In March, shortly after the Supreme Court struck down President Donald Trump’s International Emergency Economic Powers Act (IEEPA) tariffs and paved the way for $100 billion in import taxes being redistributed back to American importers, U.S. Trade Representative Jamieson Greer shared his idea of what these companies should do with this influx of cash.
“If I were these companies, and somehow they get this windfall, the most important thing and the smartest thing they should do is give it as bonuses to their workers,” Greer told CNBC.
It appears some companies have heeded Greer’s suggestion. As businesses receive more than $100 billion the U.S. Treasury has doled out in refunds since May, many are vowing to lower prices or pay down debts. A handful, however, are giving the cash back to their employees.
In its second quarter earnings report last month, houseware brand Williams Sonoma said it would allocate $10 million for one-time payments to 401(k) accounts to eligible employees “in recognition of their efforts navigating the IEEPA tariffs.”
“We’re so appreciative to have the money back and to be able to reward our employees with part of it,” President and CEO Laura Alber said on an earnings call. “They have done such an amazing job.”
TJX, which received $331 million total in tariff refunds, will similarly put a portion of its aggregated refunds into paying employees extra.
“Due to these tariff refunds, the company accrued incremental expenses of $112 million for year-end incentive compensation and discretionary bonuses for eligible associates globally,” a spokesperson told Fortune in a statement.
American companies and consumers alike have kept a close eye on the tariff refund process, particularly after Federal Reserve research showed they were the ones shouldering the brunt of the tariff costs. While companies like Walmart and FedEx have promised to compensate consumers for tariff-related inflation through lower prices or direct rebates, the unconventional decision to hand employees cash from tariff refunds indicates just what a pervasive impact the import taxes had on U.S. companies.
“Companies have a lot of different margins for how they adjust to tariffs,” Alex Durante, senior economist at the Tax Foundation, told Fortune. “They could pass all of it along to consumers, they could also reduce investment, they could reduce hiring, they could cut back on certain employer perks and forms of compensation, if they wish. And I think that this is just perhaps another way of thinking about that.”
How U.S. employees have been impacted by tariffs
Greer’s rationale for giving workers a portion of the tariff refunds goes back to one of Trump’s initial motivations for implementing levies in the first place: to bring back manufacturing jobs to the U.S.
“The whole reason the president imposed these tariffs was to try to reshore, affect our massive imbalance in trade that we’ve experienced over many years because of China, Vietnam, the EU and others,” Greer said. “If the companies are going to get this windfall, they should pass it along to their workers as a bonus or a raise, because that’s the purpose of the program.”
It appears the tariffs had the opposite effect in reshoring, with manufacturing jobs in the U.S. actually shrinking by more than 100,000 during the first year of Trump’s second term. Laura Ullrich, director of economic research at the Indeed Hiring Lab, previously told Fortune tariffs and the uncertainty surrounding maintaining supply chains, could be a reason for this dip.
“Oftentimes when there is heightened uncertainty, it’s just difficult for businesses and people to make decisions in real time,” she said. “And so that slows down employment. It slows down all those processes.”
In addition to hiring constraints, tariffs may have also suppressed wage growth, according to Pantheon Macroeconomics analysts Samuel Tombs and Oliver Allen, who argued companies slashed raises in order to maintain or take back margins when the IEEPA tariffs were in place. It’s one reason why companies may feel compelled to give workers back some cash from the duties, the Tax Foundation’s Durante suggested.
Instead of lowering prices or offering refunds to consumers amid ongoing tariff uncertainty, “what are some better ways we can retain our employees and incentivize them to want to stay with us or to want to want to work for us?” he said.
Tariffs, after all, have likely had an impact on workers’ retirement plans, at least indirectly. Though markets have recovered from Trump’s previous threats to impose sweeping import taxes, economists have found evidence tariffs will have longer-term reductions in stock prices, from about 7.33% to 10.13% across indices within the next couple of years. Lower stock prices means fewer returns for employees with retirement money in the markets.
“It is the case, absolutely, that tariffs do impact capital, and thus the equity markets,” Durante said.
