What apparel importers actually face in May 2026: tariff chaos and how to model it

The tariff stack just collapsed. Again.

Five days ago, on May 7, 2026, the Court of International Trade ruled that the 10% Section 122 global tariff was unlawful. The court found that Section 122 of the Trade Act of 1974 applies only to balance-of-payments crises, not ordinary trade deficits. The administration is appealing, but the injunction is live for the plaintiffs, and the legal basis for the tariff is now in question.

This comes less than three months after the Supreme Court struck down IEEPA tariffs in February. That ruling invalidated the "Liberation Day" reciprocal tariffs and the fentanyl-related duties on China, triggering the largest tariff refund process in U.S. history.

If you're an apparel brand trying to price a container right now, here's what you're dealing with: two major tariff authorities struck down in 90 days, a replacement tariff (Section 122) that may not survive July, and new Section 301 investigations targeting every country you might source from.

Let me walk through what's actually happening, what rates apply today, and how to model your landed cost in an environment where the rules change monthly.

The current tariff stack for apparel from China

As of May 12, 2026, here's what you pay on China-origin apparel:

• Base MFN duty (Column 1): 10-32% depending on HTS code, fiber content, and construction. Cotton knits run lower. Synthetic wovens run higher.
• Section 301 tariffs: Most apparel falls under List 4A at 7.5%. Some items on earlier lists pay 25%.
• Section 122: 10% global tariff, effective February 24, 2026. Legally challenged. Scheduled to sunset July 24, 2026 even if it survives.

Add those together. A synthetic knit hoodie from Guangzhou classified under 6110.30 (man-made fibers, knit pullover) pays roughly:

• 32% MFN base
• 7.5% Section 301
• 10% Section 122

That's 49.5% before you account for any anti-dumping or countervailing duties on specific product categories.

For a DTC brand with a 60% gross margin target, that tariff stack consumes most of your margin before freight, fulfillment, and marketing.

The Section 301 investigation that changes everything

On March 11, 2026, USTR initiated Section 301 investigations targeting 16 economies for "structural excess capacity in manufacturing." The list includes China, Vietnam, Bangladesh, Cambodia, India, Indonesia, Thailand, Malaysia, Taiwan, Mexico, Japan, the EU, South Korea, Singapore, Norway, and Switzerland.

Public hearings ran through late April and early May. Outcomes are expected by late July, conveniently timed with Section 122's sunset.

"Those companies that undertook the difficult and costly multi-year task of shifting sourcing outside of China, at the urging of the administration, now face the prospect of 301 tariffs because of production increases outside of China."

That's from the Footwear Distributors and Retailers of America in their USTR testimony. The irony is thick. Brands that spent years and millions moving production to Vietnam or Bangladesh to escape China tariffs are now facing potential Section 301 duties on those countries too.

The realistic scenario by August 2026: Section 122 lapses, new Section 301 country-specific rates land, and importers who were paying 10% flat see country-differentiated rates of 20-40% or higher on Vietnam, Thailand, Cambodia, and Bangladesh.

How to model landed cost when the rules keep changing

You can't wait for certainty. You have to model scenarios and build flexibility into your sourcing.

Here's the framework I use with brands:

Step 1: Lock your HTS classification

Classification is not a formality. It's the single most consequential decision in your import operation. The same physical product can be classified under multiple HTS codes, and the rate difference between those codes can be 10-15 percentage points.

Apparel classification hinges on:

• Construction: Knit (Chapter 61) vs. woven (Chapter 62). A jersey polo is knit. A button-down Oxford is woven. The duty rates for corresponding garment types can differ by 5-15%.
• Fiber content: The fiber that constitutes the largest percentage by weight determines classification. A hoodie that's 51% cotton vs. 51% polyester lands in different subheadings with different rates.
• Gender and age: Men's, women's, boys', girls', infants'. Different statistical suffixes, sometimes different rates.

If you have any doubt, file for a binding ruling. CBP Form 19.13 with a description, samples or photos, and your proposed classification. CBP issues the ruling in 30-90 days. It's binding for that importer and product. Worth every day you wait.

Step 2: Build a three-scenario duty model

Don't model one rate. Model three:

• Low scenario: Section 122 lapses, no new Section 301 actions. You pay MFN + existing Section 301 (China only). Vietnam, Bangladesh, etc. pay MFN only.
• Base scenario: Section 122 replaced by targeted Section 301 duties. China stays at current levels. Vietnam, Bangladesh, Cambodia, India face new 20-30% Section 301 rates.
• High scenario: Broad Section 301 tariffs at 40%+ on all investigated countries. Effective rates approach 50-60% on any Asian origin.

Price your product to survive the base scenario. Stress-test your margins against the high scenario. If your business model breaks above 45% effective duty, you have structural exposure that needs addressing before you finalize next season's buy.

