Trade wars are often framed as economic patriotism. Politicians promise they will protect domestic industry, punish foreign competitors and ultimately help American consumers. But the latest tariff-related battle tells a very different story.
It’s debatable whether U.S. textile and apparel manufacturers have experienced any benefit from the Trump trade war—and they’re not alone. The export numbers show that farmers, manufacturers and brands across industries are struggling as foreign buyers pull back and inputs become more costly. Meanwhile, manufacturing hasn’t shifted back home.
In the meantime, our competitors around the globe are busy opening new markets and finding new trading partners. Consumers so far have been least hit, but even so, retail prices have ticked up some and quality is heading in the opposite direction.
So who’s benefiting if not American corporations and consumers? A recent Guardian report put it bluntly: the real winners of the tariff wars are lawyers, hedge funds and AI companies.
First: Lawyers.
Though tariffs may not be delivering on their stated promises, one outcome is certain: trade attorneys and consultants are heading into a boom cycle, one that could last for years. As the U.S. enters a new era of tariffs, with section 122s in place at 10% globally and a host of other tariff mechanisms at the ready, we can expect endless litigation over their legality.
Already lawsuits are piling up in a push to get that money to trickle down from the importers of record to the buyers and end consumers who faced upcharges due to IEEPA tariffs. So far, consumers have brought class action suits against Costco, EssilorLuxottica (maker of Ray-Ban sunglasses) and FedEx.
At the height of the Supreme Court ruling, businesses scrambled to secure legal representation to claim their part of the $175 billion in refunds. Firms were charging $10,000 to $15,000 just to initiate refund claims, and many were flooded with new clients within hours of the ruling.
But the real opportunity for the legal industry may lie in the complexity of the process itself.
We haven’t received much information from U.S. Customs and Border Protection thus far about how duties will be refunded. But if it’s anything short of a straightforward process, lawyers will once again need to clock in to navigate confusion, facilitate documentation and push for expediency.
What struck me most, both in the Guardian article and during conversations at a recent American Apparel & Footwear Association conference in Washington, is that trade lawyers are forthcoming about this latest windfall. Many will say candidly that the Trump era has been very good for business.
Second: Hedge funds.
Financial firms began treating proposed tariff refunds like distressed assets. Some hedge funds started buying companies’ claims for pennies on the dollar, essentially betting they could collect the full refund later. One toy company reportedly sold a $15 million claim for just $2 million simply to gain immediate liquidity. I’m curious to see if this trend continues now that there’s is more reliable available information on how to proceed with the refund process.
I shouldn’t have been surprised by this group of beneficiaries. Financial markets have a way of taking almost any moment in history and turning it into an opportunity for profitability. Though perhaps I just wish I had thought of the idea first.
Third: AI companies.
This one is almost predictable. The tech sector seems to find an angle for every task and process in modern life, so why not tariffs? Companies like Profit Trust are deploying tools that search through customs documents to identify errors in classifications, HTS codes and other details.
While the importer saves money, the tech firm takes a percentage on whatever money is recovered. With roughly one in eight shipments improperly documented, they’ve been able to help importers reclaim millions in overpaid duties. All while boosting their own revenues.
Similarly these firms began deploying AI tools to automate refund claims and documentation immediately following the Supreme Court ruling.
Despite all of the money being made, notice who is missing from this list: consumers.
Not only did consumers not profit but they have helped supplement the higher costs that have resulted from the trade war. And as I noted in an earlier op/ed, once prices increase, they rarely come back down, which means shoppers will be paying the price for years to come.
Trade wars may make for good political theater but economically, the scoreboard is clear: lawyers, hedge funds and tech giants: 1; consumers: 0.
Edward Herzman is the founder of Hertzman Global Intelligence.
