Tariff refunds are landing: Levi's recovered about $80 million and is putting a third of its reinvestment into logistics

The details

Levi Strauss & Co. recorded roughly $80 million in tariff refunds in its most recent quarter, CFO Harmit Singh said on the company’s Oct. 7 earnings call. The refunds stem from the Supreme Court’s February 2026 ruling that nullified the administration’s country-specific duties.

Levi’s plans to reinvest about three-quarters, roughly $60 million:

• About a third, roughly $20 million, goes to distribution and logistics
• The rest is split between marketing and promotions, with a small portion for inventory clearance before the holidays
• About $25 million was invested in the quarter that ended Aug. 30, and about $35 million is planned for the current quarter

Net tariff recovery is expected to add about 80 basis points to Levi’s projected gross margin of roughly 63% for the year ending Nov. 29. The fourth-quarter reinvestment trims that quarter’s gross margin by about 10 basis points, to a projected 61.8%. “We believe this balanced approach strengthens our competitive position, supports near-term growth,” Singh said. Levi’s says the plan keeps it on track for mid-single-digit revenue growth and a path to 15% operating margins.

Other companies are using refunds differently. McCormick received about $28 million and Kimberly-Clark about $45 million, both to offset higher input costs. E.l.f. Beauty expects about $58.5 million and plans to fund price cuts.

The scale of refunds. About 330,000 importers paid an estimated $166 billion in IEEPA duties across more than 53 million entries before the Supreme Court ruling, and U.S. Customs and Border Protection began processing refunds through an electronic tool called CAPE in April 2026, according to law firm White and Williams. Only the importer of record can claim, which is why it matters whether your company or your supplier imported the goods. See our guide to IEEPA refunds.

What Levi’s is buying. Most of Levi’s supply chain reinvestment falls in the current quarter. The company frames the refund as a chance to strengthen distribution and logistics while keeping its margin targets, rather than as a windfall to pass through to price.

How Levi’s split the money. Of the roughly $60 million Levi’s plans to reinvest, a third goes to distribution and logistics and the rest is split equally between marketing and promotional activities, according to Supply Chain Dive. Most of the supply chain spending falls in the current quarter, which ends Nov. 29. Levi’s did not name specific distribution centers or sourcing countries. E.l.f. Beauty said it would use its refund to cut prices and lift sales volume.

The refunds in context

By our calculation from White and Williams’ figures, the $166 billion in IEEPA duties averages about $500,000 per importer and a little over $3,000 per entry, though the amounts are highly concentrated among large importers. Levi’s $80 million and the other disclosed amounts are a small share of the total, which suggests many more refunds will appear in company results over the coming quarters as claims are processed.

Three ways companies are using refunds

The supplier side of refunds

Many suppliers passed tariff costs to customers through surcharges or price increases in 2025. If those suppliers were the importers of record, they may now receive refunds for duties their customers effectively paid. Procurement teams should:

1. List suppliers that added tariff surcharges or price increases tied to the struck-down duties.
2. Ask whether they filed for refunds, and how much they expect.
3. Check contracts for clauses that require passing back duty savings.
4. Negotiate credits or price reductions where surcharges were separately itemized.

Where your own company was the importer of record, work with finance and your customs broker to confirm refund claims are filed for every eligible entry.

A worked example: what a supplier might owe you

Suppose a supplier added a 10% tariff surcharge to $2 million of your 2025 purchases, citing the IEEPA duties, and was the importer of record. That surcharge cost you $200,000. If the supplier now receives a refund of the duties it paid on those goods, you have a reasonable case for a credit. The size of the case depends on how the surcharge was documented: a separate line item tied to specific duties is far easier to claim than a general price increase. These figures are illustrative. Talk to legal before making a formal claim, and check whether your contract addresses duty refunds.

What procurement teams should do

• Inventory your refund exposure. Work with trade compliance to list every entry that paid the invalidated duties, by supplier and HTS code.
• Check supplier pass-throughs. If suppliers raised prices citing those tariffs, review contract language and request credits or price adjustments where duties are refunded to them.
• Influence the reinvestment. Make the case for funding resilience projects, such as dual sourcing, inventory buffers or logistics upgrades, as Levi’s did with distribution.
• Keep landed-cost models current. Remove refunded duties from forward cost models, but keep scenarios for the tariffs still in force under other authorities. See our tariffs explainer.

What to watch next

• More refund disclosures. Expect more companies to report refunds in Q3 and Q4 earnings; ask your suppliers whether they received any.
• Supplier pricing. Where suppliers recovered duties they had passed through, there is a case for price credits.
• Replacement tariffs. Section 301 and Section 232 actions have replaced much of the struck-down duty, so refunds are not a sign that costs are falling.

The bigger picture

Refunds are a one-time cash event layered on top of tariffs that remain under Section 232 and Section 301. Companies are using them for margin, pricing or supply chain spend. Procurement teams that come with a prioritized list of supplier and logistics projects are best placed to direct that money. Track the remaining trade dates in our Tariff & Trade Deadline Tracker.