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

Episode Date: February 27, 2026

Earlier this month, the Supreme Court ruled that Trump's "Liberation Day" tariffs were illegal. And now basically every importer who paid those tariffs will be rushing to get their refunds. But will businesses actually get paid? And how do they file a claim? And should consumers get refunded if a business passed the cost of the tariffs on to them? On this episode, we're rejoined by regular Odd Lots guest Ryan Petersen, the CEO of Flexport, a major freight forwarding company. We discuss how the entire refund process works, and the estimated timeline for payoff. We also talk about the booming secondary market in refund claims, where traders are buying up other people's claims for, in some cases, 50 cents on the dollar. Ryan also walks us through how world trade has changed since the tariffs began and the various way companies tried to game the system. Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

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Bell, connection is everything. Podcasts Radio News. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthall. And I'm Tracy Alloway. Do you think you and I are going to start getting checks because they struck down the tariffs, right? And according to economists, consumers pay the tariff. So if consumers pay the tariffs and they strike down the refund, shouldn't we get the money?

I have often said, Joe. I buy a lot of stuff. Yeah. Especially from abroad. A lot of weird stuff. Sometimes I feel like I'm running a small logistics company. Yeah. And I will say, so I know it's the importer of record who actually pays the tariffs and is supposedly supposed to get the refund.

However, I've had a few instances where, like, the Postal Service will deliver something to my house, especially in Connecticut. And while they're there, we'll say you owe us like $50 in cash as a tariff payment. And I'm literally standing on my door paying out cash and it's going somewhere. So I feel very much like I actually have paid. paid the tariffs pretty much directly to the Trump government. Like there is something very visceral. Tracy, I have some bad news to. I know, I know.

The person who did that was a con artist who showed up. No, it wasn't. It was it. And they, they duped you into thinking of that because I have never heard of someone having to pay cash in. You're not buying enough from abroad. No, it's definitely true. I got the bill online and then you can either pay online or you can pay the postal guy in cash.

It's very strange. I've never heard of that. Anyway, everyone wants their money back. How that's going to happen, what the time frame is, it's going to be major court fights. It was an article in the Wall Street Journal this morning, and it said that the scale of the suits to recover it is going to be, quote, the same level is at its bestest levels, which famously was, you know, multiple decades of lawsuits. Also gave birth to an entire portion of the legal industry. Lots of mesothelioma lawyers out there. Some time later, I'll tell you, I was briefly part of that industry as a data collector.

for it. Oh, that's interesting. Yeah, it's fun. Anyway, we got to figure out how it's all going to happen because we know all these big companies. They want their money back. Of course, you know, there's new tariffs already. And they're like the Trump administration after losing one tariffs.

They're like putting in a different one. That's probably going to have court fights, et cetera. We also know that there was a popular secondary market in claims that Wall Street banks were facilitating. And so this is going to be a mess. It's probably going to stand for years. We got to figure out how companies are actually in the process of getting their money back.

And whether they'll ever see it or whether it all go to the lawyers. Well, this is the other thing. I know you and I live in perpetual fear of paperwork and bureaucracy. And this in particular just strikes me as like the biggest nightmare of paperwork and bureaucracy. Oh, I hate that. You know, for some of the tariffs, you're like calculating them by like the proportion of like the tariffed item in the thing you're buying. So like steel and aluminum. How much of this thing is actually steel?

It just seems like a nightmare. The whole thing of customs seems like a nightmare still very antiquated. We got to learn more about this nightmare, about this chaos. And who do we talk to when we want to learn more about, not the theoretical stuff that about trade, that economists talk about, which I love them too. But the actual nuts and bolts of moving things, of course, perfect guest, Ryan Peterson, founder and CEO of Flexport, joins us today.

So, Ryan, thanks for coming back on odd lives. It is great to be with you. And Tracy, that person may have. been an impersonator of a postman, but it is illegal to impersonate a postman. I try to be one for Halloween and you can't buy a postman's outfit. I had to borrow one. I made friends with the mailman and he gave me his to borrow, but he was like, I will get fired if anyone finds out. Guys, I'm just going to be very clear. It wasn't a scat. The guy had my package. I had the bill. I've received the package. Customs isn't going after me for unpaid bills. It's just weird. It's weird. But I think

it speaks to like a lot of Americans will feel like they have paid these tariffs extremely directly. All right, Ryan. Let's just start big picture. You work with a lot of companies, etc. February 26th. What are they all up to right now? Everybody wants to figure out if they're going to get a refund. That's the big question. And if so, when and how. And my, what we've been telling you, so Flexport is one of the bigger customs brokers in the United States. And I think the most automated one of the best systems for calculating this stuff and all that. That's my only sales bitch I'll do here. So that is the giant question. And then they also wanted to, hey, hey, can I sell this now?

