Customer discount, lower prices, employee 401(k) contribution, share with vendors: How US firms are using tariff refunds

Companies in the United States are using funds got from the Trump tariff refunds to offer sale deals and discounts to customers, lower prices, and make more 401(K) contributions for their employees, besides sharing the temporary windfall with their vendors, according to a Bloomberg report.

Companies getting refunds after the Supreme Court struck down US President Donald Trump's tariffs have become “creative” with the funds, it added. SCOTUS struck down Trump's tariffs under the International Emergency Economic Powers Act (IEEPA) in February, under which some $166 billion was collected by the government.

How US firms are using tariff refunds

Among other things, the refunds are being used to cover rising costs, supplement employee retirement accounts and repay debt, as per the report. It added that some companies are also sharing their temporary windfall with vendors, besides increasing deals for shoppers impacted by inflation prices.

A Bloomberg News analysis noted that companies in the Russell 3000 Index mentioned “tariff refunds” close to 1,000 times in earnings calls and filings in July, August and September, a 4x increase compared to previous earnings season. They have revealed receipt of around $9.8 billon in refunds during that period, it added.

Here's a look at how some of the companies are using the tariff refunds:

• Williams-Sonoma Inc. said in late August that it put $10 million of the $200 million it received back toward employee 401(k) contributions. It also paid $47.5 million to vendors who gave the retailer discounts on inventory purchases to offset tariff costs. “We’re so appreciative to have the money back and to be able to reward our employees with part of it,” Williams-Sonoma Chief Executive Officer Laura Alber said on a call with analysts. She pointed to efforts by employees to mitigate the impact of tariffs during “a very chaotic year moving products all over the world.”
• Kohl’s Corp. shared some of the roughly $150 million in refunds with vendors who paid more to import inventory from manufacturers while the tariffs were in effect. Chief Financial Officer Jill Timm told analysts the company also reinvested cash in its business, including boosting inventory levels for its lower-priced brands.

• Some companies have opted to take advantage of a growing secondary market for tariff claims, since chasing down the exact amount due can be a lengthy process. For example, Funko, Inc., the parent of Funko Pops and other collectibles brands, said it sold more than $22 million in tariff refund claims for $19.2 million to a third-party financial institution and used some of the proceeds to pay down a term loan.
• Printer maker Xerox Holdings Corp. recognized $105 million in tariff refunds, then sold the receivable to a third party for $80 million in cash to help reduce its debt load, executives said.
• Academy Sports & Outdoors Inc. recorded $83.7 million in refunds, then sold $72.2 million of the claims to a third party for $10.5 million. The sporting goods retailer said it used the proceeds mainly to lower prices.
• Other retailers have also translated the refunds into more direct benefits for shoppers. Walmart Inc. said on its August earnings call that some of its refund was going into temporary discounts and deals.
• Elf Beauty Inc. plans to use some of the $50 million it received to lower prices on roughly 10% of its products.

(With inputs from Bloomberg)