Wall Street’s Bet Against the Trump Tariffs

Andrew here. There’s a fascinating new conversation happening among C.E.O.s and Wall Street firms: Some of the biggest American companies getting hit by President Trump’s tariffs are being pitched to sell their rights to a refund, which would be especially lucrative if the Supreme Court ultimately decides to reverse the levies.

Financiers are offering to buy the refund rights for cents on the dollar — and, given the costs and uncertainty of the legal fights in challenging the tariffs, many companies are considering those proposals. My colleague Bernhard Warner has a detailed breakdown. What do you think? Would you sell your refund rights up front now in exchange for cash? Let us know.

The tariff refund trade

President Trump on Wednesday sought to defend his expansive trade war by appealing to the Supreme Court.

But that hasn’t deterred Wall Street firms from a buzzy — if perhaps long-shot — trade that effectively bets against the survival of his tariffs.

The transaction revolves around tariff refund rights. Companies can challenge what they pay in import duties if they believe that the levies were unlawful. That means importers could collect windfalls if the Supreme Court upholds lower court decisions that most of the tariffs are unconstitutional. (How big? The government collected nearly $30 billion in July alone.)

Importers could also seek refunds if they think that they were erroneously charged.

Financial firms have made a proposition to importers: They would buy companies’ legal claims over refund rights.