Section Lead

Tariff Whiplash

Plat Street Frontage Vol. 1 · No. 2 April 2026 FR·1·2·1

By Frontage Editorial Team 9 min read National

On February 20, 2026, the Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act, and the effective tariff rate dropped to 9.1% — the lowest since 1947. One day later, on February 21, the administration invoked Section 122 of the Trade Act of 1974 and imposed a 15% global surcharge effective February 24. The current effective rate is 13.7% — the highest since 1941, approximately 8.5 times the pre-2018 tariff baseline. July 24, 2026 is the current expiration date for the Section 122 surcharge. That is the next inflection point.

Effective U.S. Tariff Rate — Key Inflection Points

Source: Peterson Institute for International Economics · Trade Policy Monitor, March 2026

The pace of change — from IEEPA tariffs to their elimination to a new surcharge mechanism in two days — is producing a merchant environment characterized by uncertainty that is as damaging as any specific rate. When the cost basis of your inventory can change by 5 to 10 percentage points in a 48-hour period, pricing, ordering, and planning decisions all become more difficult than the specific rate would suggest.

What the Michigan Retailers Survey Found

Michigan Retailers Association surveyed its member businesses in March 2026, providing one of the most current pictures of retail impact available. 75% of respondents reported negative or strongly negative business impact from the tariff environment. 62% had changed pricing — either raising retail prices to pass through tariff costs, absorbing them as margin compression, or some combination. 24% had deferred or canceled investment projects: store expansions, equipment purchases, interior renovations, and inventory expansions that were planned before the tariff environment became this volatile.

The Michigan Retailers data is a state-level survey, and Michigan's retail mix — significant presence of furniture, home goods, and specialty retail alongside food and beverage — makes it a reasonable national proxy. The categories represented in the survey are broadly comparable to the merchant mix in managed corridors nationally.

Tariff-Exposed vs. Tariff-Insulated Categories

Not all corridor merchants face equivalent tariff exposure. The distinction matters for district managers calibrating outreach priorities and for merchants understanding their own competitive position.

Tariff-exposed categories are those with significant imported goods in their merchandise mix. Furniture retailers source substantially from Southeast Asia and have faced serial tariff exposure across the 2018, 2019, 2025, and current surcharge periods. Home goods retailers (kitchen accessories, decorative items, bedding, bath products) source heavily from China and face similar exposure. Apparel retailers who have not diversified supply chains away from China and other tariff-exposed origins face meaningful cost increases. Specialty gift shops with imported merchandise are in the same category.

The furniture sector has been particularly stressed: more than 10 furniture retailers filed for bankruptcy between 2025 and early 2026, and the sector's physical retail presence continues to contract. The tariff environment is not the only factor — e-commerce displacement and changing consumer preferences are also contributing — but tariffs are amplifying structural pressures that were already present.

Tariff-insulated categories have product mixes dominated by domestic goods, services, or categories where tariffs have limited pass-through effect. Food and beverage operators — restaurants, cafes, bakeries — source primarily from domestic agricultural supply chains and are substantially insulated from import tariffs. Personal services (salons, fitness, alterations, repair) are structurally tariff-resistant because they sell labor, not goods. Grocery and specialty food retail with domestic sourcing is relatively insulated. Fitness and wellness businesses have limited imported goods exposure in their service delivery model.

The July 24 Horizon

Section 122 of the Trade Act of 1974 limits surcharges to 150 days. The February 24 effective date puts the statutory expiration at July 24, 2026. Three scenarios are plausible at that date:

The surcharge expires, returning the effective rate to approximately 9.1% — the post-IEEPA-ruling level. This would be the most immediate relief for tariff-exposed merchants. The administration invokes a different authority to continue or expand tariffs — as has been the pattern in prior tariff cycles. Congress acts to ratify, extend, or modify the tariff regime through legislation — the least likely outcome but the one that would provide the most durable certainty in either direction.

Merchants in tariff-exposed categories should treat July 24 as a planning horizon but not a certainty. Building business plans that assume the surcharge expires on July 24 is optimistic; building plans that assume current rates persist indefinitely is pessimistic; building plans with scenarios for both outcomes is the right approach.

What Merchants Should Do

For merchants in tariff-exposed categories, the immediate action set is concrete:

Map your specific supply chain exposure. Tariff exposure is not uniform even within a category. A furniture retailer whose primary supplier sources from Vietnam faces different exposure than one whose supplier sources from China. Understanding which specific inputs face which specific rates is the first step to quantifying actual cost impact.
Document pricing changes. The data on what tariffs are actually costing your business — in margin compression, price increases, or deferred purchases — is important for understanding your own situation and for advocacy conversations with city officials, congressional representatives, and trade associations.
Communicate proactively with customers. Customers who are surprised by price increases react more negatively than customers who understand in advance that cost increases reflect supply chain conditions beyond the merchant's control. A brief, factual explanation of tariff impact — posted in-store or communicated through email — sets the right expectation.
Contact your district manager specifically about July 24. The period leading up to the Section 122 expiration is when tariff-stressed merchants need the most support. If the surcharge expires, some may need help managing the transition. If a new mechanism is invoked, some may be facing vacancy risk. District managers who have been tracking merchant vulnerability are positioned to provide targeted support.

Key Takeaways

Supreme Court struck down IEEPA tariffs February 20; administration invoked Section 122 on February 21, effective February 24. Current effective rate 13.7% — highest since 1941, ~8.5x pre-2018 baseline.
Michigan Retailers survey: 75% negative/strongly negative impact; 62% changed pricing; 24% deferred or canceled projects.
Tariff-exposed categories: furniture, home goods, apparel, specialty gifts. Tariff-insulated: food/beverage, personal services, grocery with domestic sourcing, fitness.
July 24, 2026 is the Section 122 statutory expiration date — the next key planning horizon. Build scenarios for expiration and extension, not single-point forecasts.
Merchant actions: map specific supply chain exposure, document cost impacts, communicate proactively with customers, engage district managers about vulnerability before July 24.