Retailers Sell Tariff Refund Rights at Deep Discounts for Immediate Cash

Quick Facts

A secondary market worth over $100 billion has emerged around retailers selling IEEPA tariff refund rights to hedge funds and liquidity specialists at 5 to 40 cents on the dollar.
American Eagle Outfitters sold $68.9 million in refund claims for $18.6 million in cash before the Supreme Court struck down IEEPA tariffs in February 2026.
Oppenheimer & Co. has arranged more than $1.6 billion in refund-rights deals since 2021, with activity accelerating after the 2025 tariff expansion.

Retailers have spent the past year trading away future tariff refunds for immediate cash, creating a shadow market that now exceeds $100 billion in claimed value. The deals, structured as financing arrangements, involve selling rights to potential IEEPA tariff refunds to outside investors at significant discounts.

In February 2026, the U.S. Supreme Court ruled that tariffs collected under the International Emergency Economic Powers Act were illegal. The court did not order refunds directly. That question was left to the U.S. Court of International Trade, leaving roughly 330,000 importers waiting on an estimated $166 billion in duties plus accrued interest.

Rather than wait, some companies moved early. BDO Managing Principal David Wong told Retail Dive that a secondary market for refund claims emerged during the legal uncertainty. Joseph Cascio, chief accountant at RSM US LLP, said investors approached importers with offers to purchase their claims outright, betting that the government would eventually pay.

The math can be brutal for sellers. Cascio described a scenario where a company owed $1 million sells those rights for $300,000. Investors typically pay 20 to 40 cents on the dollar for claims tied to reciprocal tariffs. For claims tied to anti-drug measures, offers fall as low as 5 cents.

American Eagle Outfitters is the most prominent example. During fiscal 2025, the retailer entered a participation agreement with a third-party buyer, selling $68.9 million in refund claims for $18.6 million in cash. The company recorded the transaction under ASC 470 as debt. After refunds began flowing through CBP’s CAPE system in May 2026, American Eagle paid the buyer $33.1 million from recoveries received. As of its most recent quarterly report, the company had received $108.3 million of an anticipated $190 million in total refunds, with a projected net cash benefit of $140 million.

The Children’s Place took a similar route. The company filed for approximately $40 million in refund claims and sold $38.2 million of those claims to a buyer called Alnus at a purchase rate of 67.2%, receiving $25.7 million. The proceeds went toward paying down borrowings under its ABL credit facility. The company was carrying debt with effective interest rates as high as 153.1%, which helps explain the urgency to monetize claims early.

Retail Dive reports that Jefferies Financial Group has facilitated dozens of trades between importers and hedge funds, including individual deals exceeding $100 million. Oppenheimer & Co. has arranged more than $1.6 billion in refund-rights transactions since 2021, with volume jumping after the 2025 tariff expansion. Cantor Fitzgerald also explored the market, pitching deals that offered importers 20 to 30 cents on the dollar, before denying it had executed trades.

CBP launched a refund portal in April 2026. Processing times run 60 to 90 days for straightforward claims. Complex or audited cases can take 6 to 18 months. Statutory interest accrues at 6% annually for corporations and 7% for individual importers, compounded daily under 19 CFR 24.36.

Accountants warn the deals create complicated financial reporting questions. Whether a sale is classified as debt, derecognized as an asset, or treated as a contingent gain depends on how the agreement is structured. For distressed retailers under liquidity pressure, those accounting details often came second to getting cash in hand.