Good morning. One of the more interesting threads from recent earnings calls: companies are handling tariff refunds very differently, and the amounts involved are substantial.
The refunds stem from a February Supreme Court ruling that forced Customs and Border Protection to start returning duties collected under a since-struck-down law. That money is now showing up on the books of big companies like Home Depot, Amazon, and Walmart, each with its own approach.
Home Depot
The retailer collected $730 million in IEEPA tariff refunds in a single quarter, arriving in a lump sum near the end of June. CFO Richard McPhail said on Tuesday’s Q2 call that $685 million of that related to inventory already sold, cutting cost of goods sold immediately and producing a 145 basis point gross margin benefit. The remaining $45 million is still sitting in inventory and will flow through as that inventory sells.
That 145-basis-point benefit got trimmed by 60 basis points of unplanned cost inflation, leaving 85 basis points. A separate 60-basis-point drag from acquisition-related mix brought the net year-over-year gross margin improvement down to 25 basis points.
Billy Bastek, EVP of merchandising, pointed to resin, metals, fuel and energy costs that weren’t in Home Depot’s original 2026 plan, plus a shifting trade landscape: the prior tariff regime expired in July and was replaced by a new Section 301 regime targeting imports tied to forced labor. Home Depot folded the refund into its reaffirmed outlook and is using it defensively, to absorb cost inflation rather than cut prices.
The retailer beat expectations in Q2 as sales and comparable-store growth picked up, but cautious consumers and rising costs kept the recovery uneven.
Amazon
Meanwhile, Amazon CFO Brian Olsavsky disclosed roughly $600 million in Q2 tariff refunds on the July 30 call, calling it “the significant majority” of what Amazon expects to receive overall. Paired with a separate $600 million fair value benefit on AWS energy contracts, the two together cut operating expenses by about $1.2 billion for the quarter.
Olsavsky said Amazon’s total trails peers partly because it “was not the importer of record for the large majority of items sold in our store,” a reminder that refunds go to whoever paid the duty at the border, not necessarily the retailer selling the goods. Amazon had also stockpiled inventory ahead of the tariffs, limiting its exposure from the start.
Another important factor—Amazon plans to pass some of the money back to customers.
“We’ve identified a limited set of circumstances where we can trace that we’ve passed specific import charges onto customers, and when we receive those refunds, we will proactively contact affected customers and automatically issue refunds to them,” Olsavsky said.
Walmart
Walmart is taking a third path. CFO David Rainey said on the May earnings call the retailer is pursuing refunds that could total about $2.4 billion, and plans to steer that money toward price investment rather than margin, while keeping it out of guidance. Rainey called the refund “a relatively small part” of Walmart’s business, under half a percent of U.S. sales. The company is committing it to lower prices, he said.
Sheryl Estrada
Sheryl.Estrada@fortune.com
