution, was that after Donald Trump was awarded a so-called peace prize by FIFA? Yes. Surprisingly, you remember that. So yes, this is true. It happened days later.