Twelve of the 25 chief financial officers interviewed said their company plans to apply for tariff refunds, however, none intend to lower prices in response.
Only 12 out of 25 CEO even plan to apply for tariff refunds? Why would a CEO choose not to seek reimbursement for tariffs they paid previously?
That doesn't sound right.
As for the "none intend to lower prices in response" comment, why would they?
First off, half the CEOs aren't even planning on requesting the tariff refunds, so why would they lower prices? As for the other half of the CEOs, let's understand what we are talking about:
a) Tariffs were only charged for a defined period, a fraction of a year, if you will,
b) Tariffs were charged at a fraction of the imported value of a good - not retail or "market" price
So let's say I was subject to a tariff for, say, 6 months (half a year), and I was assessed a 20% tariff on my imported goods, and the imported items had a 100% markup between import value and consumer price - that would mean if I were to fold the refund back into lowering prices, it would mean a 5% drop for the consumer for one year of sales, that's it. (The math looks like this - 6 months of 20% tariff equals one year of 10% tariff, and since that 10% is before the 100% markup in price, the customer only sees a 5% savings.) That short-term 5% savings will quickly be eaten up by inflation, and then when prices bounce back to market levels, the customer will feel taken advantage of, complaining about over-sized price increases.
It's easier to just absorb the windfall, let the stock value nudge up a little, and maybe put off the next price increase for, say, another quarter.