Fed Tariff Refund Survey: Companies Lean Toward Hoarding Cash Rather Than Investing or Cutting Prices, Doubts Over Economic Boost

A survey released Monday by the Federal Reserve Bank of Atlanta shows that companies that received billions of dollars in tariff refunds have largely chosen to hold onto the money. As part of the Atlanta Fed's "Business Uncertainty Survey," about one-quarter of the more than 1,100 executives surveyed in August said they had already received a refund or were applying for one. Those refunds are expected to average the equivalent of 1.7% of annual revenue. Refunds began being issued in May after the Supreme Court ruled that $166 billion in so-called emergency tariffs were unlawful. According to documents submitted to the court by U.S. Customs and Border Protection, as of Sept. 11, about $134.7 billion in refunds (including interest) had been paid or accepted and were pending processing. Little is known about how this money will flow through the U.S. economy. Among the 220 executives who disclosed their plans to researchers (the researchers included Stanford University economists Nicholas Bloom and Steven J. Davis), about three-quarters said they expected to retain the refunds in cash. Slightly more than half of that group also said they planned to invest in research and capital projects, 17% said they expected to offer rebates to customers, and nearly 15% said they would use it to cut prices. Respondents were asked to select all uses that applied. "These results also suggest that a substantial share of tariff refunds directly benefits customers and employees," the researchers wrote in a blog post published Monday. The survey was conducted from Aug. 10 to 21. How much money flows back to households through rebates, bonuses, or price cuts could have a major impact on the economic outlook. Despite persistent inflation driven by factors such as higher gasoline prices, U.S. consumers continue to spend, supporting economic growth. Tariff rebates, or price cuts made possible by refunds, could further support that spending. Tariff refunds are slowing as the Trump administration turns to other legal authorities considered more durable to restore tariff revenue. August was the first month since the Treasury Department began issuing refunds that importers paid more in tariffs than they received in refunds. Fed officials raised interest rates this month for the first time in three years, saying it was a necessary step to help curb inflation which is climbing after more than five years above target. Policymakers are also trying to determine how much of inflation is driven by supply shocks such as war and Iran, and how much is demand-driven including the artificial intelligence boom that is fueling capital expenditure and other investment growth.