Tariff refunds: who is legally entitled to the money?

2026-03-20 - 08:41

From Tania Scivetti Recent developments in the US, where the courts held certain tariffs imposed under emergency powers are unlawful, have prompted renewed discussion on the question of refunds. In Malaysia, recent public commentary has highlighted the potentially significant sums involved, with reference to sizeable refund figures that may arise from these developments. Those figures, when viewed in aggregate, reflect the total amount of duties collected under the measures in question. However, what is often less clearly articulated — and is critical to a proper understanding of the issue — is that the existence of a large refund pool does not in itself determine who is legally entitled to receive those funds. The distinction between the scale of tariffs collected and the identity of the party entitled to a refund is not merely technical; it is foundational. Under established customs law principles, both in the US and across most jurisdictions, refund rights generally do not flow to the party that bore the tariff’s economic burden. Instead, they are tied to the legal structure of the import transaction. In practical terms, the right to claim a refund is generally confined to the party recognised within the customs system: most commonly the importer of record, or the entity that directly paid the duties to the relevant authority. This position is consistent with the statutory framework governing customs disputes and refunds, which identifies specific categories of persons entitled to challenge duty assessments and seek repayment. The framework generally does not extend that entitlement to all parties affected by the tariff, including foreign exporters who merely supplied the goods. To illustrate, consider a Malaysian exporter supplying goods to a US buyer. Even if the Malaysian exporter absorbs part of the tariff cost through pricing adjustments or commercial arrangements, the legal importer of record in the US — typically the US buyer or its customs agent — remains the party recognised by the customs system. In such a structure, any refund issued by US authorities would be payable to the importer of record, not to the Malaysian exporter. This may appear counterintuitive from a commercial perspective. Exporters may have adjusted pricing, offered rebates or otherwise borne part of the tariff burden in practice. Yet the legal framework does not follow the economic incidence of the tariff. A party may have borne the cost in substance, but unless it occupies a recognised role within the customs entry, such as the importer of record or the duty payer, it does not acquire a direct right to a refund. Accordingly, while the total value of tariffs subject to refund may be substantial, the class of parties potentially eligible to claim those refunds is considerably narrower. A foreign exporter will generally only have a direct claim where it has structured its transactions in such a way that it assumes the relevant customs role, for example by acting as the importer of record or by directly paying the duties. Outside of these circumstances, any recovery is likely to arise indirectly, typically through contractual arrangements with the importer rather than through a direct claim against the customs authority. Understanding this distinction is essential to properly interpret the figures currently being discussed. Aggregate numbers reflect the totality of duties collected but do not translate into a universal entitlement across all affected parties. The legal framework remains transaction-specific and role-dependent, and it is that framework which ultimately determines who may recover the sums in question. As these developments continue to unfold, a clearer appreciation of the underlying legal structure will be important not only in managing expectations but also in informing how future cross-border transactions are structured. In international trade, the allocation of roles at the point of import is not merely administrative; in a very real sense, it can determine who stands to benefit when the legal landscape shifts. Tania Scivetti is the founder of Scivetti & Associates, a Kuala Lumpur-based law firm. The views expressed are those of the writer and do not necessarily reflect those of FMT.