The Short Answer
Most companies do not lose money on tariffs because they picked the wrong product code. They lose money because their systems cannot answer three questions fast enough.
- What is this product?
- Where was it made?
- What were the rules on the day it cleared customs?
The U.S. tariff rulebook has changed 20 times in the first nine months of 2026 (see the list). Some new tariffs started only days after they were announced. A rate that was right when you sent the purchase order can be wrong by the time the ship lands.
That is a data problem first. It is a customs problem second. Here is what changed, and what your systems need to keep up.
What Changed Since May 2025?
When we published our first tariff blog in May 2025, we said tariffs were a data problem. That is still true. Here is how much heavier that data got in sixteen months.
Steel and aluminum went to 50%, and the math changed
The rate doubled from 25% to 50% in June 2025. The rules changed again in April 2026 (Proclamation 11021), with one more update in June.
What it means for you: Products that are almost all metal still pay 50%. Most parts and goods made from metal now pay 25%. But 25% is charged on the full price of the product, not just the metal inside it. For many products, that adds up to a bigger bill than before. If your cost model is built on metal content alone, it is out of date.
Four new tariff programs started
All four use the same national security law, called Section 232.
- Copper, which started in August 2025.
- Heavy trucks, which started in November 2025.
- Advanced computer chips, which started in January 2026.
- Patented prescription drugs, announced in April 2026 and phased in starting July.
The 2025 tariffs were struck down
On February 20, 2026, the Supreme Court ruled that the emergency law used for the 2025 tariffs does not let a president set tariffs. The government ended those tariffs the same day. U.S. Customs and Border Protection (CBP) stopped collecting them on February 24.
A temporary 10% tariff took their place under a different law, known as Section 122. Section 122 lasted 150 days and ended on July 24, 2026 (law firm summary).
What Is the Section 301 Forced Labor Tariff?
The Section 301 forced labor tariff is a 10% or 12.5% U.S. tariff on nearly all goods from 60 trading partners, in effect since July 24, 2026.
When Section 122 ended on July 24, 2026, a new program under a law called Section 301 took its place the same day. The whole European Union counts as one of the 60 partners. The U.S. argues these governments do not do enough to keep goods made with forced labor out of their own markets. However, the tariff is not limited to those goods. It applies to nearly everything these partners ship here. Partners that ban those imports, or have promised to, pay 10%. Most others pay 12.5%. Goods already paying a Section 232 tariff, like steel or aluminum, are skipped.
| Rate | Who pays it |
| 10% | Argentina, Bangladesh, Cambodia, Canada (non-USMCA goods), Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico (non-USMCA goods), Pakistan, Sri Lanka, Trinidad and Tobago, United Kingdom |
| 12.5% | Algeria, Angola, Australia, The Bahamas, Bahrain, Brazil, Chile, China, Colombia, Costa Rica, Dominican Republic, Egypt, Guyana, Hong Kong, Iraq, Israel, Kazakhstan, Kuwait, Libya, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Peru, The Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Thailand, Türkiye, United Arab Emirates, Uruguay, Venezuela, Vietnam |
| Capped at 10% total | European Union, Taiwan |
| Capped at 12.5% total | Japan, South Korea, Switzerland |
Five trading partners operate a little differently under this rule
For EU member countries, Taiwan, Japan, South Korea, and Switzerland, the new tariff works as a ceiling, not an add-on. For goods from the EU or Taiwan, it tops up the total duty to 10%. For Japan, South Korea, and Switzerland, it tops up to 12.5%. If a product’s normal duty is already at or above that line, the new tariff is zero.
What Section 301 Means for You
Section 301 has no built-in end date, so these tariffs stay in place until the U.S. decides each partner has done enough. If you’re an importer, you’ll likely see the impact on at least part of your purchases, and country of origin is the deciding factor in what you owe.
The same product can owe nothing extra, 10%, or 12.5%, depending only on where it was legally made. The rates can change, too. Several countries moved into the lower 10% group by passing forced labor import bans while the program was being written, and more are working on them now.
As a result, a supplier’s rate can drop, or a new exemption can appear, without any change to your product. If your systems can’t track origin and update rates as partners move between groups, you will overpay on some entries and underpay on others.
Which Canadian Products Are Banned From U.S. Import?
Since September 29, 2026, certain Canadian beer, wine, spirits, whey, molasses, and motorcycles over 800cc can’t be imported into the U.S. at all. Here is how it got there.
In July, the U.S. announced a 50% tariff on about $20 billion of Canadian goods, using a 1930 law, Section 338, that had never been used before. The tariff was set to start August 19.
A last-minute deal paused it for three days, but talks fell apart, and the tariff took effect August 22. Canada hit back with its own tariffs, up to 50%, on about C$27.6 billion of U.S. goods, starting September 8.
In early September, the U.S. changed the goods covered by the 50% tariff and announced the bans. A ban is not a higher price, and qualifying under USMCA doesn’t get you out of it.
For anyone trading with Canada, the question is no longer just “what’s the rate?” It’s also “can this product come in at all?”
What Are the 2026 U.S. Drone Tariffs?
Since September 3, 2026, imported drones pay a 25% or 100% Section 232 tariff, depending on their weight and features.
