U.S. companies have finally gotten $71 billion in tariff refunds, but they’re using it to offset inflation caused by the Iran war
American companies are finally getting relief from tariff rebates; But this is the time for a new wave of inflationary economic factors.
According to the US Treasury statement, US Customs and Border Protection refunded $49.2 billion in June. monthly statementThis brings total tariff refunds to nearly $71 billion, or more than 60% of the $166 billion available after the Supreme Court struck down tariffs under the International Emergency Economic Powers Act (IEEPA) in February.
But as companies recoup costs related to import duties they had to pay last year, they are in many cases seeing those funds depleted by other economic pressures.
“From a commodity perspective, we expect some more pressure on the business.” PepsiCo Chief Financial Officer Steve Schmitt said in the company’s statement: earnings call last week. “We will use the tariff, particularly the refunds, to help offset some of the commodity inflation that we’re seeing and allow us to continue to play offense in the business.”
Ramon Laguarta, the company’s CEO, said the Iran war, and its impact on gas prices in particular, has impacted consumer behavior, reducing discretionary spending and trips to the grocery store associated with purchases.
Marcos Gabriel, CFO of spice brand McCormick & Company, noted during a meeting earnings presentation He said last month that a $31 million tariff rebate would offset higher costs. company raised prices twice last year due to tariffs and limited freight capacity.
“I think it’s important to note that the conflict in the Middle East has actually led to more inflation than we ever thought possible… so we’ll be using most of the tariff rebate to offset those higher costs,” Gabriel said.
Economic effects of geopolitical tensions
Economists have long concluded that Trump’s tariff policy is inflationary. Goldman Sachs Warning that prices will increase despite the reduction of IEEPA tariffs keep upgrading partly as a result of continuing duties imposed under Sections 122, 232 and 301 of the Commercial Code 1974.
But even as companies adjust their supply chains and margins to account for rising tariff costs, they face headwinds elsewhere. During wholesale inflation fell While energy prices fell last month, Trump’s new attacks on Iran and reignited tensions in the Strait of Hormuz have analysts worried that prices could rise once again. David Mericle, Goldman Sachs’ chief US economist, warned that monthly core inflation could rise if oil rises above $100 a barrel, as it did early in the conflict. 3 to 4 basis points increase in the coming months.
