Methodology
How we built the model and what assumptions drive it.
Framework
TariffRefundIQ uses a probability-weighted decision tree to estimate the expected present value of IEEPA tariff refund claims. This is a standard valuation methodology used in litigation finance, insurance, and private equity for pricing contingent assets.
The model defines seven mutually exclusive scenarios, each with three parameters:
- Probability — likelihood this scenario materializes (must sum to 100%)
- Recovery Rate — percentage of the claim face value recovered in this scenario
- Timing — years until cash is received
NPV Calculation
The Expected Value is the sum of all scenario NPVs. This represents the risk-adjusted present value of holding the claim — the minimum price at which a rational seller should be willing to part with it.
Probability Estimates
Our probability estimates reflect analysis of:
- Legal landscape: The 6-3 SCOTUS ruling is decisive, not a squeaker. The legal path to refunds is clear — the uncertainty is in execution, not law.
- Political dynamics: The administration's stated intent to delay (2-5 years), personal attacks on majority justices, and rapid pivot to alternative tariff authorities all signal non-cooperation.
- Historical precedent: Government refund mechanisms for illegally collected fees have precedent (Japanese internment reparations, various tax refund programs), but $175B is unprecedented in scale.
- Institutional mechanics: CBP processing capacity, CIT enforcement powers, Treasury Judgment Fund access, and congressional appropriations dynamics.
We update probabilities as facts change. Pro subscribers are notified when material updates occur — CIT proceedings, congressional action, CBP guidance, or any shift in the political landscape.
Filing Status Adjustments
Recovery rates are adjusted based on how well-positioned the claim is:
| Filing Status | Recovery Adjustment | Rationale |
|---|---|---|
| 1581(i) + Protest Filed | 100% | Maximum protection — all recovery paths preserved |
| 1581(i) Action Filed | 100% | CIT jurisdiction established — strong position |
| Protest Filed Only | 90% | Some entries may fall outside protest scope |
| Not Yet Filed | 60% | Significant deadline risk — act immediately |
What's Not Modeled
- Statutory interest: 19 USC §1505 provides for interest on refunded duties. At current rates, this could add 5-10% to recovery. We treat this as upside to be conservative.
- Legal costs: Litigation costs for maintaining claims are not deducted. These vary by claimant and are best estimated by counsel.
- Tax implications: Refund proceeds may have tax consequences depending on how the original duties were treated. Consult a tax advisor.
- Correlation risk: Scenarios are modeled as independent, but political outcomes may cluster (e.g., admin obstruction makes negotiated settlement more likely).
Limitations
This model provides a framework for thinking about claim value, not a guarantee of outcomes. Key limitations include:
- • Probabilities are subjective estimates based on available information
- • The political and legal landscape can change rapidly
- • Individual claim characteristics (entry dates, liquidation status, protest timing) significantly affect recovery
- • The $175B aggregate liability is unprecedented — historical precedent may not apply
- • This is not legal, financial, or tax advice