⚠ A New Tariff With No RefundModerate threat

Home Depot (HD) — threat to the moat

Home Depot has spent a one-time tariff refund while a new across-the-board tariff replaces the old one.

The tariff refunds were a one-time gift from a court ruling. The 10-Q notes the effects of the Supreme Court decision invalidating tariffs imposed under IEEPA, ongoing litigation, and the implementation of additional tariffs1. After the ruling, the administration announced an across-the-board tariff, and Home Depot's chief financial officer said the company was evaluating the 15% tariff2.

Q2 fiscal 2026 ($M)Gross profit16,115Tariff refunds in cost of salesabout 685Home Depot Q2 fiscal 2026 Form 10-Q and results release
Refunds were about 4% of the quarter's gross profit.

A replacement tariff would not come with a refund. The fiscal 2026 guidance says the refunds are expected to partially offset unplanned fuel, energy, and other product input costs3, which means those costs remain when the refunds are spent.

Home Depot's defence is its sourcing spread; no single foreign country above 10% of purchases4.

The 10-K treats trade policy as a standing risk. It lists the impact of tariffs, trade policy changes or restrictions, and efforts to diversify the supply chain among the factors that could affect results5. The refunds were a reversal of one policy; the next one may not be reversed.

What matters is gross margin in fiscal 2027, the first year with no refund in it. A margin below 33% then would show the new tariffs are costing more than the stores can pass on.

References
  1. ReportedThe 10-Q notes the effects of the Supreme Court decision invalidating tariffs imposed under IEEPA, ongoing litigation, and the implementation of additional tariffs.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  2. ReportedAfter the ruling, the administration announced an across-the-board tariff, and Home Depot's chief financial officer said the company was evaluating the 15% tariff.
    CNBC on Home Depot's fourth quarter of fiscal 2025: shingle shipments down 28%, repair rather than replace, tariffs, and no single foreign country above 10% of purchases. — Q4 fiscal 2025 · publ. 24 February 2026 · source ↗
  3. ReportedThe fiscal 2026 guidance says the refunds are expected to partially offset unplanned fuel, energy, and other product input costs, which means those costs remain when the refunds are spent.
    The Home Depot second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - sales, comparable sales, transactions, ticket, earnings, reaffirmed guidance and the balance sheet. — Q2 fiscal 2026 · publ. 18 August 2026 · source ↗
  4. ReportedHome Depot's defence is its sourcing spread; no single foreign country above 10% of purchases.
    CNBC on Home Depot's fourth quarter of fiscal 2025: shingle shipments down 28%, repair rather than replace, tariffs, and no single foreign country above 10% of purchases. — Q4 fiscal 2025 · publ. 24 February 2026 · source ↗
  5. ReportedIt lists the impact of tariffs, trade policy changes or restrictions, and efforts to diversify the supply chain among the factors that could affect results.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business and Item 2 properties: stores, Pros, SRS, competition and supply chain. — Fiscal 2025 · publ. 18 March 2026 · source ↗
Sources
Generated September 26, 2026