Tariff Whiplash: Three Stories Hitting Manufacturers’ Balance Sheets in 2026
May 21, 2026
From IEEPA refunds to Section 232 restructures to the July 24 surcharge cliff - a fractional CFO's playbook
For manufacturers that import - even partially - the past 90 days have rewritten the tariff playbook three times. The Supreme Court invalidated the IEEPA tariff regime on February 20. Within hours, a new 15% global surcharge replaced it. In April, Section 232 tariffs on steel, aluminum, and copper were restructured to apply to the full customs value of derivative products, broadening the duty base across thousands of finished goods.
If a supplier called you about a "surcharge" recently, or your customs broker mentioned reclassifying SKUs, or you noticed an unfamiliar line item on a freight invoice, you're feeling the same tremors. And if your company paid IEEPA tariffs at any point in 2025, you may be sitting on a refund claim worth real money - plus interest accruing daily.
Here's what's actually happening, in plain terms, and what a fractional CFO would tell you to do about each.
1. The IEEPA Refunds: There's Real Money on the Table
On February 20, 2026, the Supreme Court ruled in Learning Resources, Inc. v. Trump that the President lacks authority to impose tariffs under the International Emergency Economic Powers Act. That single decision invalidated the "reciprocal" tariffs imposed in April 2025, the fentanyl-related tariffs on Chinese, Canadian, and Mexican goods, and several smaller related actions.
The numbers are large. The federal government owes an estimated $166 billion to roughly 330,000 importers, and the outstanding balance is accruing approximately $650 million in interest each month - about $22 million per day, all of which the government is statutorily required to pay alongside the principal.
CBP launched its refund mechanism - the Consolidated Administration and Processing of Entries (CAPE) portal - on April 20, 2026. Importers submit refund claims by uploading a CAPE declaration through the existing ACE portal, listing eligible entries. As of late April, more than 56,000 importers had enrolled, accounting for roughly 82% of IEEPA-related entries and approximately $127 billion in tariff deposits.
What a CFO does next
The actual filing is best handled by your customs broker - they have the entry data and the technical familiarity with ACE. A fractional CFO's job is everything that wraps around the filing:
- Quantify the exposure. Pull every IEEPA-tagged entry from 2025 forward and confirm the principal. Your accounting team or your customs broker can produce this from ACE records.
- Confirm ACH/ACE banking is current. As of February 6, 2026, CBP no longer issues paper refund checks. If your banking information isn't correct in ACE, your refund will sit in reject status indefinitely.
- Decide refund accounting treatment. Refunds aren't revenue - they're typically recorded as a reduction in cost of goods sold or as a contra-expense against the period the duty was originally booked. Timing of recognition matters for tax planning and for KPIs.
- Plan use of proceeds. This is found money. For most manufacturers we work with, the refund is a meaningful percentage of TTM EBITDA. Don't let it disappear into general operating cash. Treat it as a one-time capital event: pay down a working-capital facility, fund a deferred capex item, or strengthen a cash reserve.
- Watch for downstream claims. If you passed any IEEPA tariff cost through to customers, expect to hear from them. Some manufacturers have already faced consumer class actions and B2B contract disputes over who is entitled to the refund. Talk to counsel early; review your contracts for change-in-law and price-adjustment clauses.
"Refunds aren't revenue. They're a one-time capital event. Treat them like one."
2. The Section 232 Restructure: A Bigger Hit Than the Headline Suggests
On April 2, 2026, a presidential proclamation took effect April 6 that significantly restructured Section 232 tariffs on steel, aluminum, and copper - and on derivative products that contain them. This is the regime your supplier is referencing when they mention a 25% or 50% surcharge.
The headline rates:
- 50% on primary metal articles and certain high-content derivatives (Annex I-A) - steel mill products, aluminum sheet and plate, refined copper.
- 25% on substantially-metal derivatives (Annex I-B) - many fasteners, fittings, machinery components, household goods, automotive parts.
- 15% temporary cap on metal-intensive industrial and grid equipment (Annex III), applicable through December 31, 2027.
