Pour & Loss

On February 20 the Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. It was covered as politics. For anyone who imported, it is a working capital event: Customs opened a refund system on April 20, and the rules on who receives the money decide whether any of it reaches a winery.

In a declaration filed March 6, Customs and Border Protection put the IEEPA duties and deposits it had collected at about 166 billion dollars, from more than 330,000 importers. Its latest report to the Court of International Trade, filed September 15 in Freestyle World, the lead refund case, says that as of September 11 about 134.7 billion dollars of refunds had been accepted for processing in CAPE, the system Customs built for these claims, and about 122 billion, duties plus interest, had been certified and sent to Treasury.

Set those two figures against each other. Part of the 134.7 billion is interest, so at least 31 billion dollars of IEEPA duty had not made it into the system by mid-September. Some of it was never claimed. The same filing shows why much of the rest was turned away: 6.1 million entries failed Customs' entry-level checks, most often because the entry was past the 90 days in which Customs can reliquidate on its own authority, carried no IEEPA tariff line, or had already been filed. Older entries were not yet eligible at all.

Two details decide whether any of it reaches you.

The first is whose name is on the entry. Refunds go to the importer of record, or to a party it has designated to Customs on Form 4811. They do not go to the winery that paid a tariff surcharge line on a glass invoice in the spring of 2025, however clearly that line was printed. If your bottles, barrels, capsules or bottling line arrived through a domestic supplier who imported them, that supplier is the importer of record and the refund is legally theirs. Customs built CAPE so that only the importer of record, or the licensed broker that filed the entry, can submit a declaration. There is no side door and no clever filing.

The second is liquidation status. CAPE opened on April 20 for certain unliquidated entries and certain entries within 80 days of liquidation. Older entries fall outside it, and the government's position is that it cannot refund them without a court order. On July 17 Judge Richard Eaton gave that order for the plaintiffs in the roughly 3,700 refund cases before him. The phase built to process those entries was due August 20; on August 25 Customs told the court it had delayed it to build new validations. It opens October 6, and only for plaintiffs who gave Customs a valid importer of record number by July 30. An importer that never sued has no CAPE route for those entries today.

That could change. Two class certification motions, in V.O.S. Selections and in Freestyle World, were argued in August and would let importers that never filed suit claim as members of a class. Neither had been decided as of October 5. The government, meanwhile, has appealed the trade court's April 17 refund orders to the Federal Circuit, arguing that they reach importers who never sued. And an importer's own suit has a clock on it. An action at the Court of International Trade must be brought within two years of when the claim first accrues. Butzel Long counted that in April from the day each tariff took effect: February 4, 2027 for the China fentanyl tariffs, March 4 for the Canada and Mexico tariffs, and April 5 for the reciprocal tariffs. Those are the dates to plan against.

As of September 11, 20,184 refunds worth about 1.3 billion dollars had not gone to Treasury because the importer of record, or its designee, had not given Customs bank account information for the automated clearing house. That is an average of about 64,000 dollars a refund. Customs lists the primary reasons declarations fail as importer of record or filer mismatches, entry numbers that do not validate, and upload files that do not match its template. With more than 330,000 importers having paid these duties, I would be surprised if no wine or beverage business were inside that 1.3 billion. The obstacle is a blank field in a portal and a filing job nobody was assigned.

The tariff most wineries actually paid arrived on a supplier's invoice, and the legal authority behind it has changed twice since early 2025. IEEPA came first. After the Supreme Court struck it down, a ten percent surcharge under Section 122 of the Trade Act took its place on February 24. That surcharge hit its 150-day statutory limit on July 24 and was replaced the same minute by Section 301 duties covering 60 economies. The Court of International Trade had already found the Section 122 surcharge unlawful in May, in a ruling limited to three plaintiffs and stayed on appeal. If that ruling survives the appeal, five months of Section 122 duty becomes a second refund question, and the importer of record will again be the one holding the claim.

