Several major big-box retailers are receiving substantial refunds for tariffs they paid last year before those levies were invalidated. While the money is flowing back to companies across the retail sector, the way those retailers are putting the funds to work varies considerably.
Walmart and Target have reported some of the largest refunds among companies receiving reimbursements for tariffs imposed under President Donald Trump’s International Emergency Economic Powers Act (IEEPA). The U.S. Supreme Court invalidated those tariffs earlier this year.
The two major home improvement retailers, The Home Depot and Lowe’s, have also recovered funds, although their refunds have been markedly different in size. Home Depot has received $730 million so far, while Lowe’s has reported $80 million.
U.S. Customs and Border Protection launched a dedicated system in April to process refunds of IEEPA tariff payments. The system, known as Consolidated Administration and Processing of Entries (CAPE), had paid out $106.6 billion in IEEPA tariff refunds as of Aug. 21.
Retailers are far from the only companies benefiting. Businesses from a wide range of industries, including Amazon, Nintendo, Caterpillar and Kimberly-Clark, have also received refunds for the invalidated tariffs.
As Walmart, Target, Home Depot and Lowe’s recover their payments, their strategies offer a look at how major retailers are incorporating the returned money into their businesses.
Walmart puts its massive refund toward lower prices
Walmart had already said it intended to use any tariff reimbursements to reduce prices before the company began receiving the money. It joined other retailers, including BJ’s Wholesale Club and E.l.f. Beauty, in signaling that tariff refunds could ultimately benefit customers.
The retailer has now received “substantially all” of the $2.9 billion in IEEPA tariff refunds it expects, according to EVP and CFO John Rainey during Walmart’s second-quarter earnings call last week.
With the funds largely received, Walmart has begun directing the capital toward what Rainey described as “customer experience and price leadership.” The company has focused those investments particularly on grocery and general merchandise.
Rainey said the company’s third-quarter guidance reflects the continuing effect of pricing measures introduced during the second quarter, alongside Walmart’s ongoing focus on using tariff refunds to support its price investments.
Target has received nearly $1 billion
Target has likewise recovered most of the IEEPA tariff refunds it has applied for.
EVP and CFO Jim Lee said during Target’s second-quarter earnings call last week that the retailer had secured the “significant majority” of its expected refunds, totaling just under $1 billion.
Target recorded $994 million from the refunds as a reduction in its cost of sales.
