Meet the understated beneficiaries of the Supreme Court’s tariff decision: hedge funds fueling a $100 billion industry by acquiring claims to importers’ tariff reimbursements

Congressional Inquiry Into Cantor Fitzgerald's Tariff Refund Activities

In late February, Representative Jamie Raskin, the top Democrat on the House Judiciary Committee, sent a formal letter to Commerce Secretary Howard Lutnick and his son Brandon Lutnick. Brandon Lutnick had recently succeeded his father as chairman of Cantor Fitzgerald, a major financial services company, after Howard Lutnick joined President Donald Trump’s cabinet.

Raskin called for a probe into Cantor Fitzgerald, alleging the firm had been purchasing rights to tariff refunds from American businesses. According to his claims, Cantor Fitzgerald offered these companies only a portion of the tariffs they had paid, in exchange for the full value of their future refund claims.

The letter referenced a report from July 2025, which cited internal documents indicating the firm had the ability to trade hundreds of millions of dollars’ worth of these rights and had already completed a transaction involving approximately $10 million in IEEPA-related claims.

Howard Lutnick, an early proponent of tariffs, had previously suggested tariffs could replace certain income taxes. Raskin argued that, due to the Lutnick family’s close connections with both the Trump administration and Cantor Fitzgerald, the firm may have had access to confidential information that influenced its decisions regarding tariff refund trading.

“This potential conflict of interest raises serious concerns about federal ethics and possible insider trading,” Raskin wrote. “Was the Lutnick family’s dominance in this market simply happenstance, or was it a coordinated effort?”

Cantor Fitzgerald, however, denied any involvement in trading tariff refund claims on the secondary market.

A spokesperson for the firm told Fortune: “Cantor Fitzgerald has never completed any transactions or taken any positions on tariff refund claims. In July 2025, some of our sales staff explored the idea of brokering such trades, but no deals were ever executed. Any reports suggesting otherwise are incorrect. We will clarify this in our response to Ranking Member Raskin.”

The Rise of a Secondary Market for Tariff Refunds

Raskin’s investigation into the Lutnick family has brought attention to a legitimate and expanding secondary market for tariff refunds. This market has grown as tariffs imposed under the International Emergency Economic Powers Act (IEEPA) have faced increasing scrutiny, culminating in the Supreme Court’s recent decision to overturn the tariffs.

With as much as $180 billion in tariff revenue potentially set to be returned to U.S. businesses and consumers—who research shows shouldered most of the import tax burden—investment firms, hedge funds, and liquidation experts are eager to profit from the possibility of these refunds.

“Speculative markets are essentially a gamble,” said David Warrick, executive vice president at supply-chain risk management firm Overhaul, in an interview with Fortune. “It’s like betting on red or black. Investors saw a chance that, if things went their way, the potential profits could be enormous.”

High-Stakes Bets on Tariff Refunds

The secondary market for tariff refunds emerged as traders took a risk on the Supreme Court declaring IEEPA tariffs unlawful, which would require the government to return the collected revenue. Importers, seeking immediate cash, sold their rights to potential refunds to hedge funds and investment brokers—typically for about 25% of what they had paid in tariffs. If refunds were ultimately issued, the investors would receive the full amount.

For some American companies struggling with the financial impact of tariffs and supply-chain disruptions, the chance for quick liquidity was attractive, explained Alex Hennick, president and CEO of A.D. Hennick and Associates, a firm specializing in distressed asset recovery. Others chose to sell their refund rights to avoid the legal costs and complexities of pursuing refunds themselves.

“These hedge funds and firms are collaborating closely with the government,” Hennick told Fortune. “They’ve handled similar processes before. This isn’t entirely new territory.”

This market began to take shape in earnest after the Supreme Court agreed to hear the case challenging the IEEPA tariffs in September, signaling to investors that the tariffs might be struck down. The Court’s final decision confirmed their suspicions.

“The ruling essentially validated their position,” Hennick said. “Now, it’s just a matter of navigating the process and recovering as much as possible.”

While the exact size of this secondary market is unclear, Hennick estimated that between 15% and 50% of claims could be sold or transferred to hedge funds or liquidation specialists. Warrick suggested the market could eventually reach $100 billion.

Uncertainty Remains Over Refund Payouts

Despite the Supreme Court’s decision, risks persist in this market. The ruling did not specify how refunds would be handled, leaving lower courts like the Court of International Trade to determine the process. Former President Trump has indicated he would contest the refunds, warning that legal battles could drag on for years. Judge Richard Eaton of the U.S. Court of International Trade recently ruled that importers are entitled to refunds.

“It’s tough to predict the odds of success for those seeking refunds,” said Wes Harrell, a broker and trading group leader at Seaport Global, in an interview with Fortune. “I do think refunds will eventually be paid, but the big questions are how, when, and what obstacles might arise.”

Rathna Sharad, CEO of logistics platform FlavorCloud, noted that the process will likely be complicated due to the sheer scale of the refunds. The U.S. has issued tariff refunds before, such as under the Generalized System of Preferences (GSP), but those cases involved much smaller sums—typically around $3 billion at a time.

“There’s no precedent for handling something of this magnitude,” Sharad told Fortune. “It’s not going to be as simple as mailing checks to everyone who paid tariffs.”

The complexity of the process will influence whether companies pursue refunds, sell their rights, or opt out entirely. Only importers are eligible for refunds, and in many cases, merchants are not the direct importers. Informal agreements or contracts may determine which companies receive refunds. Without thorough records—especially since tariff rates may have changed over time—applying for refunds could become even more challenging.

“Everyone is still figuring out their position,” Harrell said. “Let things settle, do your homework, and consult with legal experts. It’s still early days.”

This article was originally published on Fortune.com.