U.S. — Major U.S. retailers including Home Depot, Walmart, and Target received hundreds of millions in tariff refunds during the second quarter following a Supreme Court ruling. The companies are deploying the funds differently, with some lowering prices while others boost margins or inventory.

Tariff refund money began flowing to retailers during the second quarter. Most major retailers applied for refunds after the Supreme Court ruled in February that the International Emergency Economic Powers Act did not authorize President Donald Trump to impose certain tariffs.

Home Depot received $730 million in tariff refunds during the fiscal second quarter. The company used roughly $685 million of its tariff refunds to reduce the cost of goods sold. Home Depot saw its gross margin increase 0.3% in its fiscal second quarter compared with the prior year, driven by its tariff refund.

Walmart was eligible to receive roughly $2.9 billion in tariff refunds. The retailer has yet to get back just under $100 million of its total eligible tariff refunds. Walmart U.S. gross profit grew 1.6% from the tariff refund boost.

"The company plans to use those funds to lower prices for consumers, and shoppers and investors will see the impact during its current fiscal third quarter," Chief Financial Officer John David Rainey said. Target lowered prices on more than 10,000 items in the second quarter. Target tariff refunds gave it a $994 million pretax benefit to its second-quarter gross margin and operating income. The refunds also gave Target a $752 million boost to net earnings, or $1.65 per share.

Lowe's received roughly $80 million in tariff repayments. Lowe's tariff refund gave it an 11-cent boost to its earnings per share for the second quarter. "We feel strongly that we want to deliver strong profitability for our shareholders and make sure that we don't follow any aggressive pricing action," Chief Executive Officer Marvin Ellison said.

TJX Cos. Used $331 million in tariff refunds to benefit its second-quarter cost of sales. Kohl's put $100 million of the refunds it has received into its gross margin in the second quarter.

Kohl's plans to use the rest of its tariff refunds to invest in deeper inventory. "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," Chief Executive Officer Michael Bender said.

Determining where tariff refund money goes depends largely on the retailer's price position in the market. More value-driven companies are likely to apply refund funds to keep prices lower and proclaim that to the marketplace. Whether a company is the importer of record for products determines who receives the tariff refunds. Much of what is sold in stores is not necessarily imported by the retailer, or U.S. manufacturers may be the ones receiving rebates for raw materials.

Why It Matters

The distribution of hundreds of millions in refunds affects how retailers manage costs and set prices for consumers. The flow of funds depends on corporate strategy regarding margins versus market share, with some choosing to reinvest in inventory while others prioritize immediate price reductions.

U.S. Customs and Border Protection uses the 'Court-Ordered Refunds under the International Emergency Economic Powers Act Worksheet' (OMB Number 1651-0149) to process refund claims. The administrative mechanism ensures that only eligible entities, typically the importers of record, receive the financial benefits mandated by the court decision.

Timeline

The U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump on February 20, 2026, that all tariffs imposed by the President under the International Emergency Economic Powers Act (IEEPA) were invalid.

What's New

Contextual information identifies that Walmart U is UK subsidiary of Walmart and that Target Corporation is an American retailer and supermarket chain.