But the rate isn't the most important change. The bigger structural shift is that tariffs now apply to the full customs value of the imported article, not just the metal content. Under the prior system, an importer of a $1,000 steel-content fabricated assembly might have had Section 232 duties calculated only against the steel portion of that value - say, $300. Under the new rule, the 25% applies to the full $1,000.
For derivative-heavy importers - anyone bringing in finished goods that contain meaningful steel, aluminum, or copper - the effective duty burden has grown materially even when the headline rate looks unchanged.
A few exceptions are worth knowing:
- De minimis exception - derivative products where the aggregate steel, aluminum, and copper weight is less than 15% of total product weight may qualify, if not classified in HTSUS chapters 72, 73, 74, or 76.
- S.-origin metal preference - derivative articles made abroad using qualifying U.S.-origin metal (95%+ smelted or cast in the U.S.) may receive a reduced 10% rate.
- No stacking with Section 122 - products subject to Section 232 are excluded from the 15% global surcharge, so the 232 rate is the operative number.
What a CFO does next
- Reclassify and recalculate. Your customs broker should walk every SKU exposed to chapters 72–76 and certain derivatives in 84–87. For each, identify the new applicable annex and the resulting duty rate against full customs value. This is often a several-week project.
- Reprice or absorb - deliberately. A 25% surcharge on full customs value is meaningful. Some products can be repriced; others can't without losing the order. The wrong default is to absorb everything because the change is recent. Build a SKU-level decision: pass through, partial, absorb.
- Renegotiate supplier contracts. Look for tariff-adjustment, change-in-law, and price-reopener clauses. If they're not there, add them on the next renewal.
- Reforecast working capital. Full-customs-value assessment changes the cash math at the entry. Your 13-week cash flow forecast and your line-of-credit availability should reflect the new draw pattern. If you import in large lots, your peak working-capital ask just grew.
- Run the reshoring math honestly. The U.S.-origin metal preference is real, but the cost differential between U.S. and imported metal often overwhelms a 15-percentage-point tariff savings. Don't reshore on instinct - model it.
3. The Section 122 Ticking Clock: Forecast Around July 24
Within hours of the IEEPA ruling on February 20, the White House invoked Section 122 of the Trade Act of 1974, imposing a temporary 10% global import surcharge - raised to 15% on February 22, effective February 24.
The critical detail: Section 122 is statutorily limited to 150 days. The current surcharge expires July 24, 2026, unless Congress extends it. That's a hard date roughly 9 weeks out from this writing.
What that means for forecasting:
- The surcharge could expire on schedule - or the administration could declare a new "balance-of-payments emergency" and restart a fresh 150-day clock, creating a de facto perpetual instrument.
- It could also pivot to other authorities (Section 301, Section 338) with different rate structures, country specificity, and procedural runways.
- Section 232 metal tariffs and existing Section 301 China tariffs are unaffected by July 24. Those continue regardless.
- USMCA-qualifying goods from Canada and Mexico are exempt from Section 122 - but the exemption must be actively claimed on each entry with a valid Certificate of Origin.
What a CFO does next
- Build at least two scenarios into your H2 forecast. One in which the 15% surcharge lapses and pricing/margin recover from August forward; one in which a successor regime extends the burden. Don't pick a side - carry both.
- Don't rebuild long-term assumptions around 15%. Nine weeks isn't long enough to justify durable contract repricing or capital reallocation predicated on the current rate continuing.
- Lock in tariff-adjustment clauses. New customer contracts and renewals should include pass-through language flexible enough to cover any successor regime, not just the current one.
- Verify USMCA paperwork. The exemption is legitimate but not automatic. If your Canadian or Mexican goods aren't entering with proper Certificates of Origin, you're paying 15% you don't owe.
The Bigger Picture: Three Regimes, One Cash-Flow Story
Each of these - the refund opportunity, the Section 232 restructure, the Section 122 cliff - is being managed in isolation in most companies, with different functions handling different parts. The customs broker handles classification. The trade attorney handles refund claims. The sales team handles repricing. The result: the likely overlooked combined cash impact across all three.
