tl;dr
Cantor Fitzgerald, led by the sons of US Commerce Secretary Howard Lutnick, is buying rights to potential refunds from companies that paid President Trump’s tariffs, offering 20% to 30% of the duties paid. This allows investors to speculate on whether the tariffs will be overturned in court. Busines...
Cantor Fitzgerald, led by the sons of US Commerce Secretary Howard Lutnick, has proposed buying the rights to potential refunds from companies that paid President Trump’s tariffs. The firm offers to trade these tariff refund rights for 20% to 30% of the duties companies have already paid, allowing investors to speculate on whether the tariffs will be overturned in court.
This move comes against the backdrop of a legal challenge to Trump’s tariffs, where businesses that started paying tariffs on April 2 could receive refunds with interest if the tariffs are permanently blocked. Cantor Fitzgerald has expressed the capacity to handle trades totaling several hundred million dollars, anticipating future growth in demand.
Some companies are willing to accept deals despite concerns and suspicions, partly due to the lengthy refund timeline and financial pressures. Ryan Petersen, CEO of Flexport, highlighted the current six to 12-month wait for refunds, suggesting that upfront deals may appeal to some firms.
Experts explain that such financial arrangements are common in legal settlements, providing upfront liquidity in the face of protracted lawsuits. Data from US Customs and Border Protection indicates billions have been collected through the tariffs, with estimates of around $14 billion potentially refundable pending legal outcomes.
Cantor Fitzgerald has reportedly completed an initial trade of approximately $10 million in tariff refund rights, with expectations of rapid expansion. Meanwhile, public betting odds, such as those on Polymarket, indicate a low probability (11%) that Trump will refund the tariffs.
Commerce Secretary Howard Lutnick, whose sons lead Cantor Fitzgerald, has stated he is unaware of the firm's actions and maintains strict adherence to ethics agreements involving recusals and divestitures. Legal experts suggest the bank’s willingness to engage reveals insider perspectives on the tariffs' viability.