Atlanta Fed: 70% of firms getting tariff refunds plan to keep some as cash; refunds average 1.7% of revenue

Most companies receiving refunds of tariffs struck down by the Supreme Court plan to hold on to at least part of the money, according to a survey published by the Federal Reserve Bank of Atlanta. Of firms that expect refunds, 70% plan to keep some as cash, and more than half plan to put some into research or capital projects. Bloomberg reported the findings.

The Atlanta Fed puts the money at stake at nearly $170 billion. The questions went to executives in its Survey of Business Uncertainty from August 10 to 21, with 1,156 responses.

Who is actually getting paid

The less reported part of the survey is how few firms are in line for anything:

• Nearly a quarter of executives believe their firm is eligible for a refund.
• About 40% of those eligible have already been paid, roughly 9% of the whole sample weighted by employment.
• Publicly listed firms are more than twice as likely to have received a refund, and larger firms are slightly more likely to be seeking one.
• About two-thirds of firms are either handling the claim with their own staff or selling their right to the refund to a third party.
• Refunds average 1.7% of a firm's annual revenue.

The Atlanta Fed notes a separate finding from its own researchers that one-third of refund dollars go to the most financially constrained firms, so the money is not only reaching large companies. But the timing gap is clear: the firms with finance departments are getting paid first.

What 1.7% means for a smaller importer

Applied to smaller companies, the survey average gives a sense of scale. It is an average across very different firms, so treat it as a rough guide, not a forecast for any one business:

For a hardware store, an auto-parts distributor or a small apparel brand that imported directly, a refund in that range is just under a week's revenue. That is enough to matter for working capital, and it explains why some firms are selling their claims to third parties rather than waiting. The survey does not say what discount firms accept when they sell, so an owner weighing an offer should compare it against the full refund and against how long the claim might take through their own staff or broker.

Where the money goes

Respondents could pick more than one use. Beyond cash and investment, 17.2% plan customer rebates, 14.8% plan to lower prices, 12.7% plan staff bonuses and 10.1% plan manager bonuses. The Atlanta Fed calls those uses surprising for a one-off windfall, and it matters for inflation: if only about one in seven firms cuts prices, refunds will do little to reverse what tariffs added to the cost of goods.

That fits a broader pattern in the data this month. Fed officials including Richmond's Tom Barkin have warned that businesses feel able to raise prices again, and Chicago's Austan Goolsbee said the Fed can no longer look through tariff-driven inflation. For how refunds are showing up in company results, see our AutoZone earnings story.

Sources: Federal Reserve Bank of Atlanta, Bloomberg. Refund examples are Chronicle calculations from the survey average. This is general information, not legal or tax advice.