This audio is auto-generated. Please let us know if you have feedback.
Looking for immediate cash, some retailers sold off the economic rights to their potential IEEPA tariff refunds over the past year.
A secondary market emerged looking to purchase future refund claims from businesses amid the legal debate over President Donald Trump’s levies imposed under the International Emergency Economic Powers Act, BDO Managing Principal David Wong told Retail Dive.
At a discount on the full value, buyers offered companies cash in exchange for the rights to those potential refunds that could come to fruition if the Supreme Court ruled against those levies. The approach is referred to as tariff refund monetization.
“For the seller, a lot of the risk is purely the economics of that transaction because of the uncertainty on exactly when an importer will receive their tariff refund,” Wong said. “That's been the biggest risk. … Do I want to take a discount on the amount that could be refunded to me and get upfront cash today, and how does that compare with the full amount plus interest on if I got that amount at a later date?”
