Hedge funds think they can make a killing on Trump tariff refunds

LONDON — From Wall Street to Singapore, hedge funds are buying up the chance to claim lucrative but risky tariff refunds from Donald Trump’s administration.

Before the U.S. Supreme Court struck down the president’s “Liberation Day” tariffs in February, U.S. importers paid $166 billion in extra duties at the border.

They’re now hoping to see that full amount refunded — but importers who need cash in hand are already selling the refunds they’re owed on to hedge funds at a discount.

Firms are on track to receive refunds directly, but it’s unclear how long it will take them to get their money back from the Trump administration. And so funds have swooped in to give firms a percentage of the cash they’re owed today in exchange for the full value of the refund when the government pays out.

Business is booming.

“The Supreme Court decision unlocked the market,” said Wes Harrell, a managing director at Seaport Global, which connects hedge funds with importers holding tariff claims.

“I think ultimately we’ll see more folks come in as a result of higher inflation around input costs and what that’s doing to liquidity concerns,” Harrell said.

Tariff refunds were selling at 20 to 40 cents on the dollar before the Supreme Court’s ruling. But prices have since skyrocketed with major brands taking legal action to get their money back.

Larger claims with high-quality sellers are going for up to 70 cents on the dollar, Harrell said. “The past month or so has been importers getting their ducks in a row, talking to trade counsel, determining how best to protect their rights in this litigation and in the refund process.”

Premium prices

The refunds being traded average between $10-$25 million in face value, with those under $5 million struggling to find a buyer, Harrell said. At the higher end, he’s connected buyers and sellers with “claims north of $100 million and larger.”

Some firms are also putting up 50-75 percent of their refund, he said, “in an effort to hedge out some of the legal and process uncertainty,” since it’s still not clear when the Trump administration will reimburse their claims. Companies are exploring using tariff refunds as collateral on bank loans as the Iran war pushes up costs.

Institutional investors are “seeking to provide upfront liquidity for those receivables at a discount to help chief financial officers manage balance sheets and deploy capital,” Harrell said.

U.S. President Donald Trump with his executive order imposing tariffs on imported goods during the “Liberation Day” event at the White House on April 2, 2025. | Andrew Harnik/Getty Images

Hedge funds backed by upwards of $30 billion apiece with offices around the globe, including King Street and Fulcrum Capital, are buying refunds, with specialist banks, including Oppenheimer and Stifel, brokering deals.

“Over the past year, Oppenheimer has seen growing demand from importers whose cash flow, day-to-day operations and ability to invest in growth have been impacted by the tariffs,” said Peter Albano, global head of fixed income at the brokerage and investment bank.

The bank has connected firms “with sophisticated investors that can help turn a potential future payment into working capital they can use immediately,” Albano said, noting Oppenheimer has “played a leading role in building a trusted, efficient market for these transactions.”

“Stifel continues to see strong demand for tariff-related recoveries and has been actively helping claimants monetize their value,” said Neil Shapiro, head of corporate communications at the bank.

Three people familiar with the market, granted anonymity to discuss private conversations freely, confirmed that Fulcrum is buying refunds. King Street declined to comment.

“I saw one come over my desk,” said a prominent litigation financier, who invests in the outcome and payouts of court cases, citing a $12 million refund claim brought to them by a colleague who specializes in bankruptcies and debt restructuring, asking if they would buy the claim.

“He came to us, and I told him who I thought did it. We don’t. But you could see people don’t even quite know where to go,” they said. Most deals are for under $100 million. “We’ve heard about ones that are bigger than that,” the litigation funder said, but they put the total volume of purchases at less than half a billion dollars.

The Trump factor

But an erratic president makes the whole endeavor a risky gamble. 

“Who knows what the hell [Trump] is going to do next?” asked a second prominent litigation financier. The president, they said, could issue an executive order tomorrow telling Customs and Border Protection not to pay out on refund claims.

“The political risk in the Trump stuff, no one can deny that that’s a big risk. We just don’t know politically what will happen with this [refund] program,” they said. “This thing could go 18 different ways.”

Even with a digital refund process in place, “it does strike me as challenging to see the government come in and just automatically refund the $160 billion that they’ve collected in tariffs over the course of the past year back to importers in one fell swoop,” said Seaport Global’s Harrell.

After a 1998 case in which the Supreme Court struck down a harbor tariff on imported goods, the U.S. government took more than two years to pay refunds to firms that filed claims. Some who hadn’t filed claims early got their money back after around six years.

Businesses are on track to receive tariff refunds directly but, with uncertainty about Trump’s next move, hedge funds are gambling on giving a percentage of the cash they’re owed today in exchange for the full value when the government pays out. | Zamek/VIEWpress via Getty Images

Primed for payday

“We should have a refund process that is efficient and expeditious, such that people shouldn’t feel the need to have to sell their rights to a refund to access the money due,” said Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce. “Ideally, what we’re talking about here is weeks, not months.”

At the end of March, the U.S. Customs and Border Protection told the New York-based U.S. Court of International Trade that it’s working on a new electronic refund claims portal. This comes after one of its judges ordered them to stop collecting “Liberation Day” tariffs known as IEEPA tariffs. Customs says payments may take up to 45 days to go through the new claims portal, which it previously said will be online in late April.

The U.S. CBP issued a bulletin last Friday that its system for companies seeking refunds is on track to begin accepting petitions next week and will be rolled out in phases, beginning April 20. Initially, it won’t apply to most importers, focusing on more recent and straightforward refund claims.

“Nothing in the bulletin commits CBP to making that process available to all importers,” said Grayhawk Law founder Matthew Seligman, who has represented small and midsize importers in tariff litigation. Future phases will cover more complex entries.

More than 26,600 importers have signed up for the agency’s automated refund system — roughly 8 percent of the hundreds of thousands of U.S. importers who paid tariffs.

So far, cost pressures from the conflict in the Middle East aren’t weighing on firms enough to get them to discount their refund to get cash more quickly, Bradley said. “Obviously, the longer the economic headlines from the conflict in the Middle East endure and the longer it takes to actually process refunds, that dynamic could change.”

Julius Brinkmann and Ari Hawkins contributed to this report.