You know, you mentioned the secondary market. Very interesting fun fact there is that those were trading at about 25 cents on the dollar three weeks ago. And it went to 52 cents on the dollar on Friday the same day of the Supreme Court. Markets move very fast on this stuff. So a lot of the companies I talked to in the last week have said, the CEOs had said, yeah, they would sell at 70 cents on the dollar today. And they're considering it at 52 cents. So I think that market's really going to heat up.

But yeah, those are the big questions. ask and I do have opinions I think I believe I have a very high degree of certainty like bordering on certainty conviction bordering uncertainty that there will be refunds and I don't think it's going to take that long I think you're gonna see refunds this year would be I'm gonna put my name I put my reputation on the line with that prediction well okay so the Supreme Court not for you Tracy sorry I don't know no no I know I've already resign myself I need to hire a customs broker actually is what I need to do someone like Ryan but okay so this

Supreme Court struck down the majority of the tariffs, but the thing they didn't do is say, like, what happens next? How do refunds actually work? Do you get a sense of, like, did they have any idea of how it should work that they just didn't say? Or like, they're just leaving it open to who exactly to decide the process of how this actually happens? Yeah, so little backgrounds here. So this started as a case in the Court of International Trade, which the administration lost. It then went to the appellate court, which is the level below the Supreme Court. In the appeal there at the appellate court, the plaintiff, this company called Voss something, but I forget, I should another day, but the plaintiff is a small business that was suing. And they actually asked for a stay, an administrative injunction, a stay, to say, hey, you have to stop collecting these tariffs while this gets worked through. You lost the case. You need to stop now. And the DOJ in that appellate court filed a motion that said, if we lose this,

case, if the government lose this case, there will be refunds. Like, that's from the DOJ. They filed the motion. You can read it in the docket. They then lost the case there. It went to the Supreme Court. They lost again. The Supreme Court has sent it back down to the original first court, the Court of International Trade, and said, okay, you decide if there's, you know, how the refunds are going. They didn't say anything about refunds. It just goes back to them. It's just if you read the thing, and I'm not a lawyer, okay, but I can read it and I make my own opinion. But the more, the reason I really have certainty is I've talked to three different international trade attorneys who all told me a hundred percent certainty that there would be refunds. And I've never heard a lawyer say 100 percent certainty of anything before in my whole life. So by the way, the company that filed, I'm looking at a Voss selections. It's a wine importer in New York. It looks like they have a nice website. Their website is very funny because it has all these beautiful pictures. And it says wines and then sake and other spirits. And then there's a big thing called fighting the tariffs. It sort of looks ugly on their website. That's epic. I've got to buy some wine from this guy.

They've done everyone a big solid here by taking this on. That's a future Oddlott's guest right there. Yeah, we should actually. We should actually. We should actually. This court of trade, it's not like some UN court. It's a New York based U.S. court. Yeah.

It sounds like it would be like the WTO or something like that, but this is a local. No, no. It's a U.S. court where they send these types of cases. In fact, there was another case that was brought in the D.C. circuit court, and they bundled them together into the Court of International Trade. Now, currently, there are over 2,000 cases before the court's, before the court challenging IEPA. Sorry, requesting refunds, in fact, challenging that they should get a refund. So I think those will likely all get rolled into one and it'll go to court.

Now, the Court of International Trade has only 30 days from February 20th was when the Supreme Court came out. And they have 30 days to make a ruling of what happens next. So I think we're going to know pretty quick how the refunds, you know, that there will be refunds. Just to be clear, is part of the reason that there is this confidence, I mean, the law is the law, I guess, but is because of that DOJ comment prior to the Supreme Court pre-indicating that if you guys reverse this, we're going to have to make refunds? Is that part of the reason that the lawyers have such confidence because they've already stated that as part of their arguments against striking this down? I mean, just think about, look, I'm not a lawyer. And you're always going to find some lawyers that will show some gray area. But I've talked to three that had just pure certainty.

And just imagine that you're going back to the same judge and you're saying, hey, you know, you're trying to fight the refunds. And your judge is going to get like, well, you filed this paper, you know, this motion in my court that said you would give a refund if you lost. Like, why are you not honoring that saying? So but there's there's complexities here. I'm not a legal expert. I'm more of a customs tariffs expert. So maybe before we go any further, let's just talk about.

who actually is paying the tariffs when like, you know, an item gets made abroad and then it gets imported by, I don't know, a shipping company, and then it goes through a customs broker, and then it actually ends up at a store, and then it gets bought by whoever. Who is the entity that is actually paying the tariff? So the importer of record that supposedly is going to get this refund. Yeah, that's the legal term for it, is the importer of record. And it's generally a U.S. business. In your case, you did it as an individual.

