Executives split on use of possible tariff refunds, with only 18% planning full price rollbacks
Good morning. For U.S. corporations, tariffs have moved from being a temporary policy test to a permanent structural fact. A recent Supreme Court ruling related to the International Emergency Economic Powers Act (IEEPA) could pave the way for refunds, but it also represents another reset of the regulatory environment.
Firms such as FedEx and Costco have taken specific actions in response to the court’s decision. But looking past these prominent examples, what is the broader corporate sentiment regarding possible refunds?
KPMG provided CFO Daily with preliminary results from its forthcoming tariff study, which surveyed 300 U.S. C-suite and business leaders from organizations across various sectors with yearly revenues exceeding $1 billion. Leaders are split on their approach to potential refunds and are hesitant to reduce prices even if their costs decline.
The central dilemma for importers is what action to take if refunds become available, according to Lou Abad, a principal in KPMG’s Washington National Tax, Trade and Customs Services group. The official importer is responsible for paying duties and would be the recipient of any refund, creating uncertainty about if and how to distribute that value to customers or suppliers.
“The process for importers to obtain refunds remains quite unclear,” Abad stated. He added, “Therefore, it is critical for companies to follow the required procedures to maintain their eligibility for refunds.” He emphasized utilizing administrative mechanisms, like protests and post-summary corrections, to sustain active claims. These actions, he notes, might be necessary to earn “a day in court” if companies eventually pursue litigation in the Court of International Trade and other venues, particularly considering the high number of transactions and the government’s possible unwillingness to issue payments.
This complexity is a key reason why roughly half of the surveyed executives intend to engage third-party specialists, such as legal firms, to help manage reimbursement processes and coordinate protests and potential lawsuits.
Should refunds be issued, companies indicate they would most probably reinvest the funds into areas like supply chain diversification, resilience, working capital, or inventory. Some might allocate money to trading partners if pre-existing tariff-sharing agreements are in place, Abad noted. However, many contracts did not account for the possibility of refunds. In such situations, the decision to pass funds along the supply chain or retain them as an unexpected gain will probably be made on an individual basis, especially as the current administration hints at imposing new tariffs using different legal frameworks, he explained.
A particularly notable finding from the survey is the low number of companies intending to undo previous price increases. Thirty-four percent would enact a partial reduction, 30% would adopt temporary promotional pricing, and a mere 18% would completely eliminate prior added charges. Abad links this to the well-known “stickiness” of prices: after a company increases prices to offset inflation or a cost shock such as tariffs, lowering them again is challenging, and the elevated prices frequently establish a new baseline.
This stickiness is bolstered by policy indications. With the administration evaluating further tariff measures, companies perceive minimal incentive to lower prices only to encounter another wave of rising costs.
For CFOs and senior executives, tariffs are now less of an isolated risk incident and more an ingrained element of the business landscape. In Abad’s view, what has transformed is not the existence of tariffs but the instability surrounding their rates, exemptions, and the layering of different measures. This results in what Abad calls a “revolving goal” for businesses: monitoring fluctuating rates, handling multiple tariffs imposed under various authorities, and figuring out which regulations govern each individual shipment.
“I believe most companies are simply awaiting direction from the Court of International Trade and other governing bodies to understand how this refund procedure will unfold,” Abad said.
Sheryl Estrada