What the swap did to your glass depends on where the glass comes from. Under the July action, goods from the European Union pay ten percent including the normal tariff, so French bottles, which carry no duty under the normal schedule, now pay ten. Goods from China pay 12.5 percent on top of the normal tariff and on top of any older Section 301 duty already on that product. The European rate has room to rise. The European spirits trade body, spiritsEUROPE, pointed out on July 24 that Washington can still add duty on European goods up to the 15 percent ceiling in the EU-US agreement, and the second Section 301 investigation, into excess manufacturing capacity in 16 economies including the EU, was still open at the end of September.

Metals are worse, and I see few budgets that model them separately. Steel and aluminum sit outside the Section 301 action, under Section 232. Since April, goods made entirely or almost entirely of either metal pay 50 percent of their full value, and most goods made substantially of them pay 25 percent. That reaches capsules, tirage cages, tanks, press parts and a long tail of cellar equipment, depending on how each is classified.

SevenFifty Daily reported on April 27 that Jon Murray, general manager of Vara Winery and Distillery in New Mexico, was paying a 28 to 32 percent surcharge on imported tirage cages, with steel tariffs at 50 percent. Murray described logistics, the port and customs clearing each adding three to eight percent of their own at every step. The same piece reported that last year he offset an average increase of 80 cents a bottle by switching to a local label maker and buying cheaper fruit out of an oversupplied grape market. Cheap fruit from a surplus is a windfall. A budget that counted on it has a hole in it the year the surplus ends.

Packaging budgeted as one blended line hides the two variables that will move, country of origin and tariff authority, and both now change on court calendars.

The biggest loss in American wine exports over the last two years had nothing to do with a duty rate.

Wine Institute's fact sheet of March 4, "U.S. Alcohol: Singled Out With Unprecedented Treatment," lays out the 2025 numbers. US wine exports to Canada fell from 460 million dollars in 2024 to 103 million in 2025, a 78 percent drop and more than 357 million dollars of lost export value. A 254 million dollar wine trade surplus with Canada became a 90 million dollar deficit. Canada went from 36 percent of US wine exports by value to 12 percent, and it accounts for 81 percent of all US wine export losses in a year when total exports fell 35 percent.

The cause was a catalog decision. Provincial liquor boards control what can be bought across most of Canada, and beginning in March 2025 they pulled American beer, wine and spirits. By the fact sheet's count, Canadian retail sales of US wine had been 1.1 billion Canadian dollars in 2024. Alberta and Saskatchewan put American product back in June 2025. Saskatchewan has since put a 50 percent levy on American alcohol, effective September 8. When distribution runs through a government monopoly, market access is a political decision made province by province, and it gets reversed the same way.

The fact sheet also counts more than one million cases of wine already labeled for Canada, which it says cannot be sold elsewhere without costly relabeling. Think about what that is on a balance sheet: finished goods carried at full cost, committed to a channel that is closed, accruing storage while the label itself stands between the wine and a sale. About 95 percent of the affected wineries are family-operated small and medium-sized businesses, the companies least able to absorb a write-down quietly.

If any of that inventory is yours, it is almost certainly still carried at a value your auditor accepted and the market does not support. Issue 01 argued that the most common deal killer in winery M&A right now is inventory carried at values the market stopped supporting. Canadian-labeled stock is the purest example in the industry. It has a documented, dated, external reason to be revalued, which also makes it the easiest write-down you will ever have to defend.

The boycott has cost Canada money too, and that is the usual argument for expecting it to end. The British Columbia Liquor Distribution Branch's 2025/26 Annual Service Plan Report, published in August, shows net income of 1,005.2 million Canadian dollars, 22 million short of target and down 8.1 percent on the year. It names halting US imports first among the causes, with cannabis price compression and a strike by its unionized staff. It still came in above the 950 million it had forecast in February. A liquor board that gives up 89 million Canadian dollars of contribution and still beats its own forecast is not under the kind of pressure that forces a reopening.