you may or may not have been the importer of record on that transaction. Yeah, I'm pretty sure it was like the actual shipping company, but whatever. With small parcel, that's what happened. And that's very relevant because FedEx this week sued the government for a refund. And my initial reaction was like, wait, I don't understand. FedEx doesn't pay the tariffs. Their customers do. But it turns out for a small parcel, what I did, I'm not in the small parcel business,

small parcel business. I didn't realize this really. But is that if you're getting a parcel delivered, although you are sent a tariff bill by FedEx. FedEx is the importer of record. They pay the tariff. So the refund comes to them. They don't have to give it to you legally until they'll probably get class action lawsuit

by a bunch of Tracy's and your friends and everybody else out there. Or, you know, it's also just brand damage. If they get the money from the government and don't do it, I don't know. It seems like a bad look. So that's in the case of small parcel. You're importing containers. That's the business that we're in, ship large, volume stuff. The importer of record is a U.S. entity, but it doesn't have to be. In actually,

United States, the UK, Hong Kong are the only countries in the world, if we want to count Hong Kong as a country, the only places in the world that allow non-resident importers. So it's a foreign importer of record. Until April of last year, that was about 9% of U.S. trade. Since April, it went to 20%. It's been an explosion of companies, 11% of trade flipped to where the foreign company imports it. And so actually, about 20% of the refunds, I don't know in dollar value, but 20% of the companies getting a refund will be foreign companies. And nothing is going to piss Trump off worse than that.

We're literally going to wire this money overseas. Can you explain what changed since Liberation Day such that it made sense for a lot of foreign companies to establish themselves as importers in the U.S.? Yeah. So what changed was a massive incentive to commit. fraud. And if you're a U.S. company that was buying goods from overseas, you have to pay the tariffs, right? And you declare your goods. You pay the tariff as a percent of the value of those goods. If instead you say, hey, I'm just going to buy the goods in the United States from my factory

and they'll take care of the tariffs. And that foreign company can just undervalue the goods and say, hey, this thing that, you know, it's actually only $10,000, not $100,000. And you just reduced your duties by 90%. Oh. And the U.S. companies are doing this in mass and washing their hands and say, hey, I didn't know any better. I didn't know. I don't see any of that. I'm just buying the goods from this foreign company. And it's not my problem. And so we've seen a huge explosion of that. And all those people are not, those U.S. companies, by the way, they don't import anything. So they're not getting any refunds at all. And I don't feel bad for them. Yeah, you got to imagine when you have something like these tariffs come into play, you're going to see some creative.

creative, you know, for listeners, with air quotes around there. Yeah. And where we started, Tracy, was you were talking about an individual case where you actually bought something from abroad. But of course, the massive things is, hey, you just buy it domestically from a company. They did raise their prices for the tariffs in a lot of cases. You're not going to get any refunds. But the really interesting shakedown that's happening is, okay, let's say you actually are a wholesaler

and you sell to Walmart, Target, these types. Your tariffs went up. You raised prices. Walmart, I talked to a company last night who's a big seller on Walmart, wholesaler to Walmart. And they said Monday morning, Walmart called and said, hey, we need to talk about this tariff refund. Oh, yeah, yeah, yeah. Because, you know, they don't have a legal obligation to give money to Walmart, but Walmart also doesn't have a legal obligation to keep carrying their product in the stores. Right. Right. So there's some influence they could exert. Actually, this reminds me. So one of the things I was wondering, and again, this comes from my personal capacity of bringing strange items into the U.S., but I,

I bought like an antique box recently. An antiques, I'm pretty sure are supposed to be exempt from the tariffs. But I still got slapped with the tariff charge because the exporter, the person sending it to me, did not label it as an antique. They labeled it as box, which was very, it was a box within a box. It was very annoying. And so it got a big tariff. How much flexibility do importers in the U.S. have over like the actual labeling of the items that they're bringing into the U.S.? Is that one way that you could potentially, you know, try to lower your tariff burden?

Fraud advice from MacPeters. It is, it is illegal. So each product has one and only one harmonized classification, we call it, harmonized schedule code. It's a classification. That said, it is not always obvious what the right one should be. And there's a whole art of classification. It's a very difficult. But it's illegal to choose your classification based on duty rate.

You know, you've got to choose it based on what's correct. Now, if the correct duty rate should happen to be lower than the incorrect one, then you're doing a great job at life. And so that's a whole art and science is how do you make the case, prove it that you did in fact get the right HS code classification. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real. Lots of firms throw a couple flashy funds your way and call it a day.

