Why Businesses Are Selling Their Tariff Refund Claims to Wall Street

Summary

WSJ What’s News – PM Edition

Episode: Why Businesses Are Selling Their Tariff Refund Claims to Wall Street
Date: February 25, 2026
Host: Alex Osoleff (The Wall Street Journal)

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Episode Overview

This episode delves into the fresh financial market trend of businesses selling their potential tariff refund claims to Wall Street investment firms. As companies wait on unpredictable government processes for tariff refunds, some are opting to take quick, discounted payouts from investors willing to gamble on a larger payoff later. The episode unpacks the dynamics of these transactions post a critical Supreme Court decision, explores how investment firms are valuing these claims, and touches on broader market headlines from crypto profits to AI-driven stock gains.

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Key Discussion Points & Insights

1. The Tariff Refund Claims Market (Main Segment: 02:43–04:53)

What’s Happening:

• Companies that paid large sums in tariffs are now deciding whether to wait for a possible refund—potentially years away—or to sell their claim at a discount to investment firms for immediate capital.

How Investment Firms Benefit:

• Investment firms buy these claims at a fraction of their potential value, betting that government refunds will be granted so they can profit from the difference.

Market Pricing Dynamics:

• Before a key Supreme Court decision, claims were trading at around 20 cents on the dollar.
• After the decision, prices jumped to approximately 40 cents, reflecting increased optimism and competition for the claims.

“Companies that paid millions and millions of dollars in tariffs are facing this crucial decision right now. Do they want to potentially wait years for this refund process to play out…or do they want to strike a deal with an investment firm that’s willing to give them a fraction of their money today?”
— Caitlin McCabe, WSJ Markets Reporter (00:37, 02:43)

Why Sell?

• Immediate cash versus uncertainty: Cash-strapped firms may prefer certainty now, even at a steep discount.

Risk for Investors:

• There’s no government guarantee on refunds; it’s a high-stakes bet, potentially including extra interest if payouts go through.

“Basically what they’re doing is they’re paying pennies on the dollar today in hopes that they will make a full dollar down the line. ... These claims are trading around 40, 40ish cents on the dollar.”
— Caitlin McCabe (03:24)

2. Market & Business News Highlights

Cuba Incident & Policy Change (00:25–01:55):

• Four people shot and killed on a US-registered speedboat in Cuban waters; incident under investigation as US policy on Cuban fuel shipments shifts amid humanitarian issues.

Crypto: Circle’s Profit Surge (06:22–08:55):

• Circle—the stablecoin issuer—reported booming Q4 profits (+77% revenue), benefiting as investors sought stability during crypto market turbulence.
• Circle’s shares spiked 35% as the company signaled moves beyond trading: cross-border payments, e-commerce, FX, and their own blockchain.

“...when the crypto market gets really volatile ... that’s when investors sell their cryptocurrencies and park them in stablecoins.”
— Vicky Go Hwang, WSJ Cryptocurrency Reporter (06:48)

AI & Tech Stocks (08:56–10:50):

• US stocks rose, bolstered by AI and software, notably Nvidia’s earning beat easing AI bubble fears.
• Salesforce and Paramount were also in focus with mostly positive results.

Prediction Market Enforcement—Kalshi’s First Public Fines (10:50–12:56):

• Kalshi fined two users for rule violations: one political candidate bet on his own race, and a Mr. Beast employee traded with inside information.
• This signals increased scrutiny as prediction markets gain popularity and the risk of insider trading rises.

“Kalshi prohibits candidates in a political race from making bets in markets related to their own elections ...”
— Crystal Herr, WSJ Reporter (11:39)

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Notable Quotes & Memorable Moments

• “Do they want to potentially wait years for this refund process to play out ... or do they want to strike a deal with an investment firm that’s willing to give them a fraction of their money today?”
  — Caitlin McCabe (02:43)
  Captures the core commercial dilemma faced by businesses with tariff claims.

• “They’re paying pennies on the dollar today in hopes that they will make a full dollar down the line.”
  — Caitlin McCabe (03:24)
  Explains the investment thesis in a nutshell.

• “These claims are trading around 40, 40ish cents on the dollar.”
  — Caitlin McCabe (04:16)
  Illustrates the shift and growing interest post Supreme Court decision.

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Timestamps for Key Segments

• Intro to Main Story & Headlines: 00:25
• Tariff Refund Claims—The New Trade: 02:43–04:53
  • Why businesses are selling claims: 02:43
  • How investment firms profit: 03:18
  • Pricing and risk insights: 03:24–04:22
• Circle’s Crypto Profits & Stablecoin Trends: 06:22–08:55
• AI, Nvidia, and Stock Market Updates: 08:56–10:50
• Prediction Market Regulation — Kalshi Fines: 10:50–12:56

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Conclusion

This episode spotlights Wall Street’s growing appetite for unique financial claims, especially in unpredictable regulatory environments. Through expert interviews and clear explanations, it explains the high-risk, high-reward nature of these tariff refund bets while delivering a comprehensive news roundup on global incidents, crypto markets, tech stocks, and prediction market regulation.

