Tariff refunds are landing. The next tariff is already here

The Lead

The Tariff Refunds Are Landing. The Next Tariff Is Already Here.

In February the Supreme Court held the IEEPA tariffs unlawful, and the refunds are now hitting balance sheets. Nike says it expects $965 million back for North America plus $21 million for Converse, with roughly $300 million in cash already received; the recovery pushed its Q4 gross margin up 890 basis points to 49.2%, per Modern Retail. Reformation's S-1 shows the same arc in miniature: the tariffs shaved 360 basis points off its 2025 gross margin, and the refund boosted Q1 2026 margin by roughly 900 basis points to 70.3%. McCormick has flagged a $28 million refund of its own. Analysts estimate the government may owe importers as much as $175 billion in total.

Here is the part that should shape your planning: the refund is not the end of tariff exposure. Reformation's filing spells it out. The President quickly imposed a 150-day 10% tariff covering most products from virtually all countries under Section 122, and has indicated the rate will rise to 15%. Nike's CFO Matt Friend put it plainly on the earnings call: tariffs remain a dynamic cost headwind, and the company is not expecting the environment to improve meaningfully over the next six months.

Two practical moves this week. First, if you imported under IEEPA and paid duties, talk to your customs broker about refund eligibility; this money is real and brands far smaller than Nike are owed some of it. Second, treat the refund as a one-time event, not recurring margin. Pressure-test the landed costs on Q4 orders you are placing now against the 10% Section 122 rate, and against 15%, and decide in advance whether you absorb it or reprice.

One more wrinkle: consumer class actions are also chasing this money, arguing brands should not pocket refunds for tariff costs they passed on to customers. The brands that came through 2025 in decent shape did it on margin structure and customer loyalty, not luck. Reformation posted 20 consecutive quarters of double-digit revenue growth through the whole mess. Customers stay with brands they trust on purpose. That is the durable hedge against whatever trade policy does next.

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Tool Spotlight

Intelligems

Intelligems is an A/B testing platform built specifically for Shopify, designed to test copy, prices, and page content against real purchase behavior, not just clicks. CRO consultant Nate Lagos told Practical Ecommerce he uses it for 90% of his client tests, including the headline capitalization test that produced a 25% conversion lift on a high-traffic landing page.

The specific use case worth running right now: take your top product page headline, especially if it's in all caps or sentence case, and set up a title case variant. Lagos found that capitalizing the first letter of each word, rather than using all caps, drove both higher conversions and lower cost per acquisition for one client. You need meaningful traffic to get to statistical significance (Lagos aims for 80% confidence), but if you have a product page pulling a few thousand sessions a week, you have enough to learn something real within a month.

Numbers to Know

By the numbers

25% increase in conversionsSwitching a landing page headline from all caps to title case produced this lift for one of Nate Lagos's clients, alongside a lower cost per acquisition, per Practical Ecommerce. source

Consumer sentiment 49.5 in June, still 18.5% below a year agoThe University of Michigan's June final rose 10.5% off May's record-low 44.8, but for the third straight month over half of consumers spontaneously said high prices are weighing down their personal finances. Your customers are anxious and price-aware at the same time. source

$662.8 billion in May retail sales, the third straight monthly riseSpending keeps climbing even with sentiment near record lows, and e-commerce keeps taking share at 16.9% of retail in Q1 (FRED). Anxious customers are still buying; they are just choosier about who they buy from. source

First California SB 54 packaging invoices expected in early 2027Brands selling into California should audit their plastic packaging now; the state's producer-responsibility law charges higher fees for plastic materials, and most brands exploring swaps are heading to fiber, per Modern Retail. source

Tactic of the Week

Tactic: Test title case on your top landing page

Nate Lagos, who spent a decade as an in-house performance marketer at brands including Original Grain and Dugout Mugs, recently ran an A/B test for a client whose landing page used all-caps headlines. The challenger: the same headline with only the first letter of each word capitalized. Result: 25% more conversions on a high-traffic page and a lower cost per acquisition, per Practical Ecommerce. Lagos says he read the idea on X and was genuinely surprised by the magnitude.

Here's how to run it this week. Open your highest-traffic product or landing page and identify the primary headline, the first text block a visitor reads. If it's in all caps, create a title case version. If you're on Shopify and have Intelligems, set it up as a content test. If not, Google Optimize is deprecated, but Neat A/B Testing and similar Shopify apps will work. Set your goal to add-to-cart or purchase, not bounce rate. Let it run until you hit at least a few hundred conversion events per variant before drawing conclusions. Lagos also notes he's seen similar directional results when headlines use smaller font sizes rather than oversized display text, so that's a second variant worth queuing up once you've settled the caps question.

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