Trade Policy Changes: Audit HTS Classifications Before They Cost You

If you blinked sometime in late February, you missed an entire tariff regime dying and a new one taking its first breath. 

Let’s review.

On February 20, 2026, the Supreme Court ruled 6-3 that IEEPA doesn’t give the president the power to impose tariffs. Hours later, the White House pivoted to Section 122 of the Trade Act of 1974, slapping a 10% global surcharge on imports with the goal of hiking it to 15%. Twenty-four states have already sued to block those tariffs too. All the while, over $175 billion in potential IEEPA refunds sits in limbo, and CBP rolled out brand-new HTS codes to implement the Section 122 duties.

What does all of this mean for you? 

Trade policy changes have made every single digit in your HTS classifications matter more than ever. A product coded under the wrong tariff heading could mean you’re overpaying duties you’ll never recover, missing refund eligibility you didn’t know you had, or flagging your entries for the kind of CBP scrutiny nobody wants. 

The cost of “close enough” just went way up. 

So we put together a step-by-step process for auditing your HTS classifications, catching the errors that trip up even experienced importers, and making sure your duty exposure lines up with what you’re shipping.

Step 1: Build a Tariff-Change Radar and Rank Your SKUs by Duty Risk

Stop treating HTS classifications like a one-and-done broker task. Trade policy changes move too fast for that now.

Pull the last 12 months of imports by SKU, supplier, country of origin, HTS code, and duties paid. Then run a simple formula on each line:

Annual Import Value × Potential Duty Swing = Your Duty-at-Risk Score

Factor in Section 122 surcharges, Chapter 99 overlays, and any Section 232 or 301 exposure. The resulting score tells you which SKUs deserve your attention first.

Focus on your top 20 lines by duty dollars. Flag anything that touches special tariff programs or sits in a product category where exemptions keep changing. No matter what you ship, your highest-volume HTS codes are where a single misclassified digit hits hardest.

CBP collected over $225 billion in duties, taxes, and fees in FY 2025, up 150% from the year before, and also issued 2,432 trade penalties. They have the budget, the tools, and the mandate to scrutinize your entries. Give them a reason to look, and they will.

Step 2: Revalidate HTS Classifications Using a Defensible Method (Not Tribal Knowledge)

Once you know which SKUs carry the most duty risk, prove your classifications can hold up under scrutiny. CBP has considerably raised the bar on what’s now considered “reasonable care."

For each high-risk SKU, build a classification memo pack (even if it’s one page):

• Product description in plain English
• Composition/materials, specs, and use-case
• Why competing headings were rejected
• Final HTS + rationale (GRI logic)

Be sure to also use the Explanatory Notes as your interpretive backbone and validate everything against the current 2026 HTS schedule (which USITC has already revised this year). Where ambiguity lingers, consider requesting a binding ruling, especially for high-dollar, repeat imports.

Your product type matters here as well. Small details drive big duty differences.

• Lumber classifications hinge on species, grade, and moisture treatment. 
• Cotton and textiles depend on fabric construction, finishing, and intended use. 
• Electronics ride on the principal function and component makeup. 
• Medical products are split into device, accessory, and consumable.

Step 3: Stress-Test Origin, Valuation, and Special Duty Overlays (HTS Isn’t the Only Lever)

A correct HTS code can still produce the wrong duty amount. Trade policy changes have created a stacking problem: Section 122 surcharges, Section 232, Section 301, and Chapter 99 overlays can all pile onto the same entry.

For your top SKUs, run a three-way check:

1. Confirm declared origin with BOMs and production records. 
2. Verify declared value, including assists, related-party pricing, and freight allocation. 
3. Review every preference claim and Chapter 98/99 program you’re using.

Get this wrong in 2026, and the consequences can quickly compound. CBP now pairs AI-driven targeting with False Claims Act theories, civil penalties, and criminal prosecution.

Step 4: Fix Issues Before They Become Penalties — Use the Right Post-Entry Lever

Every importer finds classification mistakes. The ones who get penalized are the ones who sit on them.

Build yourself a simple “correction decision tree”:

• Pre-Liquidation Errors: File a Post Summary Correction with a supporting doc pack.
• Post-Liquidation Errors: Build a protest strategy with clear documentation.
• Pattern Across Multiple Entries: Bring in legal counsel before CBP treats it as something worse than an honest mistake.

One housekeeping note: CBP now pushes refunds electronically through ACH, so make sure your finance team has the banking setup and controls ready before you need them.

Step 5: Lock In Controls So the Next Trade Policy Change Doesn’t Break You

You just did the hard work. Now make it stick.

• Build a central HTS library with version control so every classification decision has a clear paper trail.
• Require vendors to submit spec sheets, material breakdowns, and functional descriptions before you onboard them.
• Put change controls around supplier swaps, product redesigns, and new sourcing lanes so nothing slips through without a classification review.
• Train procurement and product teams on what triggers reclassification so compliance isn’t the last to know.

The DOJ’s Trade Fraud Task Force has real funding, and recent FCA settlements tied to customs evasion have already set new records. Documented, repeatable processes are your best defense.

Turn Classification from ‘Tariff Surprise’ into a Managed Input

Tariffs moved three times in a single week this February. It’s anyone’s guess when they’ll move again. Your HTS classifications shouldn’t be something you set once and forget about.

But at Mallory Alexander, we’re ready for anything. 

Our Trade Management & Compliance team will dig into your specific SKUs, origins, and duty exposure to find what’s wrong, what’s costing you, and what needs to change. We pair classification reviews with licensed customs brokerage, so what you decide is what gets filed. And our on-call advisory will connect your team to a real human with real answers when the next trade policy change hits, not a ticket number.

We’re already helping clients work through IEEPA refund eligibility, Section 122 reclassifications, and ACE/ACH setup for CBP’s new electronic refund process. We’ve been in these weeds all year.

Ready to start? Contact us to audit your highest-duty SKUs before the next trade policy change catches you off guard.