In August 2026, the U.S. announced new tariffs on “unmanned aircraft systems and their components,” which we know as drones. The tariff rate depends on what the drone is and what it can do. Drones over 25 kilograms (about 55 pounds) owe 100%. So do drones with heat-sensing cameras, drone docking stations, and certain key parts. Smaller drones without those features owe 25%. Size alone doesn’t decide it: a small drone carrying a thermal camera still lands in the 100% group.
A second wave starts February 9, 2027, when a 25% tariff reaches more drone parts. Some trading partners, including the EU, Japan, and the UK, can qualify for lower rates.
To get the exact duty, your records need the drone’s maximum takeoff weight, its camera type, and where it was made, not just a product code that says “drone.”
Is the $800 De Minimis Exemption Gone?
Yes. Shipments worth $800 or less no longer enter the U.S. duty-free, for any type of shipment, including mail.
For years, shipments worth $800 or less came into the U.S. duty-free under a rule called de minimis. The de minimis exemption was first suspended in 2025, and in June 2026, U.S. Customs and Border Protection made the suspension indefinite for every type of shipment.
Mail has its own new entry process. Packages worth up to $2,500 now need real shipment data, a customs bond, and duty paid on schedule.
Starting on October 22, goods regulated by other agencies, such as the FDA, and goods claiming trade-deal benefits can no longer use the simpler mail process. They must go through a formal entry instead. For companies that ship straight to shoppers, every small package now needs the same product, value, and origin data as a container. None of this is unusual anymore.
Why Can’t My ERP Just Take Care of This?
Many ERP systems treat duty as one number per product, and one number can no longer hold the answer.
The old way was simple: A product has a code, the code has a rate and the rate times value is your duty. Many ERP systems still run on that math.
Today’s Reality
One product can owe its base rate plus several extra tariffs at the same time. The answer depends on key questions a product record usually can’t answer:
- Where was it legally made?
- Which factory made it?
- What is it made of?
- What will it be used for?
- What tariff rules were in force the day it cleared customs?
It gets harder from there as some tariffs stack on top of each other while others skip goods already covered by a different program. Some tariffs shrink to zero when the base rate is already high. There is no single rule you can code once and forget.
An Example Using Cotton T-Shirts
Cotton t-shirts have a base rate of 16.5%. Under Section 301, if the cotton t-shirts are from Japan, that is the total, because Japan’s new tariff only tops up to 12.5%. If the t-shirts are from Vietnam, the new 12.5% stacks on top, and the real number is 29%. You can have the same shirt with the same code in your ERP, but have vastly different rates. Your system may only show one rate, and nobody finds out about the difference until the broker files or the auditor asks.
Can your ERP carry the facts the rate depends on, or only the rate itself?
This is where Kleinschmidt comes in. We don’t classify your products or calculate your duty. That’s the job of your broker and trade team. What we do is make sure the facts they need reach them. Details like origin, manufacturer, and what a product is made of often start in a supplier’s PDF invoice or a spreadsheet. Then they get stuck in one system while your broker works from another. Our document conversion service turns those PDFs, faxes, and spreadsheets into structured data your systems can use. Our any-to-any integration work connects systems that don’t talk to each other today, from an older ERP to a partner’s API. And our customs and trade compliance connections already send filings like Import Security Filings and eManifests directly to CBP. When the rules change next month, you shouldn’t need a new project. You should need the right fields, already flowing.
FAQ
The importer pays. If your company is named as the importer on the entry paperwork, you owe the money to CBP. The exporting country does not pay it. Your supplier may agree to cover the cost. You may raise prices to make it back. That changes who feels the expense. It does not change who is legally responsible. When CBP has a question, they call you. Keep those two things in separate fields. What you legally owe. And what you get back from a supplier. Mixing them is how companies lose track of what they really owe.
No. This is the one that surprises people most.
The metal tariffs reach far past raw steel and aluminum. They reach products made from metal. Parts. Fittings. Appliances. Tools. Machinery. The chip and drug tariffs work the same way. They reach pieces inside other products. Your invoice can say “cabinet hardware” and you can still owe steel tariffs. What matters is what is inside. That quietly turns your bill of materials into a customs document. If your engineering team knows what a product contains and your trade team does not, that gap is now expensive.
Usually not. This is the assumption most likely to cost you money this quarter.
Most current tariffs ignore the day the ship left. What counts is the day your goods clear customs, or the day you pull them out of a bonded warehouse.
Some notices do give a short grace period for goods already on the water. Those windows are narrow. The Section 301 tariff on 60 trading partners gave four days.
So keep every timestamp you have. Loaded. Sailed. Arrived. Released. Cleared. Withdrawn. Different programs care about different dates. Your system needs all of them, not just the one your process happens to use.
Because the gap between two countries can be more than 40 percentage points.
Country of origin means where a product was really made or really changed. It is not the country that shipped it. Sending goods through a low tariff country does not make them products of that country.
This used to matter mostly for trade deals. Now it is often the biggest single driver of what you owe.
Most systems store one country field. Someone fills it in when the purchase order is created, sometimes by hand. That is no longer a control. You need three fields. Who you bought from. Where it shipped from. And where it was legally made, with proof attached to that last one.
Not automatically. Qualifying for a trade deal and being exempt from a new tariff are two different questions.
Sometimes they line up. USMCA goods were exempt from the temporary 10% fee earlier in 2026. Sometimes they do not. The 50% tariffs on Canadian goods apply even to goods that qualify under USMCA. So do the September bans.
Treating “USMCA qualified” as a permanent exemption flag will eventually produce a wrong entry. Check whether each program names the agreement.