Cantor Fitzgerald Offers 20% to 30% for Trump Tariff Refund Rights

Cantor Fitzgerald, a financial services company led by the sons of US Commerce Secretary Howard Lutnick, has extended an offer to purchase the rights to potential refunds from companies that have paid tariffs imposed by Donald Trump. This move allows investors to speculate on the potential reversal of Trump's tariff policies in court.

Howard Lutnick, a staunch supporter of Trump's tariff policies, has previously stated that these tariffs could generate "hundreds and hundreds of billions of dollars" in revenue for the US. He believes that this revenue could eventually eliminate the need for Americans earning less than $150,000 to pay taxes.

If Trump's tariffs are permanently blocked by the court, businesses that began paying these tariffs on April 2 could be eligible for refunds, including interest. Cantor Fitzgerald is seizing this opportunity by offering to trade tariff refund rights for 20% to 30% of what companies have paid in duties. For instance, a company that paid $10 million in tariffs could receive $2-$3 million in exchange for their refund rights. The firm has the capacity to handle several hundred million dollars in these trades and expects this number to grow in the future.

Some companies may find this offer appealing due to the uncertain timeline for court proceedings and the financial pressures they face. Additionally, dealing with the court directly can be cumbersome, as it may take six to 12 months to receive a refund once approved. Ryan Petersen, CEO of a logistics technology company, noted that the process involves receiving a physical check in the mail, which some companies may find unattractive.

Financial firms often use such deals to profit from potential legal settlements, which can take years to resolve. These structures allow individuals and companies to receive money upfront or have their legal fees covered. According to US Customs and Border Protection data, billions of dollars have been collected under Trump’s new tariff policies. If the ruling is upheld on appeal, nearly $14 billion could be refunded.

Cantor Fitzgerald has already facilitated a significant deal, with a trade representing about $10 million in refund rights. The firm's clients are pricing in better than 3:1 odds of an overturn, indicating a high level of confidence in the potential reversal of the tariffs. However, some market participants, such as Polymarket, believe that Trump will not need to refund the tariffs, with only 11% of bettors expecting a refund.

Kristen Eichamer, press secretary for the Department of Commerce, stated that Lutnick is not aware of the decision made by Cantor Fitzgerald. She emphasized that Lutnick has no insight or strategic control over the firm and has fully complied with the terms of his ethics agreement regarding divestment and recusals. However, Tim Meyer, a professor of international business law, suggested that the bank’s decision reflects the views of those with connections to the administration regarding the merits of the tariffs.