American companies battered by tariffs and economic instability are resorting to creative financial strategies to stay afloat. Since the Supreme Court deemed tariffs imposed under the International Emergency Economic Powers Act unlawful, businesses have been waiting for $166 billion in refunds. However, delays in distribution and mounting financial pressures have forced many to use their pending refund claims as collateral for loans.
Economic Pressures Drive Innovation
Businesses are grappling with rising manufacturing costs, declining sales, and supply chain disruptions exacerbated by tariffs. According to a KPMG survey, more than half of U.S. companies reported compressing margins, with declines in both domestic and foreign sales. Nearly 70% delayed major investments as a result of tariffs, highlighting the financial strain.
'If you need the cash flow in order for your business to grow, to survive, it’s something where you’re better off having it now and trying to make it than waiting,' said Alex Hennick, CEO of A.D. Hennick and Associates.
Refund Uncertainty Forces Action
The Supreme Court left the process for distributing tariff refunds to the Court of International Trade and U.S. Customs and Border Protection (CBP). While an automated payment system is set to launch on April 20, refunds could take up to 45 days to process—a timeline many companies cannot afford. As a result, 26,664 importers have signed up for the CBP’s automatic refund system, representing only 8% of affected businesses.
Alternative Options Emerge
Facing uncertainty, some companies are turning to a secondary market, selling their refund claims to hedge funds and liquidity specialists. While this provides immediate cash, it often means sacrificing a larger refund. Others are leveraging their claims as collateral for loans, a strategy that offers immediate liquidity despite elevated interest rates. This approach is particularly appealing to industries like manufacturing, automotive, retail, and consumer goods, which have been hit hardest by tariffs.
As businesses navigate these challenges, the long-term impact of tariffs and refund delays on American workers and industries remains a critical concern.