Tariff refunds are hitting retailers' wallets. Here's what they're doing with the money.

America's biggest retailers are now sitting on tariff refund checks from the federal government. How they plan to spend the billions of dollars in returns is up to them.

The retailers, including Amazon ( AMZN ), Target ( TGT ), and Walmart ( WMT ), are taking various approaches. Some have offset their costs and cushioned their margins, while others have invested in marketing and cutting prices. In a small number of cases, some even claim plans to return the money to customers.

David Silverman, senior director at Fitch Ratings, noted that the billions in refunds present a predicament for businesses because of the "perception by consumers that they ultimately paid the cost of those tariffs through higher prices."

As of late July, the Trump administration returned more than $100 billion to businesses following the Supreme Court's ruling in February that struck down tariffs imposed under the 1977 International Emergency Economic Powers Act (IEEPA). That's about 60% of the total $166 billion collected under the IEEPA tariffs.

The tariff environment is a "wild card," CFRA analyst Arun Sundaram said, noting that "[It's] kind of different how each retailer is handling it, and it's also different between how much tariff refunds each retailer is getting."

Walmart shared with investors on Thursday that it received approximately $2.9 billion in tariff refunds, amounting to about 0.5% of its annual US net sales.

America's biggest retailer plans to use the returns to lower prices in areas where customers are flocking, such as grocery and general merchandise, CFO John David Rainey said. In the first half of the year, Walmart US lowered prices on roughly 11,000 items.

Target received $994 million in tariff refunds in the second quarter and used the cash to boost its margins, which contributed $1.65 to its $4.11 earnings per share. In the past year, the company cut prices on more than 10,000 items too.