For listeners wanting deeper insight into the intersection of policy, finance, and speculative investing, this episode provides a concise and timely overview—straight from the experts at WSJ.

Transcript

[CLA Representative]

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[Alex Osoleff]

Four people on a US Registered speedboat are shot and killed after being intercepted in Cuban waters. Plus, while businesses wait to see if they get tariff refunds, Wall street is buying up those claims now.

[Caitlin McCabe]

Companies that paid millions and millions of dollars in tariffs are facing this crucial decision right now. Do they want to potentially wait years for this refund process to play out, or do they want to strike a deal with an investment firm that's willing to give them a fraction of their money today?

[Alex Osoleff]

And prediction market platform kalshi has fined two users for breaking its rules. It's Wednesday, February 20. Alex I'm Alex Osoleff for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today. This just in. Four people were shot and killed and six others were injured this morning on a US Registered speedboat after being intercepted in Cuban waters. That's according to Cuba's Interior Ministry, which also said that the vessel, which was registered in Florida, opened fire on the island's border patrol when they approached the boat on Cuba's North Central Co. As of this afternoon, the identities or nationalities of the individuals on the boat weren't disclosed. The U.S. state Department didn't immediately return a request for comment, while Cuba's Interior Ministry said that authorities are investigating the incident. The deadly clash comes as the Trump administration has sought to choke off fuel shipments to Cuba in recent weeks. In fact, today the Trump administration announced that it is loosening some restrictions on fuel shipments to the country amid a growing humanitarian crisis. The US treasury today said that it would allow the resale of Venezuelan oil to private companies in Cuba, though sales to the government in Havana are still illegal. It also said that some shipments of American fuel would be allowed for a handful of US Companies. As we reported earlier this week, the chaos over President Trump's tariffs is sending business leaders scrambling to sort out what may come next. But but some on Wall street are seeing an opportunity. Investment firms are buying companies rights to any refunds they might be due. I'm joined now by WSJ markets reporter Caitlin McCabe. Caitlin, let's start with the basics here. Why would a company sell its right to tariff refunds?

[Caitlin McCabe]

So what we're seeing is sort of the latest iteration of this kind of fun and esoteric corner of finance where essentially investment firms will buy the rights to money that another party is owed. Companies that paid millions and millions of dol in tariffs are facing this crucial decision right now. Do they want to potentially wait years for this refund process to play out after the Supreme Court decision that we got last week, or do they want to strike a deal with an investment firm that's willing to give them a fraction of their money today?

[Alex Osoleff]

Okay, that makes sense from a company perspective, but how do investment firms stand to make money here?

[Caitlin McCabe]

So, basically what they're doing is they're paying pennies on the dollar today in hopes that they will make a full dollar down the line. And I think that's the big question right now is how will this process play out? In its ruling, the Supreme Court didn't weigh in on whether the government would have to pay refunds on the tariffs, but essentially they're betting. We think that this is going to happen. We think that companies will get refunds, and so we'll just pay a fraction of that today in hopes of a bigger payout down the line. And so even months ago, we saw investment firms buying up these claims they were trading in the teens got as high as around 20 to 22 cents, based on what I was hearing. And then when the Supreme Court decision came out last Friday, that nearly doubled from what I'm hearing in the market now, these claims are trading around 40, 40ish cents on the dollar.

[Alex Osoleff]

And effectively, that means that investment firms have to pay a whole lot more because there's a little bit more certainty here.

[Caitlin McCabe]

That's what they're wagering. Again, none of this is guaranteed, but they're thinking, you know, if this market continues to go in this direction, better to lock in 40 cents rather than 50 or 60 or even higher. There's also a chance some companies are speculating that they might be paid interest on the tariffs that they paid. So there is a world where potentially investment firms could make that dollar back plus any interest on top of it.

[Alex Osoleff]

That was WSJ markets reporter Caitlin McCabe. Thanks, Caitlin.

[Caitlin McCabe]

Thanks for having me.

[Alex Osoleff]

And we're exclusively reporting that the Trump administration told Congress it won't share the classified intelligence that led to a whistleblower complaint against US Spy chief Tulsi Gabbard. In an email to Democratic congressional staffers sent earlier this month, Gabbard's office said it was unable to provide the unredacted intelligence that underpinned the complaint because of presidential claims of executive privilege. Yesterday, two top Democrats on the congressional intelligence committees sent a letter to Gabbard asking who asserted privilege over the intelligence report and on what basis. The Journal has reported that the intelligence relates to a conversation two foreign nationals had about Donald Trump's son in law, Jared Kushner. Coming up, what's got investors feeling chipper? That's after the break.

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[Alex Osoleff]

Circle, the issuer of the world's second largest stablecoin, said today its fourth quarter profit jumped as crypto investors continue to flock to its stablecoin. Its total revenue also surged 77% to $770 million in spite of the meltdown in crypto prices at the end of last year. Vicky Go Hwang covers cryptocurrency for the Journal and is here to break it down. Vicki why are the biggest stablecoins doing well when other cryptocurrencies like bitcoin have tanked?

