Section 122 hits apparel hardest. Most apparel and footwear is not in Annex II, has no USMCA path (especially for non-Mexican production), and faces high base MFN rates (16-32% in many categories). The Section 122 stack adds 15% on top. For China-origin apparel, Section 301 also stacks – pushing effective rates above 40-50% on some categories.
Apparel and footwear face the highest combined Section 122 + Section 301 + base-rate exposure of any major import category. Brand and SKU economics shift sharply under the current stack; First Sale for Export, classification audit, and USMCA qualification (where feasible) are the practical mitigation levers.
Effective duty stack for apparel
China-origin knit apparel: base MFN (often 16.5%) + Section 122 (15%) + Section 301 (7.5-25%). Effective rate: 39-57%.
Vietnam-origin knit apparel: base MFN (16.5%) + Section 122 (15%). Effective rate: 31-32%.
Mexico-origin USMCA-qualifying apparel: base MFN preferential (often 0%). Effective rate: 0%. CAFTA-DR origin: similar preferential treatment.
Bangladesh / India / Indonesia: base MFN + Section 122. No Section 301 stacking.
First Sale for Export – the largest single mitigation
Apparel imports often run through middlemen (Hong Kong, Korea, Italy). First Sale for Export valuation drops dutiable value 15-30% by using the manufacturer-to-middleman price. Combined with high apparel duty rates, the dollar impact is substantial. See /first-sale-for-export-rule/.
Classification audit – overlooked
Apparel HTS classification distinguishes by knit/woven, fiber blend, gender, garment construction. Mid-market apparel importers often have classification opportunities worth 5-10% of duty across catalogs.
CAFTA-DR for Central American production
CAFTA-DR provides preferential treatment for goods qualifying under specific yarn-forward and origin rules from DR, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica. CAFTA-DR-qualifying apparel pays no Section 122. The qualification work is technical but achievable for production sourced through these countries.
Frequently asked questions
Is apparel in Annex II?
No. Apparel and footwear are not in Annex II. Most categories pay Section 122 plus base MFN.
How much can First Sale save on apparel duty?
Typically 15-30% of dutiable value, which translates to 3-10% of the original duty rate depending on stack. For a 32% effective duty stack, First Sale typically reduces effective duty by 5-10 percentage points.
Does CAFTA-DR exempt from Section 122?
Yes. CAFTA-DR-qualifying goods receive preferential treatment and are not subject to Section 122 surcharge, similar to USMCA.
Are knit and woven different for Section 122?
Section 122 itself does not distinguish; both face the surcharge. The base MFN rates differ between knit and woven, and classification matters for accurate duty calculation.
Are IEEPA refunds available for apparel?
Yes. Apparel was heavily exposed to IEEPA tariffs in 2025-2026. Recovery through CAPE is generally significant for SMB apparel importers.
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