On July 24, 2026, the 10% temporary Section 122 tariffs that have been in place since February 24 will expire—and Section 301 tariffs of 10–12.5% will take their place on 99.4% of all US imports, including every shipment from the European Union and the United Kingdom. For CFOs and Supply Chain leaders at retail brands shipping cross-border e-commerce goods to the US, this isn’t just a regulatory change—it’s a direct 10–12.5% cost increase that will hit margins, cash flow, and working capital. The good news? Duty Drawback can recover 80–95% of these duties on returned goods, turning a $1M tariff burden into a $200K net cost (or less). But you must act before July 24 to avoid disruptions.

The Legal Backstory: How We Got Here

The path to July 24 began with a landmark Supreme Court ruling and a scramble by the US government to maintain tariff authority:

💡 Key Takeaway: The 10% Section 122 tariffs were always temporary. The Section 301 tariffs are permanent—and they’re higher for some countries.

The New Tariff Framework: Who Pays What?

The USTR’s June 2, 2026 proposal creates a two-tier system based on each country’s forced labor enforcement record:

🇪🇺 For the European Union:

• Current Status: Tier 1 (10%)
• Reason: The EU has legal bans on forced labor imports but fails to enforce them effectively (USTR finding)
• Impact: All EU-origin goods (apparel, electronics, etc.) face +10% tariff from July 24

🇬🇧 For the United Kingdom:

• Likely Status: Tier 1 (10%) (UK is among the 60 investigated economies)
• Reason: Similar to EU—ban exists, enforcement lacks
• Impact: +10% tariff on all UK-origin shipments to the US

🧵 Special Case: Apparel & Textiles

• Textile Mechanism: USTR proposes a volume-based exemption allowing limited quantities of apparel/textiles to enter at reduced Section 301 rates
• Action Required: Submit comments by July 6 if your products should qualify

📌 Critical Note: No grandfathering. All entries after July 24 are subject to the new rates—regardless of when the goods were shipped.

Financial Impact: What This Means for Your P&L

For Finance leaders (CFOs, Controllers), the new tariffs translate directly to margin compression and cash flow strain:

Cost Calculation: EU & UK Shipments to US

Cash Flow & Working Capital Impact

• Upfront Payment: Duties must be paid before customs clearance (CBP requirement)
• Refund Timeline: 30–60 days for Duty Drawback claims (if set up)
• Net Effect: €100K shipment = €10K–12.5K tied up for 1–2 months

💡 Example: A €5M/month EU-to-US e-commerce retailer will see:

• Monthly Tariff Cost: €500K–625K
• Annual Tariff Burden: €6M–7.5M
• Working Capital Needed: €500K–1M (to cover duty float)

Margin Erosion

** Warning: If your **gross margin is <10%, the 10% tariff could wipe out profitability on EU/UK-US shipments.

Supply Chain Impact: Compliance & Operations

For Supply Chain leaders, the new tariffs introduce complexity, risk, and potential delays:

1. Classification Scrutiny: Annex A Exclusions

• Annex A: List of excluded products (limited scope)
• Action Required: Audit all HTS codes against Annex A
• Risk: Misclassification = penalties + delays

📋 Example: Apparel & Textiles

💡 Key Insight: Textiles and apparel (already high-tariff categories) will see total duties of 25–40%+ under Section 301.

2. Country-Specific Risks

3. Documentation & Compliance

• New Requirements:
  • Proof of origin (to qualify for Tier 1 rates)
  • Forced labor compliance certificates (for certain products)
  • Enhanced record-keeping (5-year retention)
• Penalties for Non-Compliance:
  • Fines: Up to $10K per violation
  • Seizure: Goods can be held or seized at customs
  • Delays: Additional inspections = 5–10 extra days in transit

📌 Pro Tip: Work with a customs broker to ensure 100% compliance before July 24.

The Solution: Duty Drawback for Cross-Border E-commerce

For retailers that are their own Importer of Record (IOR), Duty Drawback is the only way to recover 80–95% of these new tariffs on returned goods.

How It Works

1. Pay Duties: Import goods to the US (pay 10–12.5% Section 301 tariffs + standard duties)
2. Sell & Return: Customer returns the goods (or you export unsold inventory)
3. File Claim: Submit Duty Drawback claim to CBP
4. Recover 80–95%: Get most of your duties back (typically within 30–60 days)

Savings Calculation

💡 ROI: For every $1 spent on Duty Drawback services, you recover $10–20 in duties.

Why Now?

• July 24 Deadline: New tariffs increase duty costs by 10–12.5%—more to recover
• Summer Returns Surge: 35%+ return rates on apparel = more eligible claims
• Cash Flow Relief: Recover duties in 30–60 days vs. losing them forever¨

Action Plan: What to Do Before July 24

For Finance Leaders (CFOs, Controllers)

For Supply Chain Leaders

For Both Finance & Supply Chain

For EU and UK e-commerce retailers shipping to the US, the July 24 transition from Section 122 to Section 301 tariffs is a major financial and operational event:

✅ Finance Impact: +10–12.5% cost on all imports = margin erosion ✅ Cash Flow Impact: Duties paid upfront = working capital strain ✅ Supply Chain Impact: New compliance rules = risk of delays/penalties ✅ Opportunity: Duty Drawback = recover 80–95% of new tariffs

The Clock is Ticking.

Next Steps:

1. Book a free tariff impact audit to model costs for your business
2. Submit comments to USTR if your products should be excluded
3. Set up Duty Drawback to recover duties on returns

About TDR Trade Duty Refund helps brands recover import duties on cross border sales, unlock duty-free selling advantages, and improve margins across global markets. TDR simplifies customs duty recovery and trade compliance so businesses can save money and sell more competitively worldwide.

Learn more at tradedutyrefund.com

Reference: USTR Makes Findings and Proposes Action in 60 Section 301 Investigations Relating to Failures to Take Action on Trade in Forced Labor Goods