Now that the U.S. Supreme Court has invalidated President Trump’s tariffs, importers could be owed more than $175 billion in refunds. Our Distressed Debt & Claims Trading and International Trade & Regulatory Teams examine how importers can tap into the secondary market by selling tariff refunds while distressed claims buyers can purchase them at a discount.
- The Court did not provide a road map for importers to recoup their claims, making it unclear how and when refunds would be distributed
- Selling refund claims on the secondary market allows importers to receive liquidity in the short term and claims buyers opportunity to earn greater returns in the long term
- Importers should take steps to validate their tariff refund claims to ensure recovery of voided tariffs and streamline potential sales
On February 20, 2026, the U.S. Supreme Court issued a landmark 6–3 decision that will have far-reaching implications for both sellers and buyers of tariff refund claims. The Court struck down President Trump’s global reciprocal tariffs on trade deficits and tariffs related to illegal drug trafficking, both imposed under the International Emergency Economic Powers Act (IEEPA). According to a UPenn/Wharton estimate released following the decision, a staggering amount of more than $175 billion in U.S. tariff collections are subject to potential refunds.
Before the decision, a secondary market had already emerged where distressed investors were seeking to purchase potential tariff refund claims from importers. The Supreme Court’s ruling represents a significant victory for those investors who wagered on the IEEPA tariffs being invalidated. Previously, reciprocal tariff claims were reportedly trading at 15% to 35% of face value, while fentanyl-related claims ranged from 5% to 15%. Following this decision, the value of a tariff refund claim will now certainly increase.
The Court’s majority ruling did not provide any instructions for the process for obtaining a refund of unauthorized tariffs paid under the IEEPA. We expect the Court of International Trade to act soon to provide additional clarity. However, it is possible that it could take years before payouts are distributed.
Given this uncertainty, holders of tariff refund claims may be enticed to monetize their claims in the secondary market assuming a price can be agreed upon. Experienced buyers in the secondary market, who have the financial resources to pursue claims, are likely to offer importers immediate liquidity in exchange for the rights to recover on their claims. This arrangement will allow importers to avoid the costs and delays associated with pursuing refund claims and receive upfront cash by selling their rights at a discount.
Importers holding tariff refund claims considering selling their claims should take proactive steps to ensure their tariff claims are valid and well-documented, including identifying and evidencing all IEEPA tariffs paid and organizing supporting documentation for relevant entries. Attention should also be paid to the liquidation status and protest deadlines to preserve recovery rights. Sellers can expect sophisticated buyers of claims to perform thorough due diligence on tariff refund claims to ensure the validity of claims being sold before closing a purchase.
For both sellers and buyers of tariff refund claims, there are many material issues each party should be mindful of, such as:
- How will the sale be structured?
- Will the sale be by assignment or participation?
- Will the entire refund claim amount be sold or will the importer continue to hold some of the claim (and have skin in the game)?
- Who will be responsible for pursuing the claim and controlling decisions?
- Who will be responsible for costs and expenses in pursuing the claim?
In light of the Supreme Court’s decision voiding IEEPA tariffs, we expect to see more tariff refund claims to be traded. Importers seeking to capitalize on higher pricing and immediate liquidity, while avoiding the burden of a potentially lengthy refund process, may be more inclined to sell. Meanwhile, sophisticated buyers with the expertise and resources to pursue recovery will be eager to provide liquidity now in exchange for enhanced future returns.
Experienced trading counsel can help navigate this evolving landscape and mitigate the attendant risks of buying or selling a refund claim. With over 25 years of experience in assisting buyers and sellers of bespoke distressed financial claims, our team at Alston & Bird is well positioned to provide comprehensive support, leveraging the expertise of seasoned international trade and regulatory lawyers to guide clients through every step of the process.
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