Corporate executives tend to reinvest tariff refunds in supply chains and R&D
According to the latest KPMG survey, in light of potential refunds arising from the U.S. Supreme Court's ruling that some tariffs are invalid, most corporate executives tend to reinvest funds in supply chain diversification, R&D, and capital expenditure, rather than shareholder returns or customer rebates. The survey also shows that only a few companies plan to completely eliminate price increases caused by tariffs.
Key Findings
- Business leaders are more inclined to reinvest potential refunds related to invalid U.S. tariffs into operations rather than allocate funds to shareholders or customers, according to a survey conducted by Big Four accounting firm KPMG.
- Supply chain diversification/resilience topped the list of planned uses for potential tariff refunds, cited by 14% of organizations; closely followed by working capital and inventory (13%), R&D/product innovation (12%), and capital expenditures (12%). Shareholder returns and customer rebates/discounts ranked lowest at 5% and 4%, respectively. A KPMG spokesperson stated that the firm plans to release a detailed report on the study in the coming weeks.
- "These refunds are being viewed as genuine strategic investment opportunities," Brian Higgins, KPMG's U.S. and Americas leader for Industrial Manufacturing, said in an interview.
Deeper Dive
The survey results come as companies await further clarity on potential refunds related to tariffs from the Trump administration that have been successfully challenged.
On Wednesday, the U.S. Court of International Trade ruled that the government must refund payments companies made on tariffs that the Supreme Court struck down last month. The Supreme Court ruled on February 20 that President Donald Trump's imposition of indefinite tariffs under the International Emergency Economic Powers Act (IEEPA) of 1977 was unconstitutional.
The trade court's ruling is likely to be appealed by the government, as granting universal relief for imported goods subject to IEEPA tariffs is not clearly authorized, Gregory Husisian, a partner at Foley & Lardner, told Supply Chain Dive, a sister publication of CFO Dive.
According to estimates from the Penn Wharton Budget Model, the federal government had collected over $130 billion from the disputed tariffs by mid-December, and could ultimately face refund liabilities of up to $175 billion.
The KPMG survey also found that 34% of corporate executives would partially reverse price increases implemented due to Trump's tariffs. 30% of respondents said they would adopt temporary promotional pricing, while only 18% said they would fully roll back price increases.
"I think the throttle was slow to be pressed on the way up, and the brake will be slow to be pressed on the way down," Higgins said.
KPMG surveyed 300 U.S.-based corporate executives and business leaders between February 9 and 24, all from organizations with annual revenues of at least $1 billion.