Tariff Refunds Boost Retailer Profits After Supreme Court Ruling

In February, the Supreme Court ruled that the International Emergency Economic Powers Act did not give former President Donald Trump authority to impose the contested tariffs. The decision triggered a wave of refunds to companies that had paid the duties, with most of the money arriving during the second quarter of 2026. Retailers have incorporated the windfalls into earnings in varied ways, creating mixed signals for investors.

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• Home Depot reported receiving $730 million in refunds, applying roughly $685 million to reduce cost of goods sold, which lifted its gross margin by 0.3 percentage points year-over-year.

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• Walmart said it is eligible for about $2.9 billion in refunds and has yet to receive just under $100 million; the inflow helped its U.S. gross profit grow 1.6 % in the same period.

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• Lowe’s disclosed roughly $80 million in repayments, translating into an $0.11 boost to earnings per share.

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• Target credited a $752 million boost to net earnings and noted price cuts on more than 10,000 items, though it did not specify the exact portion tied to refunds.

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• TJX Companies applied its $331 million refund to second-quarter cost of sales.

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• Kohl’s allocated $100 million of its refunds to gross margin and intends to use the remainder for deeper inventory investment.

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Low-price operators such as Home Depot and Walmart have publicly pledged to pass most of the windfall to consumers through lower shelf prices. In contrast, Lowe’s and Kohl’s emphasized profitability and inventory strengthening rather than direct price cuts. The divergent approaches reflect each retailer’s market positioning and internal accounting capabilities.

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Company executives described the refunds as a “one-time boost” that improves current margins while prompting careful planning for future quarters. CFOs highlighted disciplined use of the funds, noting that any allocation must generate a measurable return. AlixPartners’ managing director Bryan Eshelman warned that higher-than-expected tariff rates and ongoing policy shifts could affect how retailers forecast upcoming periods.

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• “At the end of the day, a product is worth what somebody's willing to pay for it, and there is a lot of choice in this marketplace,” — Bryan Eshelman, a managing director in the retail practice at consulting firm AlixPartners

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• “We have, and will continue, to invest in price to ensure our guests are getting tremendous value each and every time they visit us at Target,” — CFO Jim Lee

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• “All of [the uses of the repayments] have to have a return, so we're not just going to be throwing money out and saying, 'I hope this works,' but we're very disciplined about it,” — Michael Bender, kohl's CEO

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