That combined view is exactly the conversation a fractional CFO is built to lead. We're not your customs broker, and we're not your trade counsel - we work alongside them. What we do is sit in the seat where working-capital impact, margin recovery, contract terms, forecast scenarios, and use-of-proceeds decisions all converge. And right now, for any manufacturer that imports, those decisions are coming faster than most internal finance teams can keep up with.
If your tariff stack has changed three times in 90 days and your forecast hasn't, that's the first signal worth acting on.
Contact Alan Docherty to talk through your specific exposure - or learn more about vcfo's Finance & Accounting practice.
ABOUT THE AUTHOR
Alan Docherty is Practice Manager and Consulting CFO at vcfo and a frequent voice on capital markets, deal readiness, and operational finance. vcfo works with manufacturers and middle-market companies across Texas and Colorado on cash-flow strategy, working-capital management, and complex transaction support.
Frequently Asked Questions
Are manufacturers eligible for refunds on tariffs paid in 2025?
Yes. The U.S. Supreme Court ruled on February 20, 2026 in Learning Resources, Inc. v. Trump that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unauthorized. The Court of International Trade subsequently ordered CBP to refund all IEEPA duties to all importers of record - not only those who filed lawsuits. Refunds include statutory interest. Estimated total refund pool is approximately $166 billion across roughly 330,000 importers.
How does a manufacturer file an IEEPA tariff refund claim?
Refund claims are filed through CBP's Consolidated Administration and Processing of Entries (CAPE) portal, which launched April 20, 2026. Importers submit a CAPE declaration - a CSV file listing eligible entries (up to 9,999 per declaration) - through the existing ACE portal. Only the importer of record or the customs broker who filed the original entry can submit the declaration. Refunds are paid via ACH directly to the importer; CBP no longer issues paper checks. Most manufacturers should work with their customs broker on the filing itself, while their CFO manages the financial planning around the refund.
What changed with Section 232 steel and aluminum tariffs in April 2026?
A presidential proclamation issued April 2, 2026 took effect April 6 and made two structural changes. First, Section 232 tariffs now apply to the full customs value of the imported article rather than just the metal content - a meaningful expansion of the duty base for derivative products. Second, the rate structure was reorganized into annexes: 50% on primary metal articles and high-content derivatives (Annex I-A), 25% on substantially-metal derivatives (Annex I-B), and a temporary 15% combined cap on metal-intensive industrial and electrical-grid equipment through December 31, 2027 (Annex III). A reduced 10% rate applies to derivatives made with 95%+ U.S.-origin metal.
When does the Section 122 import surcharge expire?
The Section 122 surcharge currently expires July 24, 2026. It was imposed by presidential proclamation on February 20, 2026 at 10%, raised to 15% on February 22, and took effect February 24. Section 122 of the Trade Act of 1974 limits any such surcharge to 150 days unless extended by Congress. The administration could allow the surcharge to lapse, declare a new emergency and restart a fresh 150-day period, or pivot to other tariff authorities such as Section 301 or Section 338. Manufacturers should build at least two scenarios into their H2 2026 forecast.
How should a manufacturer adjust forecasts and pricing in response to the 2026 tariff changes?
A practical sequence: (1) reclassify all affected SKUs against the new Section 232 annexes with your customs broker; (2) recalculate landed cost on full customs value rather than metal content; (3) make a SKU-level pricing decision - pass through, partial, or absorb - rather than defaulting to absorption; (4) renegotiate supplier and customer contracts to include tariff-adjustment and change-in-law clauses; (5) build two forecast scenarios for the second half of 2026, one assuming Section 122 lapses on July 24 and one assuming a successor regime extends the burden; and (6) verify USMCA Certificates of Origin are in place for any Canadian or Mexican entries.
What is the difference between a fractional CFO and a customs broker on tariff issues?
A customs broker handles classification, entry filing, CAPE declarations, and the technical compliance with CBP. A trade attorney handles refund litigation and contractual claims. A fractional CFO handles the financial strategy that wraps around both: quantifying exposure, deciding refund accounting treatment, planning use of proceeds, modeling working-capital impact, repricing decisions, contract clauses, and forecast scenarios. The three functions work together - they don't replace each other. For any manufacturer with meaningful import volume, lacking the CFO seat in this conversation is the gap that most often costs money.