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Bell, Connection is Everything. I want to talk more obviously about the logistics of the next several weeks and months about how this is going to be. But just in terms of maybe not necessarily fraud per se, although that was very interesting. What else have you seen basically since last April in terms of companies rerouting any of their, you know, what are the big trends in terms of restructuring the direction of the supply chain? Because part of the question to my mind is going to be with ongoing ongoing uncertainty, uncertainty about the future of tariffs and there's already a new tariff and Trump may try to restore the old tariffs in aggregate through other means and so forth. Have there been changes in

trade flows that you expect companies are just going to keep because at this point, this is the new normal and it's not sort of worth going back? For sure, lots of manufacturing has been moving towards Southeast Asia and Latin America are kind of the two big winners, Turkey, a few other locations where you're seeing stuff that can shift, move. I think the most interesting and not immediately obvious, the most interesting trend has been that it's actually in many cases Chinese companies setting up factories in these countries. And so it's like literally you're working with the same company you worked with before. And they've cloned the line. In many case, they've sent Chinese workers to manage the line. Yeah. And so it's not that as far as the money

flows, like it's still kind of going straight back to China in a lot of those cases. People are frustrated because the quality is just a lot worse. It's not easy to just pick up, shop and move the manufacturing. You're just adding layers of cost here. A lot of what's happening is in order to change the country of origin, it's not just, you can't just ship it to that country and then ship it to the U.S. That would be called transshipment. And the U.S., one of these recent executive orders did this like new tariffs on transshipments.

But it was just a ridiculous concept that shows that the guns. government doesn't understand their own rules because if you just ship it to Vietnam and then ship it to the United States, it's still a product of China. So there's no tariff on transshipments. It's just the tariff on the Chinese goods. So that law was nonsensical. That executive order was totally nonsensical. You have to actually create and show that you have trans, it's called substantial transformation. You have to show that like, okay, I have assembled products in this country. I've added enough value, whether it's through labor or other components to make it a product of Vietnam. But, of course, by definition, that's just adding costs.

And then transit times, too, because Vietnam is further away than China. There are less direct ocean sailings, et cetera. So it's been very difficult for people to navigate. I said that would be my last sales pitch earlier. But we do have a free tool for this as well. It's at atlis.netnetport.com. You can see a transit time between any two ports in the world, like the actual, like how it moves. So this has been quite helpful for people to go navigate.

And tariff, stopflexport.com helps you see what the tariff rate is. Always be pitching, Ryan. It's fine. They're free tools. So I don't feel like I'm trying to make money off your audience. So one of the reasons the story is so interesting is obviously there's a logistical element. There's an economics element. But there's also this political element.

I feel like all of economics nowadays is pretty political. But in any case, you know, Trump has said that the American consumer doesn't pay the tariff. And yet it seems we are very much about to talk a whole lot about how much money American consumers might be owed. from tariff refunds. Do you get the sense that any companies are sort of caught between a rock and a hard place where, you know, like maybe they would like to pay out some of their refund to their customers, but at the same time, they also don't want to make huge announcements about returning money that Trump says was never taken away in the first place.

Yeah, I mean, it's definitely those FedEx, UPS, DHS of the world that are in that condition. U.S.PS will be an interesting one. I'm not sure. You know, it'd be interesting to go look at those parcels he didn't see. Was it actually USPS or was it FedEx? Because if it was USPS, presumably you are the importer of record, but maybe it's USPS. That would be kind of a crazy case, actually. If USBs doesn't give back the money that they charged you, that would be a great class action.

Yeah, those are probably the one. But it's really just like a brand and business question more so than a legal one, I think. Maybe they don't want to piss off the Trump administration. By the way, I might just spend the rest of this conversation only half paying attention because I'm now playing at atlis.flexport.com. It's really cool, like clicking all these ports and seeing all the routes and seeing how long it typically takes from one route to another. I know. It's amazing. I think you've done this.

It's very helpful. This is really fun website you built. Global trade has been this mysterious black box for centuries. And now you can just see how it actually works. Where do the ships go? It's like the bus routes. You know, what ports do it stop at? how long did they take? No, this is a really fun website. So thank you for plugging it.

So, okay, tell us actually about, I guess because you're highly automated and digital, et cetera, do all companies have really good records on this stuff? Is it very clear just from a sort of over the last year? Would you say the vast majority of companies know exactly how much they've paid on ambiguously? I would say they do not, but they can very easily. So the U.S. Customs Technology System is called ACE automated commercial environment. And customs brokers love to complain about this. It's like healthcare.gov like times a million in terms of debacle of engineering problem. But it works. It took them like the decade longer than it should have to launch the thing. And you can, every importer that does entries like commercial customs entries, not the tracies of the

