Tariffs and Your Business: What Every Business Owner Should Know in 2026

The U.S. trade environment has shifted dramatically over the past year, and it is still moving. Between landmark Supreme Court decisions, new tariff frameworks, and ongoing court proceedings over potential refunds, business owners who import goods or manage international supply chains are navigating genuinely uncharted territory.

This post breaks down the essentials: what tariffs are, how they work, what has changed in 2026, and most importantly, what you can do to manage their impact on your bottom line.

What Is a Tariff, and Why Does It Matter to Your Business?

A tariff (also called a customs duty) is a tax imposed by the federal government on imported goods. In the United States, tariffs are administered and collected by U.S. Customs and Border Protection (CBP).

For most businesses, tariffs show up as a direct cost of bringing products into the country. That added cost affects your pricing, your margins, your inventory planning, and ultimately your profitability. The higher the tariff rate, and the more products you import, the greater the financial exposure.

Governments use tariffs for a range of purposes: to generate revenue, to protect domestic industries from foreign competition, to address national security concerns, or to respond to trade practices they consider unfair. Whatever the policy rationale, businesses bear the cost.

How Tariffs Are Calculated

Most tariffs are calculated as a percentage of the customs value of the imported goods, a structure known as an ad valorem tariff. The formula is straightforward:

Duty Rate × Customs Value = Duties Owed

For example, goods with a customs value of $100,000 subject to a 5% duty rate result in $5,000 owed to CBP.

Some tariffs use a specific structure instead, charging a fixed dollar amount per unit (per kilogram, per item, etc.) regardless of the product's value.

The applicable rate for any given product depends on two things: how the product is classified under the Harmonized Tariff Schedule of the United States (HTSUS), and where it originates. Even small differences in product specifications or country of origin can result in meaningfully different duty rates.

One Product, Multiple Tariffs: Understanding "Tariff Stacking"

One of the most important and frequently underestimated concepts in import compliance is tariff stacking. A single imported product can be subject to several different duties at the same time, and those rates add up quickly.

As of mid-2026, a typical imported product may carry:

• Standard MFN (Most Favored Nation) duties: the baseline HTSUS rate, generally 0–25%

• Section 232 tariffs: applied to steel (25–50%), aluminum (10–25%), copper, semiconductors, automobiles, and now pharmaceutical ingredients, based on national security findings

• Section 301 tariffs: applied to goods from China across a broad range of product categories, ranging from 7.5% to 100% on items like electric vehicles, solar cells, and semiconductors

• Section 122 tariffs: a temporary 10% global surcharge currently in effect (discussed below)

For a Chinese-origin product subject to all three layers, the effective duty rate can easily exceed 50%. Understanding your full tariff stack, not just the headline rate, is essential for accurate cost modeling.

The 2026 Tariff Landscape: What Has Changed

The IEEPA Ruling: A Landmark Decision

The most significant development in U.S. trade law in years came on February 20, 2026, when the U.S. Supreme Court issued its decision in Learning Resources, Inc. v. Trump. In a 6–3 ruling, the Court held that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. As a result, all IEEPA-based tariffs, including the broad "reciprocal" tariffs and the so-called "fentanyl trafficking" tariffs applied to Canada, Mexico, and China, were invalidated and terminated effective February 24, 2026.

This ruling affected an estimated $166 billion in tariffs collected from over 330,000 businesses since early 2025. Refund proceedings are actively underway. The U.S. Court of International Trade (CIT) has issued orders directing CBP to process refunds, and CBP has opened the claims filing process, though the procedures continue to evolve as litigation progresses.

If your business paid IEEPA-based tariffs between early 2025 and February 2026, you may be entitled to a refund. Deadlines apply, and documentation requirements are specific. We strongly encourage you to consult with a trade professional promptly.

What Replaced IEEPA: Section 122 Tariffs

On the same day the Supreme Court struck down IEEPA, President Trump signed an executive order imposing a 10% global tariff surcharge under Section 122 of the Trade Act of 1974. This surcharge, effective February 24, 2026, applies to virtually all imported goods, with certain exclusions for USMCA-qualifying goods from Canada and Mexico, critical minerals, and some pharmaceuticals and electronics.

Section 122 tariffs are temporary by statute; the current authorization runs approximately 150 days. Businesses should be prepared for this landscape to shift again as the administration determines longer-term tariff mechanisms, including expanded Section 301 investigations targeting additional trading partners.

Section 232 and Section 301 Tariffs Remain Fully in Effect

Importantly, neither the Supreme Court ruling nor the termination of IEEPA tariffs affects Section 232 or Section 301 tariffs. These remain fully in force:

• Section 232 tariffs on steel, aluminum, copper, automobiles, semiconductors, and pharmaceutical ingredients remain in effect and, in some cases, have been increased

• Section 301 tariffs on Chinese goods across hundreds of product categories continue, with ongoing investigations into additional countries

Key Tariff Authorities: A Plain-Language Overview

Understanding where tariffs come from helps you anticipate how they might change. Here are the main legal frameworks:

Section 301 of the Trade Act of 1974 authorizes tariff actions in response to unfair foreign trade practices. This is the basis for the broad tariffs on Chinese goods and is being expanded to additional countries.

