Your Landed Cost Just Changed. Here's How to Think About It.

If you import product, your landed cost just changed. Again.

The Supreme Court struck down the IEEPA tariffs in February 2026. By the next day, the administration replaced them with a 10% global surcharge under Section 122, with plans to raise it to 15%. It's temporary (150 days) and stacks on top of your existing duties.

Whether your total cost went up or down depends on where you source and what you were paying before. If you were paying higher IEEPA rates, the new surcharge might actually be lower. If you were paying standard MFN duties, you just got a 10% addition.

Either way, your numbers changed. The question is whether you've updated them.

The number that actually determines your margin

Your supplier invoice is one number. Your landed cost is the real number. It includes duties, freight, insurance, customs brokerage, and inbound warehousing. It's what actually determines your gross margin. And it shifts every time trade policy shifts.

Most founders track the supplier cost. The rest gets buried in operating expenses and never attributed back to the product. That means your gross margin is overstated, and every pricing and channel decision downstream is based on the wrong number.

We imported Italian leather sneakers for 10 years at Koio. Every time duty rates or freight costs changed, we reran our full landed cost model. That same week. It was one of the best financial habits we built.

Not because any single change was catastrophic. But because small shifts compound fast and every margin point matters. Say you're importing a product at $45 FOB and duties go up 3%. That's $1.35 per unit. Multiply that across 20,000 units and you've lost $27,000 of margin you didn't plan for. It adds up.

What goes into your landed cost

Your landed cost per unit should account for:

• Product cost (what your supplier charges, FOB or ex-works)
• Freight (ocean, air, or courier, plus fuel surcharges)
• Duties and tariffs (HTS code specific, plus surcharges like Section 122)
• Insurance (typically 0.5-1% of shipment value)
• Customs brokerage fees
• Inbound warehousing and receiving (what your 3PL charges to receive and shelve inventory)

When you add it all up, the gap between your supplier invoice and your actual landed cost can be significant. Most brands I talk to are surprised by how much margin is hiding in those line items.

What to do right now

Four things, this week:

1. Pull your last 3 shipments. Get the commercial invoice, freight bill, customs entry summary, and 3PL receiving invoice. Line them up per unit. This is your baseline.
2. Recalculate with the new tariff rates. The 10% Section 122 surcharge stacks on your existing MFN duty rate. If you were paying IEEPA tariffs before, your total rate may have actually decreased. Check both scenarios.
3. Model the 15% scenario. The administration is pushing to raise the surcharge. Know what that does to your margins before it happens. If the jump from 10% to 15% flips a channel from profitable to unprofitable, you want to know that now.
4. Don't plan around refunds. FedEx and over 1,000 companies are suing to recover what they paid under the old IEEPA tariffs. The Supreme Court didn't rule on refunds, and it could take years. Update your model to the new rates and move forward. If a refund comes, great. Don't budget for it.

The lesson I keep coming back to

Tariffs are one input. Freight rates are another. Supplier pricing is another. The real question is whether you have a system for updating your landed cost when any of these inputs change.

At Koio, we tracked every cost component per SKU. When something changed (a new tariff rate, a freight renegotiation, a supplier price increase) we could immediately see the impact on our margins by product, by channel. When we cut $3M in costs and went from negative $3M EBITDA to breakeven in 18 months, knowing our real numbers at that level of detail is what made it possible.

Build the model once. Update it when inputs change. Make pricing and channel decisions from the real number, not the supplier invoice.

If you're not sure where your margins actually stand, grab the Financial Health Checkup or book a call and we'll look at your numbers together.