Dive Brief:
- Amazon received $600 million in refunds for now defunct tariffs in Q2 and will return some of those funds to customers, according to the company’s earnings call Thursday.
- SVP and CFO Brian Olsavsky said the $600 million the e-commerce giant recouped accounted for “the significant majority” of refunds it expects to receive from duties it paid under International Emergency Economic Powers Act levies the Supreme Court struck down in February.
- Olsavsky also said Amazon had “identified a limited set of circumstances” where it could trace specific tariff costs it passed onto customers and would contact those affected and “automatically issue refunds.”
Dive Insight:
Amazon’s share of IEEPA tariff refunds, while still sizable, pales in comparison with those of companies such as Nike and Ford Motor Co.
Olsavsky explained that the amount the e-commerce company received “is limited” because of its efforts to frontload inventory ahead of the implementation of levies and because it often is not the direct importer of goods.
“We are not the importer of record for the large majority of items sold in our store, given suppliers typically handle imports and pay relevant tariffs,” Olsavsky said. “In cases where we did see an increase in cost due to tariffs, we largely absorbed these costs rather than pass them on to customers.”
Despite absorbing those costs, Olsavsky said Amazon still plans to use the returned funds to benefit consumers, including via some directly passed on refunds. Costco has also indicated it might issue refunds to customers, but the process and timing remain unclear, particularly as the company faces a class-action lawsuit related to the reimbursements.
“As we've mentioned before, our plan is to return to our members, in some form, the portion of tariffs that were passed on to them,” President and CEO Ron Vachris said on a May earnings call. “How much we return and when depends on a variety of factors, including how much refund money we receive and when it arrives as well as developments in the lawsuit filed against the company regarding the return process.”
Beyond flowing some of the returns back to a small set of shoppers, Amazon said it planned to use tariff refunds to lower prices, following a similar tack as retailers such as Walmart, BJ’s Wholesale Club and E.l.f. Beauty.
