Tariff Refunds and the Panama Canal Detour: A Procurement Playbook for Q4 2026

Procurement leaders are used to one disruption at a time. October 2026 is offering two at once. On one side, the Supreme Court’s February ruling that nullified President Trump’s country-specific duties has turned into refund cheques, and companies are deciding what to do with them. On the other side, the Panama Canal’s water constraints and high fuel costs are pushing container volume to the US West Coast. Both stories are covered by Supply Chain Dive this month, and both land on the sourcing desk: what do we do with recovered tariff money, and where should the next container actually travel?

Story one: what companies are doing with tariff refunds

Supply Chain Dive reported that Levi’s will spend part of an $80 million tariff refund on supply chain activity. The jeans maker plans to use three-fourths of the recovery on distribution, logistics, marketing and promotional activities, according to an executive quoted in the story. Levi’s reinvested roughly $25 million of the returned funds in the third quarter, which ended August 30, with $35 million planned for the current quarter. A $3 million portion of the fourth-quarter spending will reduce gross margin by 10 basis points, bringing projected fourth-quarter gross margin to 61.8%. For the full fiscal year ending November 29, the tariff recovery, net of the reinvestment, is expected to add about 80 basis points to a projected gross margin of roughly 63%.

Levi’s is not alone. The same report named McCormick & Co. and Kimberly-Clark as companies that recently disclosed millions of dollars in refunds, planning to use the windfall to offset higher input costs, while e.l.f. Beauty has directed its funds toward price cuts and higher sales volume. Four companies, three different choices: reinvest in the network, absorb input costs, or cut prices.

Story two: the Panama Canal and the shift to Los Angeles

The second Supply Chain Dive report describes shippers continuing to hesitate over the Panama Canal because of El Niño-related drought concerns. The canal has been adjusting its water-saving measures. In August it cut the daily slots available at its Neopanamax locks to nine, effective September 3; an advisory dated October 9 then raised them to 10 for bookings made from October 15, after average precipitation in the watershed increased.

The delays are measurable. From about January to late September 2026, 69 container vessels waited more than 100 hours to transit, 3.3% of all vessels passing through, against 13 vessels, or 0.6%, in the same period of 2025, per MarineTraffic. The weekly share of long waits spiked in April at the end of the dry season and climbed again from July as draft restrictions came in. Wait times have improved, but El Niño is expected to peak between October and December, with the 2027 dry season to follow.

That uncertainty is flowing to Southern California. Port of Los Angeles Executive Director Gene Seroka told reporters that after trips to Korea and Singapore, he heard that shipping lines, third-party logistics providers and manufacturers are shifting even more of their traditional canal allocations to Los Angeles. Seroka added that vessel fuel prices have doubled over the last eight months because of the Iran war, and longer transit times burn more fuel at higher prices. Carriers are passing those costs to importers and exporters, which gives shippers a reason to choose shorter and quicker routes.

Looking ahead, the port expects another frontloading wave. Lunar New Year falls early, in the first week of February, and the current US-China trade truce lifts on January 10. Shippers who want to move first-quarter seasonal products may bring cargo forward. Seroka said this “confluence of events” means volume will probably stay somewhat more elevated than normal.

The trend context

Google’s US trending searches on October 14 were mostly celebrity and sport, but the one commercial item with heavy traffic was ASML, whose third-quarter results showed €11.7 billion in net sales and €5.0 billion in net income, with management citing order interest through 2030. Another trending business item referenced oil, specifically Guyana’s crude exports set to pass one million barrels a day for the first time. Neither is a procurement story directly, but both reinforce the backdrop: capital equipment demand is strong, energy supply is shifting, and the cost of moving goods remains tied to fuel.

Procurement readers will also remember our note on October 8, when the Court of International Trade certified a class of importers seeking IEEPA tariff refunds: read the October 2026 note for Procurement. Class certification is not a refund order, and it shows how many importers may still be waiting. The companies in this week’s story appear to have already received money; many others have not.

