For retailers, the tariff shock is far from over

tariff refund – Retail executives exhaled after a major February Supreme Court ruling—but the work isn’t done. Refunds remain uncertain and complex, vendors have kept higher prices in place, and a new wave of oil-driven commodity inflation is poised to squeeze suppliers and p

When February brought the Supreme Court’s decision to scrap the use of the International Emergency Economic Powers Act for broad-scale tariffs, retail executives treated it like a reset button. The headline moment landed like relief.

Then reality set in.

The absence of a specific tax is not the same as a stable bottom line. Refunds are legally uncertain and operationally a nightmare. Even more damaging for margin recovery. some suppliers inflated costs during the peak tariff years haven’t brought those costs back down. And now, a new wave of oil-driven commodity inflation is building right behind the first one. For fashion apparel and retail leaders, the window to act is measured in weeks, not months.

For brands and retailers to navigate these pressures, the playbook can’t be vague. Fashion leaders need a structured three-part framework.

First, they must quantify before they negotiate—and the quantification is more complex than it sounds. Many fashion brands absorbed tariff costs directly. Others also worked with vendors to share some of the financial burden through pricing concessions. That cost-sharing arrangement has introduced new friction: some suppliers want to revisit those agreements. using the shifting tariff environment as justification for future price increases. Before any supplier conversations begin. brands need to understand where costs increased. which tariff-related costs may be recoverable. and how those increases are still affecting margins today.

Next comes vendor strategy, tiered instead of treated as one uniform pool. Strategic partners require direct, relationship-forward discussions that acknowledge a long-term future. Mid-tier vendors call for data-backed, category-level outreach. Tail vendors are better approached through scaled, automated communication.

The third move is where the stakes tighten. The goal isn’t only to recover historical overcharges. The aim is to prevent tariff-inflated pricing from hardening into the new baseline as fall planning starts. That’s where supplier dynamics become difficult: suppliers facing rising energy and commodity costs may resist lowering prices. even as tariff conditions evolve.

To counter that, brands are being pushed to create more transparency around pricing structures—and to separate temporary tariff-related costs from long-term base pricing before new inflationary pressures further complicate negotiations.

Costs didn’t come down when tariffs did

The February 20 ruling was monumental. but the aftermath is what Justice Kavanaugh described as a likely “mess.” The cost of tariff collections is about $166 billion. The complexity of getting that money back cannot be overstated. And the biggest mistake importers can make is treating the refund process as open-ended. It isn’t. The clock is ticking.

There’s also a blunt operational problem that can’t be argued away: costs didn’t decrease after the ruling. and that’s where margin recovery is supposed to live. During the tariff rollout, vendors raised prices to offset their own costs. When those tariffs fell or were struck down, those prices largely stayed put. For retailers, that “temporary increase” has been baked into the cost of goods sold.

Higher oil prices add a new layer of pressure

Retailers may also be underestimating timing risk: many aren’t pricing in the resurgence of oil. Rising energy prices are creating pressure that will hit supplier economics—raw materials. logistics. and packaging—within the next few weeks. That setup is often described as a “perfect storm” of resistance.

Suppliers with potential tariff refunds in mind are also facing these incoming commodity pressures. They may use rising oil costs as a shield against resetting prices downward. Once oil costs are fully embedded in the conversation, the tariff recovery argument becomes muddied.

The mandate for retailers is clear: reset the cost base now, before the commodity argument becomes the dominant narrative. The industry has limited time to ensure tariff-inflated prices aren’t carried forward as the new baseline. Every week companies delay narrows that window.

The consumer equation: loyalty or liability?

Even if brands manage to recover costs, the next question is whether savings will reach consumers. That decision sits at the intersection of finance and trust.

A wave of class-action litigation is already sweeping the industry. It targets retailers who passed tariff costs to consumers and are now quietly pursuing refunds for themselves. Because only the importers of record have legal standing to seek a refund—even if they passed 100% of that cost to the customer—there is a major ethical and legal asymmetry.

Proactive brands may have a choice to make. Selectively reducing prices in key categories can signal value leadership when consumers are worn down by inflation. In fashion, price is a brand signal, not just a line item. Deciding where to lower prices is as much a merchandising and marketing call as it is a finance one.

The tariff era, in other words, isn’t something companies can treat as a one-time event. It’s becoming an operating condition where policy can shift in weeks and cost structures have to be managed actively. Brands that treat this moment purely as a recovery exercise may miss the reset opportunity—one tied to supplier transparency. consumer trust. and competitive positioning ahead of an uncertain fall.

The window is open, but it won’t stay that way for long.

Sonia Lapinsky is partner and managing director, head of fashion retail at AlixPartners.

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