world shipping a package to themselves, but like real customs entries of formal entry, all those entries are available to you. So you can see your past history. You have to just go to And you all have an ACE account. If you don't, you've got to go create one. And if you want a refund, you must have an ACE account. They've until about two months ago, no, until February 6th, all refunds were done via paper checks from the Treasury Department from Customs. And we, Flexport has gotten over $900 million with the refunds for our customers in the last five years from Customs, one of my most proud life achievements. And all of those came via paper checks. Many of them got lost in the mail. Some of them got cashed by scammers, etc. So this was on February 6th, they, updated so that now refunds will be electronic, which was actually maybe a sign that they kind of had a sense of what was here to come. But yes, your ACE account does show you your entire past history of all your imports. And if you go to tariffs.com at the top, you can upload that and we will just show you exactly how much money you're owed. And we got about 70 Fortune 500 companies signed up in the last

week. Wow. Starting to calculate these tariffs and CFOs are coming to look. Again, it's a free service. you can just go look up your tariff refunds. Do you get any sense from your clients of, you know, I'm pretty sure they're excited about potential refunds, but do you get any sense of what they're going to do with them? Is it just, you know, fill the hole that was left from paying the tariffs in the first place? Or does this count as like a windfall payment that they could potentially hold on to and use to invest or whatever?

Yeah. These are sick and demented people who have an addiction to just buying inventory. And they're going to just buy a lot more stuff and try to grow their. No, I'm joking, but I assume that that's what will happen is you, everyone's an optimist. You get a lot of money. Most lottery winners go broke, although that might not be, it might be an urban legend. But I think they will go reinvest in their business in ways that may not make sense. And I've been advising people, you know, put it in your bank account, buy something, you know. Say that for the next round of tariffs, presumably.

So this is a, so this is actually what I was going to ask, which is, so already there's this new 10% tariff. One of the things I think I saw was that in his latest truth, social post he said 15%, but that actually it's 10, like the actual formal thing is 10%. What is the current state of tariffs as you see them? It's currently 10%. The section 122

is 10%. It was a legal limit of 15 and that's what he did the next day. First, he announced 10 on Friday after the Supreme Court, like an hour or two after. Then the next day on Saturday he went to 15. I thought he was going to wait at least until the hockey gold medal match and

just like if Canada won then put the 15. percent in, but like he jumped a gun on that. But did he put the 15 percent on? Because what is the terrible? He did. But he did it be a, I think, truth social or some other post. That's not how the laws work. So you have to actually publish it through the code of federal regulations.

And they haven't done that yet. So we're waiting for like official word, which, you know, usually it's a couple of days lag from when he says something. So it's still 10% as of today. But I would expect, you know, maybe by the time this episode air as it goes to 15. Tracy, did you know, speaking of the gap between announcement and formal? thing that technically Kevin Warsh hasn't been nominated yet. No, is it because there's a part, he has like send it to, it hasn't been sent.

And his odds on Polly Market were at 99% the day after the announcement, and they're now like 96%. So people are wondering what's up with, anyway, just throwing that out there. I should just say, we're recording this on February 26. Because again, all of the stuff seems to change day by day, if not hour by hour. So that's the disclaimer. It's very fluid. And the section 122, you, it's the section 122 of the Trade Act of 1974. And that's what gives the, that's one of the several tools. I would say that Trump probably, he lost AIPA in the Supreme Court. He has at least four other acts of Congress that have delegated trade, a tariff authority to the president under certain conditions.

Aipa was the one that they never been used before for tariffs, always for sanctions and outright bans on trade. The reason they liked it, it was under their interpretation. It gave him blanket authority just to do what they wanted whenever they wanted on demand. Like he could just wake up in the morning and just like you get a terror if, you know, you look at him the wrong way and you get a terror. That seems like it was in Switzerland specifically, right? Didn't he say specifically he was just annoyed? I forgot. Yeah, I wouldn't surprise exactly.

What you were describing was not actually a hypothetical. No, I mean, that was basically what he was doing, Canada a couple of times, etc. So the other ones require, they have much more formal mechanisms that will require like the Commerce Department or USTR to do some, you know, do something and go run a report, go demonstrate that in fact this country and this sector are being anti-competitive and they're doing something and then punish them. Now, 122 is the one that he put in. It has relatively blanket authority, but it has two limits on it. One is that it's a maximum of 15%, which we just talked about. And the other is that it's a maximum of 150 days.

And that'll go until July 20th of this year. And so then what you should expect is like between now and July 20th, that he'll be using these other mechanisms of which there's Section 301. That's the famous China tariffs from his first term, where Section 301 tariffs. Those have not been challenged. He's been able to maintain those. And then Section 232. And 232 is on national security grounds.

That's what the steel and aluminum tariffs have come in on. That's not getting challenged. or if it has they won the case or will win the case, it's reasonable to say that steel and aluminum are not important national, from a national security perspective. However, he also used Section 232 to impose furniture tariffs on national security grounds. And I think that's a little bit of a stretch personally. Couches, comfy couches are a security issue, I would argue.

