Colby Cosh: Betting against Trump's tariffs
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The Piper Sandler folk noticed. They believe the U.S. Court of International Trade's (CIT) late-May decision against the tariffs is quite sure to survive upward passage through the appellate courts; the Federal Circuit begins hearings soon. I wrote about the CIT ruling at the time, observing that the IEEPA does not explicitly allow the president to adjust tariffs at all, that the law has never before been invoked for that purpose and that U.S. President Donald Trump's invocation of a 'national emergency' is full of logical and procedural holes. Piper Sandler concludes that even a Supreme Court containing Trump appointees is probably too originalist to swallow such an obtrusion onto the U.S. Constitution, stating that a 9-0 loss for Trump is more likely than any Trump win.
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Such a final showdown is likely to be many months away, and the courts are allowing the federal government to collect the tariffs now, but they will be subject to refund in the event of a reversal. Which brings us to a remarkable item published by Wired magazine last week. Reporters Louise Matsakis and Zoe Schiffer learned that one of Wall Street's most celebrated lenders has found a promising new line of business: they're making a market for the rights to those hypothetical future tariff refunds. The company is said to be offering 20 to 30 cents on the dollar: if you have paid a million in IEEPA tariffs, they're willing to find you a quarter million or so now in exchange for the million you might get if Piper Sandler's prediction comes true.
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This financial creativity might be a life-saving cash injection for some firms struggling to adapt to the tariffs — but the kicker is that the firm plunging into this business, and betting that there may be refunds on the way, is none other than Cantor Fitzgerald, the firm controlled by the sons (aged 27 and 28) of Trump commerce secretary and rabid tariff advocate Howard Lutnick. Lutnick handed Cantor Fitzgerald over to the kids in February after he was confirmed for cabinet. He had a spokesperson tell Wired that he 'knows nothing' about the firm's new 'IEEPA Rights' product, has no remaining 'insight or strategic control' over the company and has 'fully complied' with ethics rules. What can it all mean?
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