Is Your Supplier's Tariff Surcharge Legitimate?

The 2026 surcharge wave

In the Manufacturers Alliance mid-year tariff survey from June 2025, 77 percent of manufacturers said they pass tariff costs to customers through price increases, and 41 percent said they use surcharges; the categories overlap, because many do both. If you buy components, materials, or equipment, some of your suppliers are in those numbers, and the charge is already sitting on an invoice you received.

The pass-through takes three forms. A blanket percentage added as a separate invoice line: DynaEnergetics announced a 7 to 9 percent tariff surcharge on perforating systems sold in North America, and Honeywell Building Automation announced 6.4 percent across its building-management products. A flat fee: Peterbilt added $3,000 per new truck build. And the quiet one, a plain price increase that cites tariffs in the cover note and shows up nowhere as a line item.

None of those numbers is self-evidently wrong. Each is a specific, checkable claim: that tariffs raised this supplier's costs by this amount on these goods. What follows is how to check that claim from the documents you already hold: the PO or contract, the invoice, and, if you import, your own customs records.

First question: who is the importer of record?

Import duties are owed to CBP by exactly one party, the importer of record, and the Incoterms on your PO decide which side of the deal bears them. DDP is the only Incoterm under which the seller bears import duties. Under every other term, EXW, FCA, FOB, CFR, CIF, DAP, and the rest, the buyer pays them.

That single fact does most of the verification work. If your PO says FOB or CIF or EXW, the duties are yours to pay, and in practice you are the importer of record: your broker filed the entry, and the duty on those goods was paid once, by you. A supplier "tariff surcharge" on the same goods has no duty basis on that import leg; the duty it claims to recover is a duty the supplier never paid. The legitimate version of that surcharge is a different claim entirely, that the supplier's own upstream costs rose because it imports tariffed inputs, and that claim needs its own showing, at its own magnitude.

Two wrinkles. Foreign sellers often cannot qualify as a U.S. importer of record, so deals written as DDP frequently leave the buyer as the importer in practice. And even when the supplier handles the customs filings, forensic advisors at StoneTurn note the importer remains legally responsible for accurate declarations, tariff payments, and compliance, so a supplier's paperwork mistakes land on you regardless of who ran the filing.

Being importer of record also hands you the ground truth. Any importer can open an ACE account with CBP and pull its own entry data: the lines, the duties actually paid, and liquidation status. If a surcharge claims to recover duty on goods you imported, your ACE records are the receipt showing that duty was paid once already, and by whom. The line-by-line method runs on exactly those records.

If the supplier is the importer, the contract governs

When your supplier genuinely is the importer of record, typically a domestic distributor or contract manufacturer importing on its own account, the question moves to your contract. Foley & Lardner's guidance from March 2025 is blunt: "If you have a fixed-price contract, applying a surcharge is a breach of the agreement." Buyers have historically paid such surcharges under protest to preserve the recovery claim while keeping the supply relationship alive.

Force majeure does not rescue the surcharge either. It can excuse performance; it does not authorize passing along cost increases. The official comment to UCC section 2-615 is explicit: "Increased cost alone does not excuse performance unless the rise in cost is due to some unforeseen contingency which alters the essential nature of the performance." Courts have consistently treated tariff-driven cost increases as foreseeable business risks under fixed-price contracts; the same guidance notes that no UCC impracticability claim based on tariff changes has succeeded since 2018.

Where the contract does allow pass-through, or where there is no fixed price to breach, the burden still sits with the seller. A Katten Muchin Rosenman advisory on surcharge disclosures makes the standard plain: the seller imposing a tariff surcharge bears the burden of demonstrating it is reasonably related to the increased costs the seller actually pays. The same advisory flags a flat surcharge across all items, regardless of each item's tariff exposure, as suspect, says surcharges should not persist after tariffs change, and notes that federal and state disclosure rules require mandatory surcharges to appear in upfront quoted prices.

The method: reconcile the surcharge to the duty stack

Verification is three lookups and one comparison, and every input is a document you already hold.

The PO or contract. The Incoterm (who imports), whether the price is fixed, and whether a tariff clause exists and what it actually says. Trade credit insurer Atradius recommends explicit tariff clauses stating who bears the cost and what happens when rates change; if yours has one, the surcharge either follows its mechanics or it does not.

The invoice. Is the surcharge a percentage or a flat fee, and which lines does it touch? A percentage applied uniformly to every line, imported or not, tariffed or not, is the pattern the Katten advisory calls suspect on its face.

The product's actual duty exposure.Exposure is computed per product, per origin, per date: the Section 301 rate for the product's list (25 percent for Lists 1 through 3, 7.5 percent for List 4A), plus Section 232 if the product is on the restructured metal and derivative lists, plus the Section 122 surcharge, imposed at 10 percent by Proclamation 11012, while it remains in force (it does not stack on 232-covered goods). Stack the programs that apply on the invoice date and you have the ceiling of what a legitimate surcharge could recover.