Section 232 of the Trade Expansion Act of 1962 authorizes tariffs when imports are found to threaten national security. Steel, aluminum, automobiles, and pharmaceuticals have all been subject to Section 232 actions.

Anti-Dumping Duties (ADD) are applied when foreign producers sell goods in the U.S. below fair market value.

Countervailing Duties (CVD) are applied when imported goods benefit from foreign government subsidies that distort competition.

These mechanisms can stack on top of each other and on top of baseline tariff rates, making compliance and cost management genuinely complex.

Eight Strategies to Reduce Your Tariff Costs

Tariffs cannot always be avoided, but in many cases their impact can be reduced through thoughtful planning. Here are the strategies most relevant to small and mid-sized businesses.

1. Pursue IEEPA Refunds If You Qualify

If your business imported goods between early 2025 and February 24, 2026, and paid IEEPA-based tariffs, you may have a refund opportunity. CBP has opened the administrative refund process, and court orders have indicated that refunds may extend to entries already liquidated, potentially expanding the pool of eligible claimants significantly. Act promptly: protest deadlines and filing windows are time-sensitive.

2. Verify Your Product Classifications

Every imported product is assigned a classification code under the HTSUS, which determines the applicable duty rate. Misclassification is common and costly; it can result in overpaying duties or, in some cases, underpaying and triggering compliance risk. Businesses should review their classifications periodically, particularly when product specifications change or when new tariff actions take effect.

3. Review Country-of-Origin Determinations

Country of origin is a critical factor in tariff liability. For most purposes, origin is determined by where the product underwent its final "substantial transformation." Given the significant rate differences between trading partners, particularly between China and other countries, companies are increasingly reviewing manufacturing and sourcing structures to assess whether alternative arrangements may yield better tariff treatment. These determinations are highly fact-specific and generally require professional review.

4. Use Foreign-Trade Zones (FTZs)

Foreign-Trade Zones are CBP-supervised areas that are treated as outside U.S. customs territory for duty purposes. Goods held in an FTZ are not subject to duties until they enter U.S. commerce. Depending on how goods are processed, duties may be deferred, reduced, or for goods re-exported, eliminated entirely. FTZs are particularly valuable for companies with high import volumes, significant manufacturing operations, or active export activities.

5. Consider Bonded Warehouses

A bonded warehouse allows imported goods to be stored without immediate payment of duties. Duties become payable only when the goods are released into U.S. commerce. Goods that are re-exported or destroyed never incur duty liability. This can meaningfully improve cash flow for businesses managing large inventory positions.

6. Claim Duty Drawback

Duty drawback programs allow businesses to recover most of the duties, taxes, and fees paid on imported merchandise that is subsequently exported or destroyed. For companies involved in manufacturing, distribution, or re-export, this program can generate significant cash recovery. Many businesses are unaware they qualify or have not taken the steps to capture this benefit.

7. Remove Non-Dutiable Charges from the Customs Value

The customs value used to calculate duties does not have to include every cost that appears on a supplier's invoice. Charges such as international freight, insurance, certain commissions, and documentation fees may be separable from dutiable value. Properly identifying and excluding non-dutiable costs reduces the base upon which duties are calculated.

8. Explore First Sale Valuation in Multi-Tier Supply Chains

In supply chains that involve a manufacturer, an intermediary, and an importer, the customs rules may allow duties to be calculated on the price of the first sale (from manufacturer to intermediary) rather than the higher downstream price. When applicable, this "first sale" approach can produce meaningful duty savings.

A Note on Transfer Pricing and Customs Valuation

For businesses operating internationally with related-party transactions, customs valuation and transfer pricing can intersect in important ways. When transfer pricing adjustments reduce the declared value of imported goods, there may be an opportunity to pursue customs duty refunds on the difference. Successfully capturing this benefit requires advance coordination among your tax, finance, and trade compliance teams; timing and documentation are critical.

Questions Every Business Owner Should Be Asking Right Now

• Are we tracking our full tariff stack, not just base rates, but Section 232, Section 301, and Section 122 overlays?

• Did we pay IEEPA tariffs in 2025 or early 2026? Have we evaluated our refund eligibility?

• Are our product classifications current and accurate?

• Are our country-of-origin determinations well-documented and defensible?

• Are we taking advantage of available programs like FTZs, bonded warehouses, or duty drawbacks?

• How will the expiration of Section 122 tariffs and the expansion of Section 301 investigations affect our sourcing costs later this year?

How We Can Help

Tariffs are no longer a niche concern for large corporations with dedicated trade teams. The combination of historically high import costs, a rapidly shifting legal landscape, and meaningful refund opportunities means that virtually every business that imports goods has something to gain from a structured review. As tariff policies continue to evolve, proactive planning is essential. Our team can help assess the financial and operational impact on your business and develop practical strategies to reduce costs, improve compliance, and strengthen your supply chain.