Dive Brief:
- Kimberly-Clark received a $45 million refund in the second quarter for invalidated U.S. tariffs it paid last year, SVP and CFO Nelson Urdaneta said on an Aug. 4 earnings call.
- The refund is roughly half of what the personal care maker paid in North American tariffs, including now defunct International Emergency Economic Powers Act levies and retaliatory duties from Canada. The company does not expect additional material refunds this year.
- Urdaneta said the recouped funds will help Kimberly-Clark offset about $150 million in gross input headwinds tied to higher oil prices in the second half of the year. As a result, pricing should remain roughly neutral after cost inflation, although the CFO noted that the forecast was based on current oil prices.
Dive Insight:
Kimberly-Clark joins other consumer brand manufacturers and retailers who have received tariff refunds after the Supreme Court nullified President Donald Trump's country-specific tariffs in February.
Spice and ingredients maker McCormick & Co. planned to use a $31 million windfall to offset inflationary pressures, including costs tied to the Iran war. E.l.f. Beauty expected to use its $58.5 million in refunds to cut prices and lift sales volumes, with Walmart and BJ’s Wholesale Club following a similar tack.
Some companies have received much larger tariff refunds. For example, video game console maker Nintendo secured $300 million, while online retailer Amazon received $600 million. However, while Amazon has indicated it may forward some of the returned funds directly to customers while lowering prices, Nintendo has maintained it has no plans, nor legal obligation, to issue refunds to consumers.
Meanwhile, some retailers needing cash have sold their refund rights at a discount, including American Eagle Outfitters and The Children's Place.
Customs and Border Protection is in charge of issuing the refunds and has paid out $100 billion as of July 31, a significant milestone in its effort to return $166 billion in invalidated tariffs.
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