The Tariff Window Closes July 24. Model It Before You Scale Q2.
Three scenarios to run before you order more inventory
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Section 122 tariffs expire July 24, 2026.
The current 10% global surcharge - which improved contribution margins when it replaced IEEPA - is not permanent. It's a 150-day statutory window that cannot be extended without a Congressional vote.
If you ran the break-even recalculation from the March 9th newsletter, you have the first input you need. Now it's time to model what happens when the window closes.
The numbers from what we just covered track with something I've been seeing across brands lately. If you want to benchmark where you actually stand, Omnisend's 2026 report is worth a look.
Automations are 2% of all email sends but drive 30% of total email revenue. Each automated email earns $2.87 per send versus $0.18 for scheduled campaigns. That's a 16x difference.
Most brands treat automation like a checkbox. The data says it's their biggest untapped revenue channel.
The concentration numbers make it more uncomfortable. Ecom grew 98% year over year, but that growth went almost entirely to brands running tight automation and multi-channel strategies:
• Top 5% of brands captured 57% of all order volume growth• Top 10% captured 69%• Top 20% captured 81%
The gap is accelerating. The stats worth sitting with:
• Birthday emails averaged $744 in order value• Back-in-stock automations converted at 6.46%, highest of any automation type• Abandoned cart and welcome sequences drove 76% of all automation-generated orders
These aren't complex builds. They're the basics, and most brands still aren't running them right.
Open rates are up for the fifth consecutive year. Click-to-conversion jumped 53% year over year. The channel isn't dying. The brands treating it like it is are just falling further behind.
Omnisend pulled this from 27 billion emails, 321 million SMS, and 458 million push notifications across 150,000+ brands. The full 2026 Ecommerce Marketing Report is free and worth 10 minutes of your time.
The Structural Shift You Missed
In 2021-2022, retargeting was a genuine incremental play. ASC didn't exist. The algorithm needed manual audience segmentation. Retargeting warm audiences was a reliable way to capture conversions prospecting campaigns couldn't close.
Measured's geo holdout test data across 30+ ASC campaigns found that ASC consistently over-allocates toward existing customers because they produce the highest platform-attributed ROAS, even though those conversions are the least incremental.
Both campaigns claim attribution for the same conversions. Retargeting ROAS looks strong because it's targeting people who almost bought. The conversions that would have happened through ASC anyway are invisible in the dashboard.
Three Scenarios to Model
Scenario 1: Tariffs expire July 24 with no replacement. Landed costs revert toward pre-Section 122 levels for goods outside Section 301 (China duties remain regardless).
Scenario 2: Congress votes to extend Section 122 past 150 days.
Scenario 3: Section 301 investigations currently underway produce new country-specific tariffs before or around July 24. USTR launched investigations into 60+ economies in March 2026. Section 301 tariffs typically take 6-18 months, but the administration has signaled urgency given the July 24 cliff.
What This Means for Inventory Decisions Made in April and May
Inventory ordered in April ships in 6-8 weeks and sells through July-August. Inventory ordered at current landed costs under Section 122 will be on shelves when July 24 hits.
If tariffs revert, the margin on that inventory is protected. If Section 301 replaces Section 122 at higher rates, the next inventory order - placed in June or July - will be at a higher cost.
Brands need to decide explicitly whether to build buffer inventory at current landed costs before July 24, hold current ordering cadence and model both scenarios, or diversify sourcing now as insurance against whatever replaces Section 122. The right answer depends on product shelf life, storage capacity, cash flow, and supply chain flexibility. The only wrong decision is not to have a position before Q2 scaling spend goes up.
For operators sourcing from China specifically: Section 301 duties (25%+) that were in place before IEEPA are still in place. Section 122 is additive, not a replacement. For China-sourced goods, the baseline after July 24 is Section 301 rates - not zero. The relief was marginal for China specifically. The bigger exposure is for brands sourcing from countries that only faced IEEPA tariffs with no underlying Section 301 duties.
The Ad Spend Implication
ROAS targets set in March were built on current landed costs. If landed costs rise after July 24, break-even ROAS rises with them.
Scaling ad spend aggressively in May and June - on inventory that may reprice in July - is a timing risk that needs to be modeled, not assumed away.
Operators should consciously choose between two positions:
Position 1: Scale now, bet the window extends, or Section 301 rates are lower than feared. Accept the risk that July repricing compresses margins on Q3 inventory.
Position 2: Hold Q2 spend at current levels, confirm buffer inventory at current landed costs, then scale in Q3 from a known cost baseline.
This week, pull your top three SKUs by spend. For each one, identify the country of origin and the applicable duty stack (base duty + Section 301 if China + Section 122).
Model what break-even ROAS looks like if Section 122 expires with no replacement.
If the difference between current break-even ROAS and post-expiration break-even ROAS is less than 0.3x, this is a minor factor. If it's more than 0.5x, it belongs in your Q2 spend model explicitly.
Final Thoughts
If you take one thing from this newsletter: it's better to have a plan in uncertain times than to be taken by surprise.
We can't predict what will happen on July 24. But you can model all three scenarios now, know which one affects your numbers, and update your ROAS targets the day we find out - not three weeks later when you realize your margins shifted.
If you want a growth partner who is invested in helping you build a profitable business, someone who is going to push you to make changes that focus on profitable growth. Book a call - let’s chat.
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Disclaimer: Thank you to Omnisend for sponsoring today's newsletter.
