Retailers seeking immediate cash have increasingly sold the economic rights to potential tariff refunds over the past year, according to BDO Managing Principal David Wong, as reported by Retail Dive. This secondary market emerged amid the legal dispute over tariffs imposed under the International Emergency Economic Powers Act (IEEPA), with buyers offering companies upfront cash in exchange for the rights to future refunds, a practice known as tariff refund monetization.

Read also: Apple, Amazon, Nike Get Billions in Tariff Refunds; Consumers Get Little

Wong noted that for sellers, the primary risk is the economic uncertainty of when an importer will actually receive the refund. He explained that companies must weigh accepting a discount on the potential refund amount against waiting for the full amount plus interest at a later date.

Before the Supreme Court ruled against the IEEPA-backed tariffs in February, American Eagle Outfitters sold a portion of its refund claims to a third-party buyer during fiscal year 2025. The third party purchased $68.9 million of the retailer’s refund claims for $18.6 million in cash, according to a June 3 quarterly report. As of the filing date, $33.1 million had been paid to the buyer from refunds the company received from the government. American Eagle Outfitters also reported applying for about $190 million in tariff refunds, with an anticipated net cash benefit of $140 million.

The discount rate for these transactions has varied depending on timing relative to the Supreme Court ruling, Wong said. Before the decision, refund claims traded at 30 to 40 cents on the dollar, representing a 60% to 70% discount. After the ruling and the establishment of a refund process with U.S. Customs and Border Protection, claims traded around 60 cents on the dollar.

The Children’s Place entered into a claim sale and purchase agreement with Alnus Investors on March 31, selling claims for refunds of tariffs originally invoked under IEEPA and previously paid to CBP, per its latest 10-K filing. Alnus purchased $38.2 million of these claims for about $25.7 million, and the retailer used the net proceeds to partially pay down borrowings under its ABL Credit Facility.

Lawrence Griff, head of retail and consumer brands at Grant Thornton, told Retail Dive that while such moves offer quick capital, the risk lies in the steepness of the discount. He said a CFO must weigh immediate cash against what could be realized with more patience, and that selling at too large a discount could invite criticism if market clarity later emerges.

Investment firm Oaktree Capital Management sued big-box retailer BJ’s for allegedly backing out of a deal to sell its refund claim. In a New York Supreme Court lawsuit filed in April, Oaktree said it had an agreement to purchase a $29 million refund claim from BJ’s for about $20 million, or roughly 70 cents on the dollar. BJ’s allegedly withdrew after CBP announced in April that it would launch a tariff refund portal. BJ’s did not respond to Retail Dive’s requests for comment.

Griff noted that many retailers seek alternative financing due to tighter working capital and seasonal inventory needs. However, the decision to sell refund rights at a discount depends on a retailer’s broader financial position. He said cash-rich big-box retailers with easy access to debt markets would not benefit from steep discounts, as their cost of capital is lower than that of other retailers.

Wong explained that the market for these deals has grown because traditional capital is too expensive, partly due to interest rates. Retailers often compare the cost of a commercial loan with the discount they would take on monetizing their tariff refund claim.

The market for these rights has not slowed after the IEEPA ruling. Griff said that with more certainty, more information, and large dollar amounts involved, a marketplace naturally develops, and it has remained robust even after the Supreme Court decision and the creation of a refund process.

https://www.indexbox.io/blog/tariff-refund-monetization-retailers-sell-claims-for-quick-cash/