Businesses Use Tariff Refund Claims as Collateral

Businesses are reportedly considering using tariff refund claims as collateral as they await government reimbursement.

That’s according to a report Thursday (April 2) from Reuters, which characterizes the trend as an indication that importers might be able to meet their short-term funding needs using their claims before they collect refunds from the outlawed “Liberation Day” tariffs.

The White House announced those tariffs a year ago, leading to pushback from the business world, which sued the administration. The Supreme Court sided with those businesses earlier this year, declaring the tariffs illegal.

Now, companies are waiting on roughly $166 billion in refunds, though the Trump administration has said it could take time to process all the claims.

That’s where financial services firms come in, Reuters said. These companies purchased refund claims from importers worried about ever getting reimbursed, no matter the Supreme Court ruling. Some companies want to use their claims as ​collateral for loans, instead of selling them at a steep discount to a buyer, said an attorney and a broker advising clients in this area.

“There’s ⁠a lot of money looking to be deployed,” Raniero D’Aversa, partner and chair of law firm Orrick’s restructuring team, who is advising buyers, sellers, investors and lenders in the transactions, told Reuters. “You’re paying ​interest, but you’re not giving away 50% of your claim. You still own the claim.”

He said commercial banks, hedge funds, and private credit funds are all hoping to lend against these claims as collateral. However, the report added, importers could still be stuck with the loan if their refund doesn’t come through.

In related news, PYMNTS wrote this week about the one-year anniversary of Liberation Day, and the uncertainty that resulted from the tariffs, with the past 12 months establishing a pattern for middle-market companies.

“A policy shock has evolved into a durable operating condition, where volatility is arguably the only constant, shaping how businesses plan, invest and manage risk,” the report said.

The weeks following the tariffs saw a jump in the share of goods product leaders who reported high levels of uncertainty due to supply chain disruptions, rising from 11% in March to 33% in April. Confidence, meanwhile, “deteriorated with unusual speed,” the report added.

The number of goods product leaders who felt highly certain they could manage supply chain disruption dropped from 40% in February to 37% in March to just 5% in April.

“Subsequent reports confirmed that this was not a temporary adjustment,” PYMNTS wrote. “Firms operating in high-uncertainty environments reported no meaningful confidence in their ability to adapt.”