Why a 15 percent tariff can raise a price tag by 30 percent

The Section 122 tariff that replaced the struck-down IEEPA duties took effect February 24, 2026, and the math of retail markups means shoppers see the cost multiplied at the register.

By Ida Dahl, Contributor · 3 min read

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Infographic showing how a wholesale jacket price multiplies to a store shelf price — AI-generated photorealistic reconstruction — not a documentary photograph.

Since February 24, 2026, most clothing entering the United States carries an added surcharge under Section 122 of the Trade Act of 1974 — initially set at 10 percent and raised to 15 percent just before implementation — after the Supreme Court invalidated the earlier IEEPA tariffs in February. Apparel industry analyses put the pass-through bluntly: because retailers mark up landed cost, every 1 dollar in tariffs can translate to 1.50 to 2 dollars in the final retail price. That is why a 15 percent duty can move a price tag by 30 percent or more on some items.

How does a tariff get multiplied on the way to the shelf?

A tariff is paid on the wholesale import cost, not the retail price. If a jacket costs a retailer 25 dollars landed and the store prices it at 75 dollars — a typical three-times markup — a 15 percent duty adds 3.75 dollars to the import cost, which becomes 11.25 dollars at retail once marked up. Multiply that across a wardrobe and the arithmetic explains why apparel CPI has been climbing even when no single announcement makes headlines.

Did the Supreme Court ruling mean prices would fall?

Shoppers hoping the February decision would roll prices back have mostly been disappointed. The government replaced the invalidated IEEPA duties with the Section 122 surcharge within weeks, and by April 2, 2026 the Yale Budget Lab estimated the effective average tariff rate at 11.1 percent. U.S. Customs did process refunds on a large share of the old duties — CBP reported electronic refunds on roughly 82 percent of affected entries — but those refunds went to importers, and competitive pricing has not passed most of them to consumers.

What can a shopper actually do about tariff-driven prices?

Favor domestically produced or FTA-qualifying goods, which received partial exemptions from the surcharge.
Buy categories with lower import exposure — used clothing is now even tracked separately in CPI methodology because secondhand demand has grown.
Concentrate apparel purchases during clearance windows, when retailers absorb margin rather than pass costs.

The price condition to keep in mind: the 15 percent Section 122 surcharge has been in effect since February 24, 2026, and with typical markups it shows up at retail at 1.5 to 2 times its face value — budget for that multiplier rather than the headline tariff rate.

Frequently Asked Questions

What is the Section 122 tariff on clothing?

It is an additional surcharge on most imports under Section 122 of the Trade Act of 1974, effective February 24, 2026 at 15 percent, imposed after the Supreme Court invalidated the earlier IEEPA tariffs.

Why does a 15 percent tariff raise retail prices more than 15 percent?

Tariffs are charged on wholesale import cost. Retailers mark up landed cost — often about three times — so each dollar of duty becomes roughly 1.50 to 2 dollars at the register.

Did the Supreme Court ruling lower clothing prices?

Not meaningfully. The invalidated IEEPA duties were replaced by the Section 122 surcharge within weeks, and importers' refunds have largely not been passed through to shoppers.