Hedge Funds Emerge as Unseen Beneficiaries of Tariff Ruling, Building a $100 Billion Market on Importers’ Refund Rights

In late February, Representative Jamie Raskin, the lead Democrat on the House Judiciary Committee, directed a formal inquiry to Commerce Secretary Howard Lutnick and his son, Brandon Lutnick. Brandon currently heads the financial services firm Cantor Fitzgerald, having taken over the leadership role when his father joined President Donald Trump’s cabinet.

Raskin requested a probe into Cantor Fitzgerald, claiming the firm had been purchasing tariff refund rights from American businesses. He alleged that the firm offered these companies a small fraction of their original levy payments in exchange for the full value of their eventual refunds.

The inquiry cited reports from July 2025, which claimed internal records showed the firm had the potential to trade hundreds of millions in these rights and had already completed a transaction worth approximately $10 million involving IEEPA rights.

Howard Lutnick has been a prominent supporter of tariffs. Raskin suggested that because of the Lutnick family’s close connections to both the Trump administration and Cantor Fitzgerald, the firm might have had access to confidential information that influenced its decision to trade in tariff refunds.

“This potential conflict of interest raises concerning questions regarding federal ethics and insider trading,” Raskin stated. He questioned whether the Lutnick family’s move to capture this market was a coincidence or a planned strategy.

Cantor Fitzgerald has denied participating in any transactions within the secondary market for tariff refunds.

“Cantor Fitzgerald has never carried out any trades or held any positions related to tariff refund claims,” a spokesperson said in a statement. “While some Cantor employees explored the possibility of brokering these trades in July 2025, no transactions were ever executed. Any reports claiming otherwise are inaccurate, and we will clarify these points in our response to Representative Raskin.”

Raskin’s investigation has brought attention to a legal and expanding secondary market for tariff refunds. This market has grown as levies imposed under the International Emergency Economic Powers Act have faced legal challenges, culminating in a Supreme Court ruling last month.

With the potential for up to $100 billion in tariff revenue to be returned to U.S. businesses and consumers—who have largely borne the costs—investment groups, hedge funds, and liquidation experts are eager to profit from the possibility of these payouts.

“Speculative markets are essentially a form of gambling,” David Warrick, executive vice president at the supply-chain risk firm Overhaul, told . “Investors look at the situation and weigh the odds. They clearly identified an opportunity where, if the legal outcome matches their expectations, the potential profits are massive.”

Betting big on tariff refunds

Like other speculative ventures, the secondary market for tariff refunds emerged from traders betting that IEEPA tariffs would be declared illegal, requiring the government to return the revenue. Importers approached brokers at hedge funds and investment firms, selling their refund rights for roughly 25% of the original cost to secure immediate cash. If the refunds are eventually issued, those investors will receive the full amount.

For some U.S. businesses struggling with cash flow due to tariffs and supply-chain disruptions, the offer of immediate funds was highly attractive, according to Alex Hennick, CEO of A.D. Hennick and Associates, a firm specializing in distressed assets. For others, selling the rights was a way to avoid the high costs of legal teams and the administrative burden of the refund process.

“These hedge funds and investment firms are working closely with government procedures,” Hennick told . “They have navigated similar processes in the past; it isn’t a brand-new concept.”

This market gained significant momentum last autumn following a Supreme Court signal against IEEPA tariffs in September, which suggested to speculators that the levies might be overturned. The Supreme Court’s final ruling confirmed those expectations for investors.

“The court’s decision essentially validated their bet,” Hennick noted. “Now it is just a matter of navigating the process to recover as much as possible.”

While there is no precise figure for the current market size, Hennick told that between 15% and 50% of claims could eventually be sold to hedge funds or liquidation specialists. Warrick of Overhaul suggested the market could grow to as much as $100 billion.

Chances of seeing returns

The Supreme Court’s decision does not eliminate all risks in this market. The ruling left the specific details of the refund process to lower courts, such as the Court of International Trade. Meanwhile, Trump has indicated he would oppose the refunds, arguing they were necessary. However, Judge Richard Goldberg of the U.S. Court of International Trade recently ruled that certain tariffs were indeed unlawful.

“It is difficult to determine the exact probability that these refunds will be successfully distributed,” Wes Harrell, a trading group head at Seaport Global, told . “While I believe it will happen eventually, the main uncertainties are the timing, the format, and the potential bureaucratic obstacles that may be put in place.”

Rathna Sharad, CEO of the logistics platform FlavorCloud, noted that any refund process will be difficult due to the massive dollar amounts involved. While the U.S. has previously issued refunds following lapses in programs like the Generalized System of Preferences, those payouts were much smaller, typically around $3 billion.

“There is no historical precedent for something on this scale,” Sharad told . “It won’t be as simple as automatically mailing out checks to everyone who paid.”

The complexity of the recovery process will help businesses decide whether to pursue refunds themselves, sell their rights, or abandon the effort. Since many merchants are not the direct importers of record, they may rely on specific contracts or informal agreements to determine eligibility. Without meticulous record-keeping, the application process could become even more difficult.

“Companies are still trying to determine their best course of action. They are waiting for the situation to stabilize and consulting with legal counsel,” Harrell said. “It still feels like the early stages of this process.”