The tariff refund checks have landed.

I'm hearing it from more and more of our clients.

Lump sums — in some cases, multimillion-dollar lump sums. After a year where tariffs ran as high as 5% of revenue for import-heavy brands, that flow has started reversing.

For the first time in a while, the question is where to put money instead of where to find it.

Most founders treat a windfall like this as a one-time call about where the money goes.

But there's a second, trickier question underneath it: everything you changed because of tariffs — the price increases, the supplier splits — is still in place. The tariffs are gone (mostly). The changes aren't. Somebody has to decide what gets unwound and what deliberately stays.

You assume all that money is yours.

And it is legally yours.

I'm not a lawyer, but I don't see a version where the administration comes back and takes those checks away. Once you give someone something, taking it back is generally political suicide.

So the money's yours. The question is whether it should stay yours.

The way I think about it: three groups can make a case for a piece of this refund.

Let's take them in order.

Think about what last year looked like on the supplier side. I heard so many stories of brands calling their factories saying you're going to have to eat these tariffs.

A lot of you landed on a split where the factory eats a third of the cost, you eat a third, you pass a third through to the customer.

Some of you pushed harder than that.

Either way, suppliers had little choice but to be beaten up or die.

Now you've got the refund.

Are you giving any of it to the supplier who worked with you through the hard times?

My belief is that over time, if you keep beating them up and you don't give them anything in return, you're going to feel it one way or another - likely in product quality. Or good luck asking them for better payment terms in the future.

You don't necessarily have to write them a check. But think about paying your invoices early. Or, on the next six POs, instead of giving them 10% down, give them 20%. That's real money to them and it buys you goodwill you'll want later.

Your team belongs in this conversation too.

I posed this question to a group of other CFOs, and one of the answers that came back: they gave a small portion of it as a tariff dividend payment to their employees, weighted more heavily to the task force of folks who were dealing with the chaos of it.

The people who spent last year re-quoting freight and reworking POs felt the tariffs more than anyone. A dividend like that is cheap relative to what it buys you with the people who lived it.

Do what's right for your business — just don't forget the people you leaned on to get through it.

Most of you raised prices last year because of tariffs. Some split it with the factory, some passed it straight through. Either way, your customer is paying more than they were.

Here's where the May benchmark data comes in. (The full report is back, with a new year-to-date column on the far right that gives you better context on the trend.)

Look at the under-$10M cohort year to date:

Contribution margins are improving. Normally you'd assume improving ROAS is driving it. The data says otherwise:

We know that when you increase spend, ROAS goes down.

But when you decrease spend by almost 20% as the <$10M cohort did, I'd expect an increase in return on ad spend. This has been the opposite. That makes the story worse, not better.

So the next place to look is gross margin. For years leading up to 2025, gross margins were effectively flat. Then in 2025 and 2026, brands increased prices, cut low-margin SKUs, sold more of their higher-margin products, or got better upsells.

Gross margin negated the decline in ROAS and carried contribution margin up.

This may be uncomfortable part: the tariff price increases you took last year are a big part of what's propping up margins right now. The tariffs went away. The prices didn't.

Which is exactly why the next question is so hard to look at.

When tariffs hit, everybody talked about Amazon adding a tariff line item. X went crazy for months with sellers threatening to add a “tariff” line to their checkout.

Now that tariffs have largely receded, nobody is saying they'll add a line item for an extra 20% off because we're not paying a tariff anymore.

No one's doing that. Of course sellers want to keep prices high.

The real question is whether you should bring prices back down to pre-tariff levels. And that comes down to how elastic or inelastic your customer demand is.

If you're Apple and you raise the price of the iPhone from $1,200 to $1,400, you'd survive it. Most of you aren't Apple.

If you're selling something with real substitutes, the price increase you took last year may be costing you more volume than the margin it's buying.

If I were your CFO, this is where I'd start. Pull conversion rate by pricing period, not by month:

Then run the postmortem. If I bring price back to where it was, here's the volume I'd expect and here's what it does to contribution margin.

That's the finance job. Then you hand the results to marketing.

Because if you decide to bring prices down, how you do it is a marketing decision, not a finance one. Do you do it surgically, product line by product line? Do you put it in the creative — we were paying 20% tariffs, we got the refund, we're passing it back to you?

Or the one I'd pitch: hold it for Black Friday and run the biggest discount you've ever given. Same margin math as a quiet price reduction, but now it's a story your marketing team can actually sell.

Our job is to give you the numbers clean enough that you can make that call. The owner and the marketing team decide what to actually do.

Save this one for the week your refund lands — or before you touch holiday pricing.

Keeping some of it — or most of it — is a fine answer. But keep it on purpose.

If you believe the administration figures out another way to implement the tariffs, holding prices where they are is the rational move. You don't want to drop prices and then have to take them back up.

And if the refund stays on your balance sheet, decide what it's for. Debt paydown. The war chest. Or — if you read the fun budget issue — this is exactly the kind of money that should fund marketing R&D: budgeted as pure expense, assuming zero revenue, paying for the tests you couldn't justify out of operating profit.

What I don't want for you is the default: the refund dissolves into working capital, nobody decides anything, and in six months you can't say where it went.

A multimillion-dollar lump sum deserves a decision.

Refunds are landing all over our client base and everybody's handling it differently. Suppliers, employees, Black Friday ammunition, straight to the balance sheet.

What are you doing with yours?

— Sam

P.S. Here's the full May report:

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