Trump tariffs and ERP cost configuration: 2026 update

I do not normally write about political decisions. I wrote the first version of this article in April 2025 because tariffs were turning into an operations problem for every company that imports, and that is still true. What changed is the legal basis. Between February 2025 and July 2026 US tariffs moved from emergency powers, to a temporary surcharge, to Section 301 trade tariffs. As of October 2026, most imports into the US carry an extra 10 or 12.5 percent on top of normal duty, plus sector tariffs on metals and vehicles. Importers are also chasing refunds of the duties the Supreme Court struck down.

If your ERP still treats duty as a one-off number buried in a standard cost, every one of those changes has hit your margins late. The fix is mostly configuration discipline, and it is the part of this article I would read first if you run SAP.

The headline rates moved constantly. This is the sequence that matters for planning.

Date	What happened
February to March 2025	Tariffs under the International Emergency Economic Powers Act (IEEPA): 25% on most Canadian and Mexican goods, 10% then 20% on Chinese goods
2 April 2025	"Reciprocal" IEEPA tariffs: at least 10% on imports from all trading partners, higher for dozens of countries
April 2025	China reciprocal rate raised to 125%, bringing most Chinese goods to 145% in total; later reduced through negotiation
30 October 2025	US-China truce agreed in Busan for one year; extended in September 2026 to 10 January 2027
20 February 2026	Supreme Court rules 6-3 that IEEPA does not authorise tariffs (opinion); IEEPA duties stop from 24 February
24 February 2026	Temporary 10% surcharge under Section 122 of the Trade Act of 1974, limited by law to 150 days
7 May 2026	Court of International Trade finds the Section 122 surcharge unlawful, with relief limited to three plaintiffs; the government appeals
24 July 2026	Section 122 expires; Section 301 "forced labor" tariffs of 10% or 12.5% take effect on imports from about 60 economies

Section 232 tariffs, which rest on national security grounds, were never part of the IEEPA case. Steel and aluminium carry 50 percent, and vehicles and auto parts carry their own Section 232 rates, with lower rates for some partners that signed deals. Chinese goods still face the heaviest stack: the 12.5 percent Section 301 tariff on top of the older product-specific Section 301 tariffs, commonly 25 percent. Kroll's summary of the 2026 changes calls it tariff substitution rather than tariff removal, which matches what importers have seen.

Two consequences for operations. First, rates now change by legal instrument as well as by country and product, so your master data needs to know which tariff applies, not just the total. Second, money may flow back. Importers who paid IEEPA duties have been pursuing refunds through customs and the courts, and the same may happen with the Section 122 surcharge if the appeal fails.

The mechanism has not changed since my first version. Importers pay the duty at the border. Few can absorb a 25 percent cost increase on a product line, so they pass it to their customers. Those customers pass it on again if they sit in a supply chain. By the time it reaches the end buyer, the increase is fully loaded.

The evidence from the last round is clear. Economists from the New York Fed, Princeton and Columbia found that the 2018 tariffs were passed almost completely into US prices of imported goods. The full incidence fell on US buyers (NBER working paper 25672). Foreign exporters did not cut their prices to absorb it.

1. 01Duty paid at the borderBy the US importer
2. 02Importer raises pricesFew can absorb 25 percent on a product line
3. 03Next link passes it onIf they sit in a supply chain
4. 04End buyer paysThe increase arrives fully loaded

2018 tariffs: almost complete pass-through into US prices of imported goods

Source: NBER working paper 25672

How much a business can pass on depends on whether competitors face the same tariff, whether customers have substitutes and how sensitive demand is to price. Industries with few substitutes, such as many construction materials and industrial components, pass costs through more easily. Discretionary consumer categories struggle, because demand shifts or falls.

Moving supply chains is slower than the headlines suggest. Qualifying a new supplier means factory audits, quality validation, capacity checks and contracts, which typically takes 12 to 24 months. With rates changing every few months, I would not commit to a new source on tariff grounds alone until the legal position settles.

In my view, the companies that cope best treat tariffs as data, not as a finance spreadsheet. These are the areas I would check in SAP, or any major ERP.

