Background and market reaction
The U.S. Supreme Court's ruling that a set of emergency tariffs imposed by President Donald Trump are illegal has prompted a rapid repricing in the market for rights to potential tariff refunds. The court did not order that refunds be paid from the roughly $175 billion in tariffs collected since last February, but the ruling has nonetheless triggered a flurry of activity among importers, legal advisers and outside investors.
Many importers had already hedged potential losses by selling to third parties the rights to pursue refunds for a fraction of the face value of those claims. Under those arrangements, companies kept the upfront payments they received when they sold the rights. If the government eventually returns money, the purchasers of the rights would collect the proceeds.
These transactions, often described in the market as "special situations" trades, have attracted buyer interest because legal sources active in the market say the assets are not closely correlated with broader equity or bond markets. That characteristic makes them appealing to investors seeking diversification into event-driven legal claims rather than market-sensitive instruments.
Pricing dynamics and legal context
Legal advisers working with buyers and sellers report a marked jump in interest since the high court issued its decision. Amy Pasacreta, who practices in the restructuring group at Orrick, said demand expanded materially after the ruling and that bid prices in the secondary market have moved up toward the 40-50% range after previously trading at much lower levels.
Orrick's activity in this area dates to soon after the tariffs were implemented in April, according to Pasacreta. The court case covered two distinct categories of emergency levies: tariffs targeted at stemming fentanyl imports and a broader set of so-called reciprocal tariffs. Prior to the decision, market participants had valued the fentanyl-focused claims more cheaply because some analysts believed those measures had a greater chance of surviving judicial review. In practice, buyers were paying in the mid-teens for fentanyl-related claims - roughly 16-17% - while reciprocal-tariff claims traded in the mid-to-high 20s - roughly 26-28%.
Pasacreta said the pricing gap between the two claim types has narrowed since the ruling, describing the categories as having "converged" since the Friday decision. She also cautioned that prices remain below full value because substantial uncertainty persists - including the administration's public stance that it intends to contest refund claims.
"The reason that we're not seeing higher (prices) is because there is still the uncertainty," Pasacreta said. "This administration has indicated that they're going to fight the refunds."
Corporate responses
Companies subject to the tariffs have been contacted by buyers seeking to acquire their refund rights. Mark Bissell, the chief executive officer of vacuum maker Bissell Inc., said his company has received repeated inquiries since the decision, and that the price quoted to them has risen to about 45%.
"Our name pops up, because we're higher volume in (imported) containers," he said, "so we're on a list a lot of people see." Despite the elevated offers, Bissell said the company is not inclined to sell its refund rights at this stage. He explained that the firm would prefer to await a potential government refund, noting that the company spent the prior year assuming it would receive nothing back and that any returned funds would be welcome.
Outlook and considerations for market participants
The ruling has created a complex operational environment for potential claimants and buyers. Sellers who previously monetized potential claims by taking upfront cash now retain those advance payments while the buyers of claims assume the legal and execution risk of recovering funds. For investors, the attractive feature is the low correlation with market movements; for claimants, the question is whether to monetize now at elevated secondary prices or hold out for a direct refund - if and when that occurs.
Key constraints cited by market participants include the prospect of extended litigation and the stated intent by the administration to contest refunds. Those factors contribute to continued price dispersion and sustained uncertainty even after the Supreme Court's determination on the legality of the tariffs.