The comparison. A 15 percent blanket surcharge on goods whose only exposure is Section 301 List 4A at 7.5 percent fails reconciliation on its face. So does any percentage that stays constant across products with different exposure, and any surcharge that predates the tariff it cites.

The dates. This is where 2026 does the most damage. The Supreme Court struck the IEEPA reciprocal and fentanyl tariffs on February 20, 2026, in Learning Resources, Inc. v. Trump, and CBP is refunding them through the CAPE system inside ACE; tariffs collected under IEEPA are estimated at more than $200 billion. A surcharge still recovering those programs after February 20 is recovering a cost the supplier no longer pays and may be getting refunded. The Section 122 surcharge that replaced them, imposed at 10 percent by Proclamation 11012 effective February 24, was invalidated by the Court of International Trade on May 7, 2026, but is still collected while the appeal runs, and it lapses July 24, 2026 absent Congressional action. A surcharge that reconciles today can stop reconciling in three weeks; the check runs per invoice, per date.

One surcharge, rebuilt by hand

A domestic supplier imports molded enclosures from China on its own account and resells them to you; the supplier is the importer of record, and the enclosures sit on Section 301 List 3 at 25 percent. In mid-2025 the supplier set a tariff surcharge of 55 percent, matching the stacked China exposure suppliers were disclosing at the time: Section 301 at 25 percent, the IEEPA fentanyl tariff at 20 percent, and the IEEPA reciprocal tariff at 10 percent. Epec Engineered Technologies published exactly that itemization to its customers in April 2025: program by program, rate by rate.

Now take an invoice dated May 15, 2026, with a $40,000 line and the same 55 percent surcharge: $22,000. Assume dutiable value equals the line price to keep the arithmetic visible, and rebuild the stack as of May 15. The two IEEPA programs were struck on February 20, so 30 of the original 55 points are gone, and refundable to the supplier through CAPE. The Section 122 surcharge adds 10 points from February 24 (the arithmetic assumes the 10 percent rate set by the proclamation). Actual exposure on May 15: 25 plus 10, or 35 percent, which is $14,000. The surcharge collected $22,000. The $8,000 difference is duty the supplier is not paying, recovered from you anyway, on every invoice since late February.

If instead you bought directly from the Chinese manufacturer on a PO that said FOB Shanghai, the rebuild is shorter: you were the importer of record, your broker paid the $14,000 at entry, and the entire $22,000 surcharge needs a justification that has nothing to do with duty on these goods. The tariff check runs this same date-aware rebuild on entry lines automatically; the surcharge side of the comparison comes from your PO and invoice.

The conversation with your supplier

Most surcharge problems are staleness, not fraud: a number set defensibly in the chaos of 2025 that kept billing on autopilot after the ground moved. That is still your money, but it changes the conversation. You are not accusing anyone; you are asking the seller to carry a burden the law already assigns to it. Four questions do the work, at line level:

• Which duty programs, at which rates, does this surcharge recover, and on which products?
• Are you the importer of record for these goods, or are we?
• What value is the percentage applied to, and how does it map to the dutiable value?
• Has the surcharge been re-set since February 20, 2026, and if you are filing for IEEPA refunds through CAPE, how do those refunds flow back through pricing?

A supplier with a real basis can answer all four quickly, the way Epec answered them in public. A supplier that answers "it is a standard charge" has told you the surcharge does not reconcile, because a percentage that never varies by product, origin, or date cannot be tracking duty programs that do.

When to involve your broker or counsel

Bring in counsel when the contract is fixed-price and the supplier applies a surcharge anyway: that is a breach question, not a negotiation question, and paying under protest preserves the claim while you sort it out. Counsel also owns the disclosure angles, undisclosed mandatory surcharges and the state statutes that allow private suits.

Bring in your customs broker when the dispute turns on the duty math itself: the product's HTS classification and country of origin, which programs applied on which dates, and, if you are the importer of record, what your own ACE records show you paid. Those records feed the refund side of the 2026 story, covered end to end in the pillar guide.

A procurement-documents problem, not a customs problem

Customs-side checking, the audits and refund filings that run on entry summaries and ACE data, answers one question: did we pay CBP the right amount? A supplier surcharge never appears in that data. It lives in the PO, the contract, and the invoice, documents CBP never sees, and it exists even for buyers who import nothing themselves, because their suppliers are the importers. Verifying it means joining those commercial documents to the duty rules in force on each date. The duty-rule half of that join is the same math a line-level tariff check already runs; first-party receipt, for scale: Kynthar's duty engine priced $2.32 million of duty across 532 entry lines and reconciled the total to the dollar. The surcharge check is that arithmetic, run from the buyer's side of the paper.