Odd Lots

The Scramble Is On for Businesses to Get Their Tariff Refund Checks

February 27, 2026

Key Takeaways Copied to clipboard!

  • There is a high degree of certainty among trade attorneys that importers will receive refunds for the struck-down tariffs, with the process likely being complex and potentially taking years, though guest Ryan Petersen predicts refunds could arrive this year. 
  • The secondary market for tariff refund claims is active, with claims trading at prices significantly below face value (e.g., 52 cents on the dollar following the Supreme Court ruling), reflecting uncertainty about payoff timelines. 
  • The tariffs incentivized foreign companies to establish themselves as non-resident importers of record to commit customs fraud by undervaluing goods, leading to approximately 20% of potential refunds going to foreign entities. 

Segments

Tariff Refund Certainty and Timeline
Copied to clipboard!
(00:03:36)
  • Key Takeaway: Ryan Petersen expresses near certainty that tariff refunds will be issued this year, based on legal advice and the DOJ’s prior filings.
  • Summary: The guest has a high degree of certainty that refunds will occur, predicting they will be seen this year. This confidence stems partly from the Department of Justice filing a motion in the appellate court acknowledging refunds would be necessary if the government lost the case. The case has been sent back to the Court of International Trade, which has 30 days from February 20th to rule on the next steps.
Importer of Record Explained
Copied to clipboard!
(00:11:04)
  • Key Takeaway: The entity legally entitled to the tariff refund is the ‘importer of record,’ which is generally a U.S. business but can be a foreign entity in specific circumstances.
  • Summary: The importer of record is the legal entity that pays the tariffs and receives the refund, typically a U.S. business. For small parcels, carriers like FedEx may act as the importer of record, paying the tariff upfront. The U.S., UK, and Hong Kong are unique in allowing non-resident importers of record, a practice that has exploded since the tariffs began.
Tariff Workarounds and Fraud
Copied to clipboard!
(00:13:11)
  • Key Takeaway: The tariffs created a massive incentive for foreign companies to establish themselves as U.S. importers of record to commit fraud by undervaluing goods.
  • Summary: Foreign companies circumvented tariffs by setting up as importers of record and drastically undervaluing goods upon entry to reduce duties by up to 90%. U.S. companies buying from these entities often washed their hands of the issue, as they were not the importers and thus not eligible for refunds. This led to an 11% flip in trade volume to foreign importers since April of the previous year.
HS Code Classification Art
Copied to clipboard!
(00:15:46)
  • Key Takeaway: Choosing the correct Harmonized Schedule (HS) code is an art, and while it is illegal to choose a code based on duty rate, selecting the correct, lower rate classification is permissible.
  • Summary: Each product has one official harmonized classification code, but determining the correct one is not always obvious. It is illegal to choose a classification solely to achieve a lower duty rate. Successfully arguing for the correct HS code classification, even if it results in lower duties, is a key area of expertise in customs.
Supply Chain Restructuring Trends
Copied to clipboard!
(00:18:31)
  • Key Takeaway: Manufacturing has shifted toward Southeast Asia and Latin America, often involving Chinese companies cloning production lines in these new locations.
  • Summary: Manufacturing has been moving to Southeast Asia and Latin America, with Chinese companies frequently setting up parallel factories managed by their own personnel. Simply shipping goods through a third country (transshipment) does not change the country of origin for tariff purposes; ‘substantial transformation’ through assembly and added value is required. This restructuring adds costs and transit times, as locations like Vietnam are further away from U.S. ports.
De Minimis End Impact on Air Freight
Copied to clipboard!
(00:35:36)
  • Key Takeaway: The end of the $800 de minimis exception for Chinese shipments did not cause air freight prices to collapse as predicted because high demand for AI data center components absorbed the volume.
  • Summary: The termination of the $800 de minimis exception for China, which previously accounted for 50% of global air freight, was expected to cause prices to drop significantly. However, air freight prices remained high due to massive component imports for global data center build-outs related to AI activity. Chinese e-commerce companies like Shein have established large U.S. fulfillment centers, continuing operations despite paying duties.
Tariff Refund Mechanics and Secondary Market
Copied to clipboard!
(00:40:19)
  • Key Takeaway: Claiming refunds requires importers to pull their ACE report, calculate owed amounts, and likely file formal protests, while a secondary market exists for companies needing immediate liquidity.
  • Summary: The process for obtaining refunds involves importers accessing their history via the ACE (Automated Commercial Environment) account and filing protests against the tariff payments. A secondary market allows companies to sell their claims, with prices fluctuating based on perceived risk and time value of money (currently around 52% to 70% of face value). Refunds are legally due with 6% annualized interest, meaning selling claims at 60% might mean leaving money on the table if the full amount is expected.
Future Tariff Uncertainty and Strategy
Copied to clipboard!
(00:25:55)
  • Key Takeaway: The administration is expected to use other legal mechanisms, like Section 301 and Section 232, to reimpose tariffs after the current Section 122 authority expires in July.
  • Summary: The current 10% tariff under Section 122 of the Trade Act of 1974 is set to expire on July 20th, but the administration is expected to immediately re-extend it or use other authorities like Section 301 (China tariffs) or Section 232 (national security grounds for steel/aluminum). Companies that absorbed the tariff costs, like Costco, are in a better PR position to receive refunds without facing pressure to pass them back to consumers.