[Vicky Go Hwang]

So when the crypto market gets really volatile and bitcoin prices and major token prices are tanking or going up and down, it's actually somewhat positive for stablecoins because that's when investors sell their cryptocurrencies and park them in stablecoins. But this doesn't extend to every single player in the stablecoin space. Usually it's the largest players like Circle and Tether that have already established their foothold in the market that sort of weather these storms somewhat unharmed.

[Alex Osoleff]

Circle went public in June last year and it had this big stock market debut, but since then shares have fallen almost 70%. Today, though, its stock rose 35%. Is this a sign of a turnaround, potentially for its stock price?

[Vicky Go Hwang]

So Circle went public last year and their IPO was really a blockbuster debut and the stock soon reached a peak after after the president signed into law the first stablecoin bill, which really helped establish a regulatory framework for the stablecoin space. However, stablecoins, even though they are stable and pegged to the dollar, they are still mainly used by crypto traders to trade in crypto. So they are numbed together with a broader crypto space. Circle's performance today in may be because the company said how they are trying to expand beyond just using stablecoin as a trading tool, but also for cross border payments and E commerce. They're also trying to diversify into FX business or launching their own blockchain or setting up their own payments network. Their performance sort of decoupled from the broader crypto market and they could be on the path to a turnaround if they're able to diversify their revenue stream and broaden their business beyond relying on the interest income that comes from the reserves.

[Alex Osoleff]

That backdoor stablecoin that was WSJ reporter Vicky Go Hwang. Thanks Vicky.

[Vicky Go Hwang]

Thank you for having me.

[Alex Osoleff]

US Stocks rose today AI related names and software stocks continued to bounce back from Monday's sell off. Nvidia stock gained 1.4% ahead of its earnings after the close, which helped push the NASDAQ 1.3% higher on the day. The S&P 500 and the Dow were up less than 1%. And reporting after the bell, Nvidia reported record sales and income in the January quarter, helping ease concerns over a possible artificial intelligence bubble that have rippled through markets in recent months. The chip giant reported fourth quarter net income of $43 billion, up 35% from the year earlier quarter on sales of $68.1 billion, up 20% from a year earlier, easily beating analyst estimates. Paramount Streaming revenue grew in the fourth quarter, but the company reported weakness in its TV media segment. The company reported revenue of $8.15 billion for its fourth quarter, in line with analyst estimates, and Salesforce expects revenue to grow in the current fiscal year at about the same rate as it did the year before as Investors worry about AI's threat to software. Revenue in its most recent quarter rose 12% to $11.2 billion in line with analyst expectations. For more on these results, visit WSJ.com Prediction Market Platform Kalshi said today that it's fined two users for violating its rules. One person who ran for governor in California was fined more than $2,000, which includes the amount related to his trades and penalties, while another was asked to pay more than $20,000. Kalshee said this was the first time it's publicly disclosed disciplinary actions against users and comes as the proliferation of prediction markets has raised concerns about users making trades, using inside information and manipulating markets. For more, I'm joined now by Journal reporter Crystal Her. Crystal, how did Kalshi catch these two users?

[Crystal Herr]

So for the case of the trader who bet on his own victory in the race for the California governor, he actually posted a video that seemingly showed him making that bet on X. So it sounds like the surveillance department saw that video, froze his account, and investigated and then found that his trades violated Kyoshi's rules. And then the second case with the video editor who worked for Mr. Beast, it looks like the data show that he was getting some pretty successful trades on a market where that is pretty difficult. And that not only raised the concerns of people at Kalshi who work on that same team, but also of Kalshi users who flagged it to Kalshi. So in both cases, it was the work of the surveillance department. And in the second case of the Cauchy users as well.

[Alex Osoleff]

What rules did the users violate?

[Caitlin McCabe]

Exactly.

[Crystal Herr]

Yeah. So in the case of the political wagers, Kalshi prohibits candidates in a political race from making bets in markets related to their own elections, as well as those employed by political action committees. And if you look at the LinkedIn page of Kyle Langford, who is the traitor who was faced with these fines, it says that he is the president of a California based pack. And for the second user, he was privy to information that is not public to other people. And so he should not have been trading on markets related to Mr. Beast according to Kalshi's rules.

[Alex Osoleff]

And we should note that a spokesperson for the company that oversees Mr. Beast's business ventures said the firm prohibits its employees from making prediction market wagers using proprietary company information. And it declined to comment on whether the employee still works there. Crystal, as I mentioned, this is the first time that Kalshi has publicly made it known that it's taken disciplinary action against users. Should we expect to see more of this?

[Crystal Herr]

It seems like that is likely that it will happen. These prediction markets are only becoming more popular, and there's a lot of concerns about insider trading and market manipulation, especially because these markets are geared towards everyday Americans. And Kalshi did announce just a couple of weeks ago a lot of hires they'd made to crack down on this sort of activity.

[Alex Osoleff]

That was Journal reporter Krystal Herr. Thanks, Crystal.

[Crystal Herr]

Thanks.

[Alex Osoleff]

And that's what's news for this Wednesday afternoon. Today's show is produced by Pierre Biennime with supervising producer Jana Herron. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning.

[Caitlin McCabe]

Thanks for listening.

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