Recently, I asked a simple question: Costco shoppers paid billions in tariffs, so who gets the refund?
Now we have the first real answer.
On its Sept. 24 earnings call, Costco said it collected $184 million in tariff refunds during its fiscal fourth quarter: $174 million in refunds plus $10 million in interest. The company said it put much of that money into lower prices, and it plans to keep doing so.
Quick background. The refunds exist because the Supreme Court ruled 6-3 in February that the emergency-powers law the president relied on didn’t authorize those tariffs. So the government owes importers their money back.
And who really paid those tariffs? The Federal Reserve Bank of New York estimated nearly 90% of the economic burden fell on U.S. companies and consumers. In other words, you.
So what is Costco doing with the money? Here’s what we know.
1. These prices already dropped
On the call, Chief Financial Officer Gary Millerchip named four Kirkland Signature items that got cheaper:
- Walnuts: $13.79 to $9.99, about 28% off
- Colombian whole bean coffee: $21.99 to $19.99
- Coarse black pepper: $6.99 to $5.99
- Dry facial towels: $19.99 to $18.99
Prices vary by region, so yours may not match exactly. But if walnuts are on your list, that’s nearly $4 back every time you buy a bag.
2. Watch these aisles next
Millerchip said the price cuts came in the second half of the quarter, mostly on everyday items in produce, meat and beverages, plus some home furnishings and hardware.
Those are the aisles where more cuts are most likely to show up. He said Costco’s goal is “to be the first to lower prices” when it sees a chance.
3. More refund money is already rolling in
This wasn’t a one-time check. Millerchip said Costco has already received about as much in refunds this quarter as it did last quarter, and the company intends to keep putting the majority of that money back into member value.
That’s your cue to keep watching the price tags on your regulars over the next few months.
4. It’s not a full give-back
Here’s the part you won’t see on a sign in the warehouse.
Costco’s earnings release says the refunds added 15 cents a share to fourth-quarter profit, after what it called “partial reinvestment” in member value. Translation: Some of the money went to their bottom line. Costco says the majority is going back to members, not all of it.
That’s still more than some companies will do. But notice who’s deciding. The refund went to Costco, not to the members who paid higher prices. Two class-action lawsuits argue that amounts to a double recovery for the retailer.
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5. Make sure a price cut is really a cut
A lower sticker price means nothing if the package got smaller. That’s shrinkflation, and it’s why the government doesn’t just track sticker prices.
The Bureau of Labor Statistics measures price per standard size, usually per ounce. In one of its examples, an ice cream tub that shrinks from 64 ounces to 60 ounces at the same $5.99 counts as a 6.7% price increase.
Do the same math yourself. Check the unit price on the shelf tag, and snap a quick photo of prices on the things you buy most often. Next trip, you’ll know whether a “deal” is real.
6. See how the other big retailers handled theirs
Costco isn’t alone. Walmart said in August that it would use $2.9 billion in tariff refunds to cut prices, and it ran about 11,000 rollbacks in its second quarter, according to CBS News. You can read more about that in “Walmart Will Use Tariff Refunds to Cut Prices. Will Other Retailers Follow?”
Amazon took a different route. It got about $600 million back and said refunds would go to customers only in a limited set of circumstances. Here’s what every Amazon shopper should know.
7. Your membership still looks like a deal
No fee hike came with this report. Costco ended the quarter with 84.1 million paid members, and 92.3% of U.S. and Canadian members renewed.
Executive memberships grew 9.4% to 42.3 million. When that many people keep paying for the top tier, they’re telling you something. If you want to squeeze more out of yours, here are 14 Costco perks that pay for your membership fee.
The bottom line
In March, Costco’s CEO said the company would pass any tariff refunds on to members through lower prices and better values. So far, it’s doing what it said — mostly.
Keep an eye on the aisles above, check unit prices, and remember that the money flowing back belonged, in large part, to you in the first place.
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