Duty in purchasing conditions. Customs duty should be a condition in the purchasing pricing procedure, maintained by country of origin and material or product group. It then flows into the purchase order and goods receipt as a planned delivery cost. If duty only appears when the broker's invoice arrives, your inventory cost is wrong until then.

Country of origin and commodity codes. Rates now depend on origin, Harmonized System code and the legal instrument. If country of origin is missing on purchasing info records or material masters, no calculation can be right. SAP Global Trade Services (GTS) handles classification and duty calculation; without it, keep the origin and code data clean in materials management.

Standard cost estimates. Cost estimates run before a tariff change carry the old duty. Rerun them against current purchasing conditions after each material change, or the variance lands in a month-end surprise. Companies using actual costing in the material ledger see the effect sooner, but still need current conditions to plan.

Selling prices. If prices are built on standard cost plus a markup, check margins by material group and origin after every rate change. The condition technique in sales and distribution can update prices by group, but someone has to decide and own the review.

Refunds and accounting. Under IAS 2, import duties form part of the cost of inventory, unless they are later recoverable from the tax authority. A refund of IEEPA duties therefore reduces inventory cost for goods still in stock and cost of sales for goods already sold, and under IAS 37 the refund receivable is recognised only when recovery is virtually certain. Finance, tax and trade teams need to agree that treatment before refunds arrive, and the ERP needs a clean link from each customs entry to the goods it covered.

Rates will move again. This is the sequence I would put in place, with an owner for each step.

1. Trade compliance: confirm the new rate, the legal instrument, the effective date and any exemptions, by HS code and origin.
2. Master data: update country of origin and commodity codes where they are missing or wrong.
3. Procurement: update duty condition records and the validity dates on open purchase orders.
4. Product costing: rerun cost estimates for affected materials and review the variance.
5. Sales and pricing: review margins by product group and origin, and approve price changes.
6. Finance: log duties paid by entry and legal instrument, so refund claims and inventory adjustments can be calculated.
7. Planning: run the scenario on next quarter's margin. SAP Analytics Cloud or a well-built planning model will do it; a spreadsheet copied from last year will not.

Teams with clean master data and live procurement analytics, whether in SAP Ariba or elsewhere, can model a rate change in hours. Teams that run duty in spreadsheets outside the ERP spend the quarter explaining variances. If your supplier and material data is the weak point, start with my guides to SAP Ariba sourcing and supplier management and SAP FI/CO, and if the gap is in reporting, my SAP Analytics Cloud guide.

Is a tariff a tax?

Yes. A tariff is a tax on imported goods, collected by the importing country, either as a percentage of value or as a fixed amount per unit. The importer pays it at the border, but the cost usually moves forward through the supply chain to the end buyer.

Are the 2025 Trump tariffs still in place?

Not in their original form. On 20 February 2026 the Supreme Court ruled that IEEPA, the law used for the 2025 "reciprocal" and fentanyl tariffs, does not authorise tariffs. A temporary 10% surcharge under Section 122 followed until 24 July 2026, then Section 301 tariffs of 10% or 12.5% on about 60 economies. Section 232 tariffs on steel, aluminium and vehicles were not affected by the ruling.

Can companies get refunds of IEEPA tariffs?

Importers that paid IEEPA duties may be entitled to refunds. US Customs and the Court of International Trade have been working through the process, and the details depend on each entry's status. Importers should keep entry-level records, take trade counsel advice and agree the accounting treatment early, because refunded duty changes inventory and cost of sales figures.

Why do businesses not just absorb tariff costs?

Margins rarely allow it. A 25% tariff on a product line earning a 15% gross margin would make that line loss-making. Most businesses combine partial price increases in the short term, supplier changes in the medium term and product mix changes in the long term.

How should companies update SAP for tariff changes?

Hold duty as a purchasing condition by origin and product group, keep country of origin and commodity codes clean, rerun standard cost estimates after each change, review selling prices by margin, and record duties by customs entry and legal instrument so refunds and inventory adjustments can be calculated. SAP Global Trade Services helps with classification and duty calculation.

Can supply chains be restructured quickly to avoid tariffs?

No. Qualifying new suppliers usually takes 12 to 24 months. With US tariff rates changing by legal instrument several times in 2026, many companies are waiting for the legal position to settle before committing to new sources.