Step 3: Map your origin options

China+1 is not a strategy if every "+1" faces the same tariff exposure. You need to know:

• Which countries are in the Section 301 investigation: All the major apparel origins are included. Vietnam, Bangladesh, Cambodia, India, Indonesia, Thailand, Malaysia.
• Which countries have FTA coverage: USMCA (Mexico), CAFTA-DR (Central America, Dominican Republic), KORUS (South Korea). These may provide duty relief if you can meet rules of origin.
• Which countries are not under investigation: A short list. Guatemala, Honduras, El Salvador, Nicaragua, Haiti, Sri Lanka, Pakistan, Egypt.

The CAFTA-DR angle is underexplored. Textiles and apparel that qualify for preferential treatment under CAFTA-DR are exempted from the Section 122 tariff. If Section 301 actions target Asia but not Central America, the landed cost math could shift dramatically.

What HTS classification actually costs you

Let me give you a real example. Two cotton t-shirts. Same weight, same factory, same FOB price.

T-shirt A: 100% cotton, knit, men's. HTS 6109.10.0012. Base rate: 16.5%.

T-shirt B: 60% cotton, 40% polyester, knit, men's. HTS 6109.90.1007. Base rate: 32%.

That 40% polyester blend costs you 15.5 percentage points in base duty. Add Section 301 at 7.5% and Section 122 at 10%. T-shirt A pays 34%. T-shirt B pays 49.5%.

On a $10 FOB garment, that's $3.40 vs. $4.95 in duty. Multiply by 10,000 units. The blend decision just cost you $15,500.

This is why classification happens before design, not after. If your product development team doesn't understand fiber content thresholds, you're leaking margin before you cut a single sample.

The de minimis elimination and what it means

As of February 24, 2026, the U.S. eliminated the $800 de minimis exemption globally. Every single import shipment, regardless of value, now requires formal customs entry with HTS classification, country of origin verification, and full duty payment.

If you were shipping individual parcels under $800 to avoid duties, that model is dead. Millions of shipments that previously cleared customs automatically now need a licensed customs broker.

For DTC brands doing direct-from-China fulfillment, this is a structural change. The operational friction is significant: more documentation, more broker fees, slower clearance, and full duty exposure on every parcel.

The refund window you might be missing

The IEEPA refund process went live on April 20, 2026. If you paid the "Liberation Day" reciprocal tariffs or the fentanyl-related tariffs between April 2025 and February 2026, you may be entitled to a refund with interest.

The numbers are significant. The invalidated IEEPA tariffs collected an estimated $166 billion from over 330,000 businesses. CBP is processing refunds electronically via ACH. If you haven't enrolled for ACH refunds through the ACE Portal, do it now. Paper checks are being discontinued.

At Ohzehn, we've been helping brands document their exposure and file through the CBP portal. The process is straightforward if you have your entry summaries organized. If you don't, start pulling them now.

What to do in the next 90 days

The tariff environment will change again before August. Here's your action list:

Immediate (this week)

• Pull every entry summary from Q1 2025 through Q1 2026. Check for IEEPA duty exposure and file for refunds.
• Confirm your HTS classifications are accurate. If you're not 100% certain, pay for a classification review or file for a binding ruling.
• Enroll for ACH refunds in the ACE Portal if you haven't already.

Short-term (next 30 days)

• Build your three-scenario duty model. Run your P&L against each scenario.
• Map your supplier base against the Section 301 investigation countries. Identify which SKUs have single-origin risk.
• Talk to your freight forwarder about FTZ (Foreign Trade Zone) options. FTZ entry can defer duty and provide flexibility if rates change mid-shipment.

Medium-term (next 90 days)

• Evaluate CAFTA-DR or USMCA sourcing for high-volume SKUs. The math may work now even if it didn't last year.
• Request proactive tariff engineering guidance from your factory. Can fiber content be adjusted? Can construction method change? Can you qualify for a different HTS line?
• Watch the Section 301 investigation timeline. Public comments closed April 15. Hearings ran through May 5. Decisions are expected by late July. Set a calendar reminder to re-run your models when outcomes are announced.

The fiber content decision that haunts you

I'll leave you with this.

Most brands pick fiber content based on hand feel, performance, or supplier recommendation. They don't think about duty rates until the entry summary shows up.

By then it's too late. You've already placed the order. You've already committed to a retail price. You're absorbing the margin hit or passing it to the customer and hoping they don't notice.

The alternative is to bake tariff exposure into your product development process. Know your HTS lines before you finalize your tech pack. Understand the rate difference between 51% cotton and 49% cotton. Model your landed cost before you negotiate FOB.

Show me a tech pack and I can tell you your landed cost in 90 minutes. The question is whether you want that information before or after you've committed to 5,000 units.

The tariff environment is chaotic. The legal landscape is shifting monthly. But the fundamentals of landed cost modeling haven't changed: classify correctly, model scenarios, and make sourcing decisions with the end in mind.

The brands that survive the next year of tariff volatility will be the ones that treat duty exposure as a design constraint, not an afterthought.