The dispute has moved the other way since. On July 20 the President signed three proclamations putting an additional 50 percent duty on Canadian dairy, alcoholic beverages and motor vehicles. In August, with a deal close, Prime Minister Mark Carney asked the premiers to restock American alcohol, and Newfoundland and Labrador's premier said all of them agreed. Talks broke down on August 21 and the duties took effect the next day. Canada answered on August 25 with duties of 15, 25 or 50 percent on 27.6 billion Canadian dollars of US goods, effective September 8. On September 8, the day those took effect, the President signed Proclamation 11061, which bars most packaged Canadian beer, wine and spirits from entering the United States from September 29, and cites Saskatchewan's levy as evidence that Canada had escalated. It is now in force.

Wine Australia reported in May that Australian wine exports to Canada rose 24 percent in value and 15 percent in volume in the twelve months to March, and that its share of Ontario's market went from 6 to 9 percent. Shelf space taken during a year-and-a-half absence does not come back on the day a deal is signed.

If you have been treating Canada as a temporary suspension, you have been carrying a receivable against a reopening nobody has scheduled. Model it as a lost market with an option attached. August showed the option is real, and that it can expire in two days.

Plaintiffs' firms are filing putative class actions against companies that paid IEEPA tariffs, passed the cost to customers through explicit surcharges or higher prices, and now stand to collect refunds from the government. Holland & Knight counted more than 80 in more than 20 federal districts by mid-June, and close to 100 in nearly 30 districts by mid-August. The theory is simple: you recovered the cost once from the customer and are recovering it again from Treasury. No court had ruled on it when Holland & Knight wrote in June.

The same fight is running between businesses. Troutman Pepper Locke's October 2 alert on the refund process lists contract claims by business customers under surcharge clauses and price-adjustment terms among the disputes now arriving, and singles out invoices that showed the tariff as its own line. It also notes at least one suit against an importer that offered customers discounts funded by its refund instead of giving the money back.

If you added a visible tariff surcharge to a wholesale invoice, a club shipment, a distributor price sheet or a restaurant program in 2025, you have a file to pull. The surcharge was probably fair at the time. What matters now is what your paperwork says about whether the charge recovered a cost or raised a price, and whether anyone in your company has decided what happens when the underlying cost comes back. The same logic runs upstream in your favor. If a supplier put a tariff line on your invoice and is collecting a refund on it, you have a commercial claim, and a stronger one for having that line in writing. Win it, and if you passed that line on to your own customers, you are standing exactly where the importer stood.

Three moves before the calendar year closes. None requires capital.

Establish your tariff position in writing. If you import anything yourself, pull your entry summary data from February 2025 forward, identify the importer of record on every import line, filter for the Chapter 99 lines that carried IEEPA duty, and confirm your bank details are enrolled so an approved refund can actually be paid. Put February 4, 2027 on the calendar; it is the earliest of the filing deadlines Butzel Long reads from the statute. Then call every domestic supplier whose imports you bought and ask directly whether they have claimed or received a refund on goods you paid a tariff surcharge on. That call is uncomfortable and it is the one with money in it. Pull every invoice on which you showed your own customers a tariff line, and set the two lists side by side. Give the job to one named person with a deadline, because 1.3 billion dollars of refunds stuck for want of a bank account number is the evidence that this work does not get done by being everybody's responsibility.

Revalue your closed-market inventory now. Identify every case labeled for Canada or for any other channel that is not open to you, and decide its exit this quarter: relabel where the economics work, bulk it, or write it down. Do it as a documented decision with a date and a reason attached. That record is worth more than the carrying value you are protecting, and it is the difference between a write-down you chose and one a buyer discovers.

Rebuild the packaging line in your budget by country of origin. Split glass, closures, capsules, barrels and equipment by where they are made and which tariff authority applies, and hold a rate assumption for each, tied to the next date that could change it: the two Federal Circuit appeals, the excess-capacity investigation, the Canada proclamations. Your exposure now runs on that calendar, and very little of it will reach you through the trade press.