I imagine on July 20th, what's going to happen is we'll have like a one-day tariff Jubilee or a 15-minute tariff jubilee and then they just get re-extended for another 120 days, right? That was my prediction. I think I talked to a couple of trade lawyers about that prediction and they told me that, yes, he might do that, but there's no way that that would hold up in a court. So, it's one thing what Trump does versus what a court finds to be legal. We'll find They say abs are made in the kitchen. Cool, but who has time for three hours of meal prep and a fridge full of Tupperware? That's why I started using Factor. Factor delivers fresh, never frozen, ready-to-eatian designed for balanced science-backed nutrition.

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Going back to the way these tariffs were originally described by the administration, the whole idea was bringing jobs and industry back to America. And like some of the justification seems to have morphed since then at the state of the union address Trump was talking, I think, about how he used tariffs as like a tool of political power to influence countries and get them to do other stuff that he wanted. But again, when you look at your customers, do you get the sense that these tariffs have been successful in their original goal in shifting economic activity back to America? It's a little hard to parse out. I mean, like a lot of our customers are importing goods, so they're not the ones. The exporters, you know, I've met as many companies at export that said that these tariffs actually hurt them because they import components. Right.

And it makes it uncompetitive. If you import a component, you've got to pay a duty on it. And if they were to put that factory in Mexico, they wouldn't pay the same duty. They could import the goods. And then if they're selling it in the U.S. fine. It's like one way or the other. It's the same. But if you're selling it into Europe or you're shipping it abroad, then it really makes that manufacturing less competitive.

It's probably a little hard to parse out, though, because we're going through this incredible AI CapEx build out that, you know, there's a lot of industrialization happening, a lot of stuff. Like, in general and theoretical grounds, like tariffs are good for manufacturing in purely economic, theoretical world. But these things are like, I think, much too complex to be centrally managed by the state is like the great lesson of the last century. I do think the point about tariffing imported components for, you know, because we don't, in theory, we don't want to just build stuff here. We want to build complex high value ad thing. And then sell it to other people. And sell it, supposedly. But yeah, if your input costs go up because here's this one piece of metal or whatever it is, then that does make the cost of doing business higher in the United States.

But on the AI, I'm curious, just sitting aside all the tariffs since you brought up the AI boom, that's creating its new different. trade flows, incredible imports from Korea, right, for memory chips. And those prices are going insane. And I think I saw a stat, just the pure level of importing that we're doing from Taiwan is just staggering all because of chips, et cetera. But what else you're seeing interesting in terms of trade flows because of all this AI activity that's going on? Or do you see any fingerprints of that? Yeah, you see a lot. In the air freight market especially, because one of the Trump administration crackdowns was the end of de minimis shipping, which was if you ship something less than $800, you didn't have to pay customs duties on it. And that was just this huge boom. It had been 50%

of the world's air freight. And so when that ended back in, I think it was in May for China, they stopped. They ended that program. All the experts, including me, went on the record and said, hey, the price of air freight is going to collapse because it's 50% of the world's air freight is de minimis shipments from Asia, from China, mostly. And that's all going away. And so the price going to collapse. Well, it turns out price of air freight is stayed stable, stayed high because there's so much, so many components for a data center buildouts getting flown around the world. It's more than made up for the drop from the de minimis shipping. That de minimis exception, the 800 exception, that always reminds me of, you know,

the charts that you see of men's, like, self-reported heights where, like, no one is 5-8 or 5-9, everyone is either, like, shorter or 5-10 and above. Like, all. All the shipments were either, you know, like less than 800 or a lot more than 800 and like nothing just around there. What happened, though? Because I thought they were going to kill like Sheehan and Timo and some of these things with the de minimis stuff. Did any, what happened with those businesses? Those guys are actually doing, they're doing pretty well. It turns out it wasn't just tariff arbitrage.

So that's also part of the story on the air freight market that we got wrong. It's like, they're doing okay. And that one thing they've set up fulfillment centers in the U.S. They've set up some pretty big automated networks that are probably like 20% of the size of Amazon's network now is these fulfillment centers for Chinese e-com run by Chinese e-commerce companies. It is really a massive kind of an underreported thing there. And they're also, they're still flying it from China. They're paying the duties. One of the most interesting facts I learned this year actually is that Sheen does, they have 40 billion of sales, 40 billion of revenue last year.

And no purchase order that was made from Sheein to its factories was more than 200. items. So you're talking like tens of millions of little tiny granular purchases. And that means they never have to discount because they don't keep much stock. You know, they only have 200 of each thing. Whereas if you go to like a lot of websites, they're like retail stores are always running a sale because they got to, they bought too much stuff and they're dumping it. So the business model actually has some attractive features for it.

And I had, we had started to build that service. We were offering it for a lot of, we do still offer a similar service where we can ship from overseas and then we'll just inject it directly. to the Postal Service or other last mile carriers. We stopped investing there because I was like, this is going to die with the end of de minimis, but probably a mistake in hindsight. We're seeing like actually that model is still working.

