The government's handing back $100 billion in tariffs, and everyone wants to know: where's my cut?
In February the Supreme Court ruled the president did not have the authority to impose most of his tariffs, so the government is now handing the money back to the companies that paid it. As of July 31 it had signed off on $100 billion in refunds, with interest, out of roughly $166 billion collected; $49.2 billion went out in June alone, per Reuters. This earnings season is shining a light on every company's decision about what to do with that money: keep it or give it back to consumers?
So far, the earnings scripts are coalescing around traceability: can you tell who paid? FedEx can, down to the penny and its returning $800 million. Amazon can't trace most of it. On its July 30 earnings call, CFO Brian Olsavsky said there is "a limited set of circumstances where we can trace that we passed specific import charges on to customers." Those people get automatic refunds, and the rest of the roughly $640 million goes to "invest in low prices." Costco Wholesale can't trace at that level, so it pledged in March to get members their share back somehow. Target, which received $994 million, is cutting prices instead of writing checks, and Walmart essentially committed to the same in May. And Nike, expecting $986 million, has said nothing to customers at all... while customers sue it for exactly that.
Every earnings script or talking point about this carries an implied claim about who paid the tariffs, and the first thing to protect is your own continuity. All of these companies spent months blaming price increases on tariffs, and the refund works like a receipt for everything they said: "prices are up because of tariffs" then, "we largely absorbed the tariffs" now. Both can be true, but the trouble lives between those statements and it isn't only plaintiffs' lawyers doing the side-by-side; it's reporters, analysts, employees, and anyone with ChatGPT or a search bar. Even Costco, which made the most customer-friendly pledge of the group, has already been sued four times.
So the work for comms teams is two-fold. First, pull every previous statement your company or its executives made blaming prices on tariffs and reconcile them with whatever your CFO plans to say next (i.e. tariffs cost us this much, we got this back, here's where it went) then say that sentence everywhere. Consistency across audiences is what makes it protective. Second, assign someone to category monitoring: who in your industry got refunds, what they said then, what they're saying now... refreshed regularly, so you can bring that view into the room while the business decision is still open. Because, as we all know, the decision itself is the statement.
Target's CEO is talking more like a COO
Michael Fiddelke has been Target's CEO since February, and yesterday he shared a great quarter: sales at its established stores up 3.8 percent when analysts expected 2.4, traffic up, and the full-year forecast raised for the second time, to about 5 percent.
What sits underneath that progress, he said, is four key priorities: "leading with merchandising authority, elevating the guest experience, accelerating technology, and strengthening our team and communities." Those are the same four priorities, in the same exact order, that he shared with employees on his second day in the job. They appeared again in Target's March press release, again at the March investor meeting, again in May. So six months across five separate moments featuring the exact same four pillars.
[Something that struck me: there's no name for the plan — he won't even say the word "turnaround." More on why that could be a problem in a minute.]
Now read the vocabulary from the earnings call and the reason comes into focus. "Intentional" choices. "Disciplined" about where we invest. "Executing with urgency and discipline." "Simplify" execution. That's a process vocabulary, not a brand one.
If you're not familiar with Fiddelke, he started at Target as an intern in 2003 and rose through the CFO and COO jobs before this one. When the board named him CEO, the stock fell as much as 11 percent before closing down 6.3 because the Street wanted an outsider. At his first investor meeting in March, UBS's Michael Lasser told him to his face that much of the plan was "not that dissimilar from what we saw at Target around 10 years ago." Newness was never available to him, so he's leading with what he knows.
Which is why the wins Target chose to celebrate this week are operational wins. Moving shelf space out of TVs and bikes and into Lego, trading cards and collectibles, "the largest space move in our company's history," alongside the largest grocery transition in more than a decade. Not a taste story or a brand story but an execution story.
Even the windfall got the operator treatment. Target received $994 million in tariff refunds this quarter, free money from the Supreme Court ruling, worth about 40 cents of every dollar of profit it reported, and instead of letting it dress up the comeback, they spelled out exactly what the refund added and what the business earned on its own. The CFO went even further and told analysts to grade Target on the number without the refund: "we think that's a better measurement." A good foil to this was Home Depot the day before where it gave its $730 million refund figure on the call and did none of that math, so an analyst did it publicly, found profit margins would have shrunk without the refund, and the coverage became "tariff refunds did the heavy lifting." So same windfall, opposite choice, opposite headline.
Three things I'd watch on Target's turnaround from here:
Fiddelke isn't calling this a turnaround, but he also hasn't named the strategy. An unnamed strategy gets named by somebody else, and the media has already done it: the "$6 Billion Plan." That shorthand risks hardening into an ROI question (what did shareholders actually get for six billion dollars?) instead of the question Target wants asked which is, are the stores better?
Not all growth is the same kind. The full-year forecast counts total sales, and total sales rise when you open new stores, sell more ads, or take a commission from outside sellers on target.com. According to the CFO, more than a point of this year's growth comes from those sources. That's real money, but it isn't shoppers falling back in love with the stores they already had, which is what the four priorities promise to fix. So the established-store number is the one that will ultimately tell us whether the revival is legit.
The refund doesn't repeat. Next year Target has to grow past a quarter that had a billion dollars of free money in it, and analysts were already asking about that on yesterday's call.
So let's wait and see, especially what Fiddelke's language does the first time a quarter misses.