How to reprice after a tariff increase (the exact formula)

First, the one number that actually moved

When a tariff goes up, your retail price did not change and your supplier invoice did not change. What changed is the duty you pay at the border, which flows into landed cost: the all-in cost to get one unit onto your shelf, duty and freight included. Reprice against landed cost, not against the factory price, or you will under-recover every time.

The total duty rate on a single item is usually a stack of separate programs, not one figure. A China-origin good can carry its base HTS duty, a Section 301 add-on, and a Section 232 metals duty all at once. The first job is to add them into one total duty rate, then push that through two short formulas.

Dividing by (1 − target margin) is the part people get wrong. Adding 40% on top of landed cost gives you a 28.6% margin, not 40%. To hold a 40% margin you divide by 0.60. That single division is the difference between recovering your margin and quietly bleeding it.

A worked example, end to end

Take a rechargeable product built around a lithium-ion battery pack, imported from China, sold for $25, costing you $10 a unit with $1 of freight. Your target margin is 40%. Overnight, the duty stack on HS 8507.60 lands at 43.4% (base 3.4% on this code, plus a Section 301 add-on, plus the provisional Section 122 surcharge). Watch what happens.

The product is now underwater against your own target: it earns 38.6% where you require 40%. The fix is not dramatic. Move the price from $25.00 to $25.57 and the 40% margin is restored. The hard part was never the arithmetic. It was knowing, on the morning it happened, that this specific SKU crossed the line at all.

Which duties might be in your stack

You cannot reprice correctly until you know which programs apply to each item. The base duty comes from the exact HS code. The add-ons depend on origin and product category. Here are the live programs as of June 2026, with sources, so you can confirm rather than guess.

Rates verified 2026-06-21. The base duty always varies by the exact HS code, so confirm yours in the HTS before repricing.

How to find which SKUs went underwater

The tariff change tells you a rate moved. It does not tell you which of your products it sank. To find the underwater SKUs, you work from the rate back into your own catalog:

1. Map each SKU to its HS code and origin. The duty stack is driven by these two fields. A product imported from China and one imported from Vietnam under the same HS code can land at completely different costs.
2. Recompute the total duty rate for each affected SKU using the live programs above. Only the items whose code or origin touches a changed program need new math.
3. Recompute landed cost with Step 1, then recompute margin with Step 2.
4. Flag every SKU whose new margin fell below your target. Those are your underwater products. Everything still above the line you can leave alone.
5. Generate the recovery price with Step 3 for each flagged SKU, and decide product by product whether to lift the price, absorb the hit, or change the supplier.

The catch is scale. A revision to one Section 301 list can touch hundreds of HS codes at once. Filtering 600 SKUs by hand to find the 14 that crossed your margin line is exactly the kind of work that gets skipped until a quarter-end report shows the damage.

Doing it across a whole catalog

The single-SKU formula does not change at scale, but the workflow does. Across a catalog you want a repeatable pass, not a one-off spreadsheet:

• Hold cost, freight, HS code, and origin per SKU in one place so a rate change can be applied uniformly instead of re-keyed.
• Diff the duty schedules on a schedule — daily is reasonable, since revisions take effect on a stated date with little warning.
• Only surface the crossings. You do not want a 600-row report; you want the handful of SKUs that fell below target since yesterday, with the recovery price already computed.
• Keep it advisory. A repricing tool should hand you the number, never silently edit your live storefront. A wrong rate should cost nothing.

That is the entire job of MarginGuard. It stores the per-SKU inputs, diffs USITC HTS, Section 301, and the other live programs against your catalog every day, and emails you the morning a rate moves with the underwater SKUs and the exact recovery price for each. The formula on this page is the formula it runs — it just runs it on every product at once and computes the precise duty stack from your real HS codes, not an estimate.