Key Takeaways:
A growing number of US retailers are selling their rights to potential tariff refunds, a sign that sustained import duties are squeezing corporate balance sheets and forcing companies to prioritize immediate cash over future recoveries.
Academy Sports & Outdoors and The Children's Place are among the businesses that have transferred claims to tariff refunds they might be due, according to people familiar with the transactions. The companies effectively sold the right to collect refunds from the US government to third-party firms in exchange for upfront payments, typically at a discount to the claim's face value.
"The willingness to trade away refund rights at a discount tells you these companies need liquidity now, not later," said Elena Fischer, trade policy analyst at Edgen. "When the cost of waiting for a government reimbursement exceeds the discount rate, the math favors the immediate payout."
The practice centers on refunds tied to Section 301 and Section 232 tariffs — duties imposed on Chinese goods and steel and aluminum imports, respectively. Importers can apply for refunds if they later determine the tariff classification was incorrect or if the goods were re-exported. But the application process can take months or years, creating a cash-flow gap that some retailers can no longer afford to bridge.
The current average US tariff rate on Chinese goods stands at roughly 19 percent after the most recent escalation in early 2025, according to data from the Peterson Institute for International Economics. The previous round of tariff increases in 2018-2019 reduced bilateral trade by about $60 billion over two years, Census Bureau data show. Companies that imported heavily during that period faced extended delays in refund processing, with some claims taking more than 18 months to resolve.
For retailers operating on thin margins — typically 3 percent to 5 percent in the apparel and sporting goods sectors — tying up capital in refund claims for over a year can strain working capital. The Children's Place, which sources a significant portion of its merchandise from Asia, reported inventory of $347 million in its most recent fiscal year. Academy Sports, a Texas-based sporting goods chain with over 280 stores, carries roughly $1.4 billion in inventory.
Trading refund rights is not new, but the practice has gained traction as tariff rates have remained elevated. Third-party firms that specialize in customs recovery buy the claims at a discount — typically 70 cents to 85 cents on the dollar, depending on the likelihood of approval and the expected processing time — then pursue the refund themselves. For the seller, the trade-off is clear: a guaranteed payment today versus an uncertain recovery tomorrow.
The broader implication extends beyond individual companies. If the practice becomes widespread across the retail and import sector, it could signal that tariff policy is creating a structural cash-flow drag on US businesses. The National Retail Federation has estimated that tariffs on consumer goods cost the industry $4.5 billion per month in additional duties. Companies that cannot absorb those costs face a choice between raising prices, cutting margins, or finding creative ways to unlock cash — including selling refund claims.
The next escalation point comes in September, when the US Trade Representative is scheduled to complete its statutory review of Section 301 tariffs on Chinese goods. Any reduction in rates would shrink the pool of refund claims, while an extension or increase would likely accelerate the trend of companies trading away their refund rights.
This article is for informational purposes only and does not constitute investment advice.
