WEYCO GROUP INC

Incremental Tariffs

In early 2025, the U.S. imposed tariffs on certain imported goods under the International Emergency Economic Powers Act (“IEEPA”). During 2025 and the first quarter of 2026, we paid approximately $19.8 million in IEEPA tariffs. In February 2026, the U.S. Supreme Court invalidated IEEPA tariffs, and in April 2026, U.S. Customs and Border Protection (“CBP”) commenced a phased process for accepting refund claims. Accordingly, in April, we submitted refund claims for our Phase 1 entries totaling $18.6 million, substantially all of which were approved during the second quarter. As a result, during the quarter we recognized: $15.3 million in tariff refunds as a reduction to cost of sales ($14.3 million in the Wholesale segment and $1.0 million in the Retail segment), $3.3 million as a reduction of inventory, and $0.7 million of interest income.

Our remaining entries, totaling $1.2 million (now classified as Phase 3 entries), have not yet been assigned a claim submission timeline. No refunds related to Phase 3 entries have been recognized, as the timing and amount of these recoveries remain uncertain and subject to execution by CBP.

Following the U.S. Supreme Court's ruling in February, the Administration imposed a 10% incremental tariff under a separate statutory authority, which remained in effect throughout the second quarter. On July 24 th, the Administration increased the incremental tariff on imports from China, Dominican Republic, and Vietnam to 12.5%. U.S. trade policies continue to evolve and remain unpredictable, creating near-term gross margin uncertainty. We have mitigation strategies in place and will continue to adjust, as appropriate, in response to future policy developments.