What this means for procurement teams

1. Treat refunds as a cross-functional decision

Finance owns the cash, but procurement owns the supplier relationships and the data. Before a refund arrives, agree internally on three questions. Who has legal title to the refund, the importer of record or an entity further down the chain? How much of it relates to goods already sold, and at what price? And do supplier contracts contain clauses on duty sharing, price adjustments or indemnities? If your company paid duties and then passed some cost on to customers through surcharges, expect customers to ask. If suppliers paid duties on your behalf under delivered-duty-paid terms, expect them to ask.

2. Check your importer-of-record arrangements

The Supply Chain Dive coverage advised companies to evaluate their importer-of-record arrangements and have deep supply chain visibility ahead of the upcoming changes. In practice that means a clean list of every entry, the party named on it, the duties paid and the supporting documents. If a customs broker, a freight forwarder or a marketplace acted as importer on your behalf, confirm in writing who files claims and who receives money. Gaps here are the most common reason refunds are delayed or lost.

3. Decide on a reinvestment rule before the money lands

The four companies above illustrate options you can compare. Reinvesting in logistics and distribution, as Levi’s is doing, buys resilience but dilutes the margin benefit in the short run; Levi’s own guidance shows the trade-off in basis points. Offsetting input costs, the McCormick and Kimberly-Clark approach, protects pricing and margins. Lowering prices, the e.l.f. approach, trades margin for volume. A written rule, for example a fixed split between cost recovery, resilience spend and price, avoids ad hoc decisions and gives auditors and boards a clear record. Accounting treatment varies by company and jurisdiction, so involve your controller early.

4. Re-quote lanes ahead of the frontloading wave

If Los Angeles volume stays elevated through the first quarter, expect congestion, higher spot rates and tighter drayage and warehouse capacity in Southern California. Procurement can act now by locking in capacity commitments on key Asia-US West Coast lanes, comparing total landed cost, not just ocean freight, for canal routes and West Coast routes with rail or truck onward, and building buffer stock for fast-moving items before the January 10 truce deadline. Remember that the Panama Canal’s slot count has already moved twice in two months, from nine to ten, so assumptions made in August may be stale.

5. Put fuel clauses and surcharges on the table

With vessel fuel prices doubling over eight months, carriers will keep passing cost through. Review bunker adjustment factors, surcharge triggers and notice periods in logistics contracts. Where possible, index surcharges to a published benchmark with caps and symmetrical downward adjustments. Ask suppliers to separate freight from product price so you can see which part of an increase is genuinely logistics.

Risks and open questions

• Refund certainty. Levi’s and others have received money, but not every importer has. Process and timing can differ by claimant and by entry, and legal positions may still change. Do not book a refund you have not received without advice from finance and counsel.
• Weather. El Niño is expected to peak between October and December. Canal slot counts could be cut again if rainfall falls, which would send more volume to the West Coast.
• Geopolitical cost. Fuel prices tied to the Iran war may move quickly in either direction, and surcharges tend to rise faster than they fall.
• Trade policy. The US-China truce lifting on January 10 introduces another deadline. A change in tariff levels could reward early shipping, or create new refund claims later.

A simple 30-day action plan

1. Week 1: Pull a list of all customs entries since the start of 2025. Identify the importer of record and duties paid for each.
2. Week 2: Agree an internal policy with finance and legal on refund allocation. Draft supplier and customer communications for the case where refunds arrive.
3. Week 3: Request updated quotes for Asia-US lanes covering the January and February period. Include a canal-routed option and a West Coast option, with sensitivity to fuel.
4. Week 4: Decide on safety stock for seasonal first-quarter products and commit capacity where the economics work. Set a review date after the canal’s next advisory.

Bottom line

Procurement is being asked to act as treasury, risk manager and logistics planner at once. The companies in this month’s coverage show that a tariff refund is not just a one-time gain; it is a choice about resilience, price and margin. The Panama Canal story shows that routes assumed stable can change within a quarter. The teams that come out ahead will have clean customs data, written rules for how to use windfalls, and contracts that let them respond to a fuel or canal shock without renegotiating from scratch.

Sources

• Supply Chain Dive, “Levi’s to use part of $80M tariff refund for supply chain” (October 2026)
• Supply Chain Dive, “Panama Canal challenges drive shippers to Port of Los Angeles” (October 2026), citing MarineTraffic and Port of Los Angeles briefing
• Google Trends, US trending searches, October 14, 2026

This article is general information, not legal, customs or accounting advice.