By Ed Avis
When President Trump imposed tariffs on products from around the world, costume shops – and ultimately their customers – paid more for imported products. But the Supreme Court ruled in February that those tariffs were not proper, and since then a structure has been set up for companies to request refunds.
So should costume shops be expecting refunds?
Don’t hold your breath. The structure for requesting refunds only works for companies that directly paid the tariffs, which for the costume industry primarily means manufacturers. So stores, in most cases, cannot use that refund structure.
But if a manufacturer from which a store bought products gets a refund, won’t they pass the appropriate amount of that refund to the store? Again, don’t hold your breath.
We informally polled costume industry manufacturers about the possibility of refunding tariffs, and of those that replied, none had definite plans to do so. Why not? For a couple of reasons:
According to our poll, the average tariff the manufacturers paid was 35 percent. However, they only passed on 10-12 percent to retailers, so the manufacturers and/or others in the supply chain “ate” the rest.
Two, they had to pay legal fees and other expenses to deal with the tariffs when they were imposed, and are paying more legal fees to get them back.
The bottom line is that even if the manufacturers succeed in getting 100 percent of the tariffs refunded, they likely will keep that money as reimbursement for their own expenses.
“Since the manufacturers only charged the retailers a portion of the actual tariff they paid, and since they had a lot of other expenses related to the tariffs, it’s probably not realistic for retailers to expect refunds,” says Nigel FeBland, a sales representative for numerous companies in the industry. “It is a fluid issue, but refunds to retailers are not likely.”
Another point to consider: In some cases, the tariff situation probably caused manufacturers to lose business. For example, we received this email from Linda Sparks, owner of a Canadian company called Farthingales:
“I sell corset making supplies – so costume making supplies, too. Last fall I had to upgrade my website to charge Duty on all American orders – no shipments were allowed to cross the border if the Duty was not prepaid. So, the website automatically charged 50% duty on most orders, and many people abandoned their shopping cart - understandable!…. The USA is about half my market, or at least it was.”
So with all those pressures – tariff costs, legal expenses, lost customers, etc. – it will not be surprising if the vendors choose not to refund.
But there is one possibility: If manufacturers get their tariff money back, they could offer a discount to retailers. This might be a win-win situation, since the manufacturer could use that discount as a sales incentive and the retailers could get some products at a lower price.
“We might offer some special credit or discount on future orders,” wrote one manufacturer – who did not want to be named – in the comments portion of the informal poll we took.