Tariff Refunds Reach Businesses, Not Consumers: Retailers Keep Billions

The S. government is returning more than $160 billion in tariff refunds to businesses and importers following a Supreme Court ruling in February that struck down many of President Donald Trump's tariffs. However, as retailers and other companies receive these payouts, many consumers who paid higher prices due to those tariffs are asking why they are not getting their cut.

Sandra Alonso, a resident of Tampa, Florida, is one such consumer. She ordered a powered wheelchair last year, the same model she had used for years because it was easy to fold and lift. At the time, tariffs on Chinese goods were 145%, and she paid an extra $3,500 for the chair. After learning about the Supreme Court decision, she expected a refund. "There's no reason I had to pay double for this chair," Alonso said. "The federal government should give me my money back."

The government, however, does not refund consumers directly. Instead, it returns the money to the importers of record — the businesses that paid the tariffs upfront. Those businesses then decide whether to pass the refunds along to customers in the form of lower prices, or to keep the money to bolster profits or offset other costs.

"It's all just a giant transfer from consumers to corporations," said Michael Ettlinger, a senior fellow at the Institute on Taxation and Economic Policy. "You can't really design a worse tax than that."

Retailers Reap Billions

Major retailers have reported substantial tariff refunds in their second-quarter earnings. Home Depot received about $730 million in tariff refunds during its fiscal second quarter and used roughly $685 million to reduce the cost of goods sold, according to financial disclosures. CFO Richard McPhail said the refunds represent "the vast majority" of what the company expected to receive. He also said the company would use some of the money to cover new costs from pricier gasoline and diesel.

Walmart was eligible to receive roughly 9 billion in tariff refunds and has yet to get back just under $100 million of that total. The company plans to use the refunds to lower prices for consumers, a move that aligns with its value-driven positioning.

TJX , the parent company of J. Maxx and Marshalls, used its $331 million in tariff refunds to benefit its second-quarter cost of sales. Lowe's received roughly $80 million in refunds, which contributed an 11-cent earnings per share boost in the second quarter. Target reported a $752 million boost to net earnings from tariff refunds. Kohl's CEO Michael Bender said the company put $100 million of tariff refunds into its gross margin in the second quarter.

Consumers Left Out

While retailers have benefited, consumers have not seen direct refunds. Many retailers did not spell out how much customers were paying for tariffs and instead baked the cost into higher prices. This has led to frustration and, in some cases, legal action. Costco and Nintendo are facing class-action lawsuits from shoppers demanding tariff refunds. Nintendo has asked the court to dismiss the lawsuit, arguing that plaintiffs received exactly what they paid for.

There is an exception: shipping companies. UPS, FedEx, and DHL have pledged to pass along tariff refunds to customers. UPS told Alonso that her refund is being processed and can take up to 90 days to receive. Terence Lau, dean of Syracuse University's college of law, said FedEx and UPS are obligated to return tariff refunds to customers. "The law is clear that the importer of record is entitled to the refund," Lau said. "If the importer is the shipping company, they must pass it through."

A Complex Situation

The tariff refund situation has complicated retailers' earnings reports, as Wall Street struggles to parse how the money has been used. Bryan Eshelman, a managing director in the retail practice at consulting firm AlixPartners, said the way retailers have handled the refunds varies widely. "These trails aren't always clean in terms of finding the right way to apply, in a fair sense, the rebate to prices," Eshelman said. He noted that where the money goes depends on the retailer's price position in the market and whether they were the importer of record.

"There's also just the reality of record-keeping internal to retailers and whether or not they easily have a way to attribute the rebate directly back to a product that was already sold," he said. "It's not a simple task."

For consumers like Alonso, the wait continues. She said she hoped the refund would help her cover other expenses, but she has not received it yet. "I just want what's fair," she said.