Wall Street bets "The Supreme Court rejects tariffs, the U.S. government is forced to refund taxes," the son of the Secretary of Commerce even participated at one point

Wall Street investment banks are constructing a special "financial gamble," betting that the U.S. Supreme Court will ultimately rule that some tariffs from the Trump administration are illegal, thereby forcing the U.S. government to pay massive refunds to importers.

On October 25, media reports citing informed sources revealed that companies like Jefferies and Oppenheimer are actively facilitating such transactions. They are matching importers who have paid high tariffs with investors (mainly hedge funds) seeking investment opportunities.

In these transactions, importers essentially sell their future potential tariff refund claims to investors at a discounted price.

If the Supreme Court ultimately makes a ruling favorable to those challenging the tariffs, investors will reap a substantial difference between the claim's face value and the purchase price, while the banks arranging the transactions will take a commission.

Buying Refund Rights at Low Prices, Betting on High Returns

The core logic of these transactions is that investors purchase claims at prices far below the potential refund amounts.

Reportedly, investment banks have been reaching out to customs brokers in several U.S. states, seeking to buy claims from cash-strapped importers.

An Oppenheimer promotional material stated:

This solution provides the ability to eliminate uncertainty of outcomes and receive guaranteed payments immediately, without waiting for a final court ruling.

According to media reports citing relevant letters and anonymous insiders, hedge funds may buy claims for 20 to 40 cents on the dollar, meaning that if they win the bet, they will receive returns several times their original investment.

According to an informed source, most transactions range from $2 million to $20 million, with very few exceeding $100 million.

The company stated in its materials that its special assets team has arranged over $1.6 billion in similar transactions since 2021, centered around tariffs from the U.S.-China trade that predate Trump’s latest round of tariffs.

Notably, the investment bank Cantor Fitzgerald, led by the son of U.S. Commerce Secretary Gina Raimondo, also considered arranging such transactions earlier this year. However, according to media reports in August, the company halted related business before executing any transactions.

Legal Prospects and Execution Challenges

The key to the entire gamble lies in the ruling of the U.S. Supreme Court.

The U.S. Supreme Court is scheduled to hear arguments on November 5 regarding the legal challenges to the tariffs imposed by the Trump administration under the International Economic Emergency Powers Act. Previously, two lower courts have ruled that Trump did not have the authority to impose tariffs under this act.

If the Supreme Court ultimately determines that the tariffs imposed by the government are illegal, the U.S. government may need to refund a significant portion of the tariff payments to companies.

It is estimated that by fiscal year 2025, net customs revenue from increased tariffs will reach $195 billion. The Supreme Court may issue a ruling by the end of this year or in the first quarter of 2026.

Trump himself has always favored the revenue generated by tariffs, claiming that tariffs have made America "very rich again," and believes that if the Treasury is forced to refund these funds, it would be a "disaster" for the country. **

Even if the Supreme Court overturns the tariffs, the refund process will not be simple.

This is especially complicated for importers who handle documents and tariff payments through commercial couriers like FedEx and United Parcel. The U.S. Customs and Border Protection only issues refunds to registered importers and may require documentation for each shipment to obtain a refund