Actually, that reminds me. When you look back at, gosh, I can't believe it's only been like a year, basically, but when you look back at the past year and your customers, what was the biggest differentiating factor between those who handled the tariffs well and those who didn't? Was it just like size and their ability to squeeze out concessions from suppliers or was it, I don't know, data records and really good lawyers, I guess? What did you see that made a particular company handle this better than others? Yeah, I mean, you have to look probably within an industry because certain industries are just have sectoral advantages or disadvantages.

Like it's hard to move electronics out of China. And then some of those industries were exempted from the tariffs. Actually, you know who did the best was the guys who went to manage to get a meeting at the White House and shake hands and convince them, you know, like Apple, don't tax, don't tear up the iPhone. But that was a very privileged small number of people that had that kind of access. But smaller, all other things being equal, I think that like more entrepreneurial companies that could just move quickly and make good decisions and just like, all right, cool, we're going to set up manufacturing in Mexico or Latin America or some of these places and actually move relatively quickly. But it's not just speed. You've got to make good decisions, you know. Like people who moved to India in a hurry and then found out India got hit with a 50% tariff, like not doing that great.

So maybe some of it's just luck, too. I mean, it's very hard to forecast how this thing did play out. And what's going to happen next is kind of anybody's guess. So sometimes the best thing to do is nothing and just let things go stable. I met a couple of companies that said that was their plan. And I was like, that's kind of bold. And I like it on some level. So, okay, you're fairly optimistic that this is not going to.

take as long as perhaps some people think. But what is, what our company is doing right now to walk us through the actual nuts and bolts of getting the refunds and what's happening right now and how the timeline works and what they have to do to actually get them and so forth, walk us through that. It's a bit of a technical thing, but you guys have a nerdy audience. So I think the way that it'll work, first of all, there's some uncertainty of how the timing is going to work if their refunds at all is still not guaranteed, although I feel pretty high certainty. The way that it's likely to work is you're going to need to pull that ACE report that was I was talking about earlier. Pull it from customs, calculate how much you're owed. You then are going to need to file, it's unclear if you'll need

to file protest. Typically, the way that it works to get a refund is you go, you file a protest. You make your case to the government that, hey, we've got this misclassified, we are protesting, and you'll get a refund. That's typically how it works. And that's how we're set up to go do that is go file these protests on your behalf to go challenge the AIPA protest and say, hey, You never should have paid me this and I'll get a refund. So we're putting that program in place right now for companies to go just make that easy take away the paperwork. The piece that's a little bit more sophisticated is where people are selling these things in the secondary market that I mentioned earlier. So there's at least three big banks that are out there.

I don't know if they're big, but there are three groups that are out there, at least three. There's probably more that are buying these things. And like I said, the market price went to 52%. So there's a lot of negotiating right now of going, all right, what's this time value? money, what's your relative certainty of when and how this is going to play out. That's a market that I'm tracking very closely. Thus far, those guys have only transacted where companies refund is at least $10 million. One of the things I'd like to be able to do is say, hey, we can pool a bunch of these guys

together. Yeah, I was going to have any of the banks come to you and said, like, rather than trying to gather all of these, you know, tens of thousands, however hundreds of thousands of companies, do they just come to any of the freight brokers and say, like, assemble your crew and we, like, do a batch, a batch sale? Yeah, until last Friday, we have, we talked to all of them. Until last Friday, there was just a little too much uncertainty for us to put in the effort and, like, to build the thing. We built a calculator. That's why we were able to go live with the calculator, you know, the same day as the refunds went live because we've been building that.

But as far as the processing, we didn't really invest in building that capability until Friday. kicked off those, you know, like in earnest. So that's what I'm hoping to be able to build in a hurry. I really like to be able to pool these things. And I've talked to so many companies that said, hey, if you could get me 70%, 60% even, I would do it tomorrow. So that would be, I think we could, I think that we could create a lot of value there for everybody. I mean, I think my estimate is much higher than 60%.

So if I value the thing differently than you are, there should be a win-win. This is what I was going to ask. So just to be clear, like those claims on terror-free funds, are trading at 50 or 60% at the moment. But we are expecting the full refund amount to actually come back, right? There's not plus legal fees, I think. Well, I don't know about legal fees, but plus interest. You're supposed to get 6%.

I think 6% is the current rate on that, 6% annualized. So yeah, now we say we are expecting. That's me and my team and some lawyers I've talked to. But the brands probably aren't expecting it that higher, or else they wouldn't sell it for 60% or they need to, What would be the justification for not getting the full refund? If they're illegal, like the totality is illegal, right? Well, the full refund would come, but in that case, they would go to the person who bought it from you, not you.

