Hedge funds across major financial centres are increasingly buying rights to potential US tariff refunds linked to President Donald Trump’s “Liberation Day” trade measures, as companies seek early liquidity in exchange for a discount on future government payouts, according to a report by Politico.
The trade has emerged following a US Supreme Court decision in February that invalidated the tariffs, which had generated an estimated $166bn in duties collected at the border. While importers now expect refunds, uncertainty around the timing of government repayments has created an opportunity for investors willing to purchase those claims upfront.
Under these arrangements, companies sell their entitlement to future tariff reimbursements at a reduced price in exchange for immediate cash, effectively monetising what remains a contingent government receivable. Hedge funds and other institutional investors then assume the risk of collecting the full value when refunds are eventually processed.
Market participants say activity has accelerated significantly since the court ruling, with trading firms, hedge funds and specialist credit investors increasingly active across London, New York and other financial hubs. Intermediaries report a notable rise in demand from importers seeking to shore up liquidity as tariff-related costs continue to pressure balance sheets.
Pricing in the market has shifted sharply. Before the Supreme Court decision, tariff refund claims were reportedly trading at deep discounts, but valuations have strengthened as legal clarity improved and more companies began formal recovery efforts. Larger, higher-quality claims are now changing hands at substantially higher levels, reflecting growing confidence that at least part of the refunds will eventually be paid.
Transaction sizes vary widely, with mid-sized claims commonly in the $10m to $25m range, while larger portfolios can exceed $100m. Smaller claims have struggled to attract interest, according to market participants.
Some companies are also retaining only partial exposure to their claims, selling a portion while holding the remainder as a hedge against timing and legal uncertainty. In certain cases, firms are also exploring the use of anticipated refunds as collateral for financing, particularly as broader cost pressures increase.
Specialist brokers and investment banks have helped facilitate deals by matching importers with credit investors willing to provide upfront capital in exchange for eventual repayment. Market participants say this intermediation has helped establish a more structured, if still niche, secondary market for tariff-related receivables.
Several large credit-focused investment firms are understood to be active in the space, alongside litigation financiers and opportunistic hedge funds. However, the overall market size remains relatively modest compared with broader credit markets.
Despite growing interest, investors caution that the trade carries significant uncertainty. The timing of refunds remains unclear, and political and administrative decisions could affect both the pace and the completeness of repayments. Market participants also note that past episodes of tariff reversal have taken years to fully resolve.
Government agencies have indicated they are developing electronic systems to process claims, with phased rollouts expected. However, early stages are likely to cover only simpler cases, leaving more complex claims subject to longer delays.
Supporters of the developing market argue that it provides an important source of working capital for importers facing liquidity constraints. Critics, however, say the need to sell refund rights at a discount highlights inefficiencies in the administrative process and uncertainty around policy implementation.