So it's just a time value of money and a uncertainty question that someone's willing to take a lower rate. But, yeah, I think, personally, I think if you sell it for 60%, you're probably leaving money on the table. Just wait a year. I mean, 40% for a year is a pretty good return. Should set up a little side hedge fund, a little side pocket. Joe, I'll sell you my tariff-free fund claims. All right. Maybe we'll do a little trade here and write about it.

Ryan Peterson, thank you so much. Great to catch up with you. I'm sure there will be more opportunities in the coming months and years ahead of all this. But thanks for coming back on Nodontz. That was great to be here again. Thank you. Thanks, Ryan. Tracy, we should do an episode on the new delivery network that's being built by the Chinese companies inside the United States.

I didn't know that existed at all. I think that'd be fascinating. 20% is. already as big as Amazon's logistical network, that's pretty wild. Well, this is why, you know, I was asking a few questions about, like, how you actually classify items and things. Whenever you see this kind of sweeping rule change, I feel like you get a very immediate reaction from the people who are paying it. And some of them get extremely creative, if not illegal, right? And it's fascinating to look at some of those solutions.

Yeah. No, like the, it's, I mean, it makes obvious sense. It's, oh, I sell this thing for $100. I'm going to set of a company in the U.S. that I sell it to for a dollar. Right. And then that company sells it for $100 to, you know, or tries to. That's business. It's also illegal. It's business. But the fact that you see it like that it shows up in the data, right?

Yeah. That a foreign company can theoretically apply for the refund and et cetera. Or can establish, what was the importer of record? A foreign company can establish itself as the importer of record. And that it shows up in the data like that shows how much a creativity was underway since Liberation Day. I mean, just from a broader macro perspective, and I know that wasn't the focus of this episode, but maybe we'll do one at some point.

It is going to be really fascinating to see what refund recipients actually do with that money, right? Yeah. I feel like if you're a corporate analyst at the moment or if you're an investor, like, it's going to tell you a lot about the direction of that particular company, what they do with that money. I think a big question is just going to be how many announced sales or something. thing because like there's going to be some pressure to refund money to consumers, right?

And it'll be interesting to see if any do some sort of nominal rebate of some sort of. I mean, obviously they're not legally obliged to. But, you know, I think a lot of people, it's going to really annoy people if, especially if there are categories where it's obvious that consumer prices went up because of the tariffs. Or if companies in some cases may have, oh, we're putting a. tariff surcharge on you, right? And they might have spelled it out of some sort of bill. They probably did because they don't want to be seen to be raising prices. So if you were the type of company that's like, look, we weren't raising, we didn't want to raise prices. We just have to.

So we're telling you that part of this $50 that you paid X amount is a tariff surcharge that we're applying. They better give you a refund. Otherwise, that's going to be really annoying. I guess we will find out. It's like a de facto windfall for them. Well, you know who handled it pretty well. All things considered at this moment in time. it seems like they handled it pretty well at Costco. Because I think they didn't, they explicitly said they weren't going to pass on the tariff charges to customers. They were just going to like eat the loss, but also file suit against the Trump administration

saying the tariffs are illegal. And so now, you know, they get the refunds. They don't have to like actually pay them back to customers, but they don't take the brand hit from not doing that because they never charged them anyway. They say they never charged them. But, you know, in theory, they could have helped. the price steady and maybe in the alternate universe, the prices would have come down, right? Sure.

We'll see. At least from, I'm saying from a PR perspective, it was a good play. Yeah, yeah, totally. I'm only saying that because I'm a big fan of the giant Spanish hams that you can use at Costco. Which were presumably tariffed. I guess, but this is the first year I ever bought a Costco ham. So I can't tell you. It was so good.

It was so good. I can't tell you what it was the year before. if it actually went up. Can I tell you a little life hack for the people that are still listening to the very end of the conversation? If you ever, like, show up at a party and you bring a Spanish ham, people will just love you. And, like, you know, there are a couple hundred dollars or whatever, but there's a lot of food in the Spanish ham.

And if you're the guy who shows up at a party with a big Spanish ham on the whole, on the spit or whatever it is, like that you would be the life of the party. It is a very strong move. A friend of mine did that and everyone loved him. I think that's an excellent idea. I bought my husband one for Christmas, and I will say, I think it lasted us like a good three weeks. And we ate a lot of ham. You just leave it out there, right?

Yeah. No, it's great. Yeah, they preserve very well. Some cheese and ham for dinner for like three weeks. You just keep carving at it. It's value for money. Yeah, it actually is. All right. Shall we leave it there?

Let's leave it there. Okay, this has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Joe Wisenthal. You can follow me at the stalwart. Follow our guest, Ryan Peterson. He's at TypesFest. Follow our producers. Carmen Rodriguez at Carmen Armin, Dashel Bennett at DashBot and Kail Brooks at Kail Brooks.

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