Department of War Releases the President's Fiscal Year 2027 Budget

On April 21, 2026, the Department of War released the President's Fiscal Year 2027 Budget.

See: Dept. of War Press Release.

Country of origin determination for duvet covers, pillow shams and quilts; 19 CFR 102.21(c)(2); tariff shift; 19 CFR 102.21(c)(4); most important assembly or manufacturing process

On April 2, 2026, U.S. Customs and Border Protection issued Binding Ruling Letter N359713 relating to country of origin of duvet cvers, pillow shams.

Bangladesh

• Polyester and cotton fibers are spun into yarns.
• All outer facing/shell fabrics, binding fabric and double slub fabric are woven.
• All griege woven fabric are exported to India.

India

• Sewing thread, zippers, cotton nonwoven batting and polyester nonwoven batting are formed.
• Fabrics are subject to cleaning, bleaching, dyeing, rinsing, drying, heat steaming, shaping, pre-shrinking and final inspection.
• Fabrics are cut and assembled by sewing into duvet covers, pillows shams, and quilts.
• Quilts are quilted.
• Finished items are inspected, packaged, labeled and exported to the United States.

The country of origin of the duvet covers is Bangladesh in accordance with 19 CFR 102.21 (c)(2) and 19 CFR 102.21 (e)(1). The country of origin of the pillow shams is Bangladesh in accordance with 19 CFR 102.21 (c)(2) and 19 CFR 102.21 (e)(2)(ii). The country of origin of the quilts is Bangladesh in accordance with 19 CFR 102.21 (c)(4).

Fiscal Year 2027 Budget Estimates Defense Logistics Agency

April 2026

The FY 2027 request for Defense Logistics Agency, O&M includes $585,610 thousand of discretionary and $143,000 thousand of mandatory for a total of $728,610 thousand.

The 2027 mandatory funds add necessary resources to reduce material readiness gaps as critical set by expanding the Warstopper program to increase industrial readiness and buy down manufacturing lead times. (U) The Warstopper Program implements industrial preparedness measures and preserves critical industrial capabilities to support the Department’s readiness requirements and meets requirements of the Defense Production Act of 1950, Section 103 of Executive Order 13603, and the NDAA 1992-1993 Conference Report requirements directing DLA to maintain industrial readiness for critical “War stopper” items. The program seeks to obtain industrial capability for go-to-war material where industry does not have a business case to provide for DoW readiness levels. These industrial readiness measures are applied to vulnerable industrial base items within the DLA supply chains such as FIRE-RESISTANT COMBAT UNIFORMS, Body Armor, Combat Helmets, nerve agent antidote auto-injectors, meals-ready-to eat, airfield damage repair (ADR), aging aircraft spares, specialty fuels, the nuclear enterprise, and specialty metals.

Peacetime demand for these items is inadequate to sustain an industrial base sufficient to meet mobilization requirements or item characteristics are such that procuring end items is not feasible. The Program identifies industrial base vulnerabilities through in-depth risk analysis and implements risk response strategies to sustain a healthy and robust supplier base furthering Global Resiliency. A modified Lean Six Sigma approach is used to study, analyze, and recommend the rough order of magnitude to mitigate the identified risks.

Read the Fiscal Year 2027 Budget Estimates HERE.

Physical Fitness Gear Contract Awarded

Karlas and Emmas Knits LLC,* Brooklyn, New York, has been awarded a maximum $763,082,470 fixed-price, indefinite-delivery/indefinite-quantity contract for physical fitness gear. This was a competitive acquisition with five responses received. This is a five-year base contract with one five-year option period. Other contracts are expected to be awarded under this solicitation (SPE1C1-25-R-0130) and awardees will compete for a portion of the maximum dollar value. The ordering period end date is April 21, 2031. Using customers are Army, Navy, Air Force, Marine Corps, Space Force, and Coast Guard. Type of appropriation is fiscal 2026 through 2031 defense working capital funds. The contracting activity is Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE1C1-26-D-0035).

*Small business

Physical Fitness Shirt Contract Awarded

Karlas & Emmas Knits LLC,** Brooklyn, New York, has been awarded a maximum $21,070,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for various types of physical fitness shirts. This was a competitive acquisition with 12 responses received. This is a four-year contract with no option periods. The ordering period end date is April 20, 2030. Using military services are Air Force and Space Force. Type of appropriation is fiscal 2026 through 2030 defense working capital funds. The contracting activity is Defense Logistics Agency Troop Support, Philadelphia, Pennsylvan

**Women-owned small business

BACKGROUND to IEEPA Tariffs and Sec. 122 Tariffs

On February 20, 2026, the Supreme Court held that the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs. Later that same day, President Trump announced that he was imposing a temporary 10% surcharge on imports using Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132). This is the first time a President has used Section 122.

Section 122 authorizes the President to impose temporary import duties or surcharges "[w]henever fundamental international payments problems require special import measures to restrict imports (1) to deal with large and serious United States balance-of-payments deficits, (2) to prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or (3) to cooperate with other countries in correcting an international balance-of-payments disequilibrium." President Trump's actions have raised questions about the meaning of the term "balance-of-payments deficits" as it is used in Section 122.

Extending the Tariffs. Section 122 authorizes a surcharge for up to 150 days "unless such period is extended by Act of Congress." Congress could consider legislation to extend (or terminate) the surcharge proclaimed by President Trump, although Section 122 does not provide expedited procedures for considering such legislation.

Amending Section 122. If Congress approves or disapproves of Section 122 duties and does not wish to wait for or defer to courts' interpretations of the statute, it could either amend Section 122 or pursue nonbinding measures (such as a simple resolution) to express whether it thinks Section 122's conditions for tariffs are currently satisfied.

See: Proclamation 11012 of February 20, 2026

See: Section 122 of the Trade Act of 1974.

See: CRS Report IF13199.

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On February 20, 2026, the U.S. Supreme Court issued its decision in Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., two appeals concerning tariffs President Trump had imposed under the International Emergency Economic Powers Act (IEEPA). In an opinion authored by Chief Justice Roberts, the Court held that IEEPA does not give the President authority to impose tariffs.

See: CRS Report LSB11398.

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On April 2, 2025, President Trump declared a separate emergency concerning "a lack of reciprocity in our bilateral trade relationships . . . as indicated by large and persistent annual U.S. goods trade deficits." Based on this declaration, President Trump invoked IEEPA to announce tariffs of at least 10% on imports from almost all U.S. trading partners and higher, country-specific "reciprocal tariffs" for many countries (collectively, the worldwide tariffs). President Trump subsequently modified the trafficking tariffs and the worldwide tariffs several times. The President also cited IEEPA when imposing tariffs on imports from Brazil, India, and various other imports based on emergency declarations.

See: Executive Order 14257 of April 2, 2025 Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits

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On February 1, 2025, President Donald Trump invoked IEEPA to announce tariffs on imports from Canada, Mexico, and the PRC, declaring emergencies largely concerning illicit drugs (the trafficking tariffs).

Executive Order 14193 imposed additional tariff of 25% on products of Canada, effective February 4, 2025.

See: Executive Order 14193 of February 1, 2025 Imposing Duties To Address the Flow of Illicit Drugs Across Our Northern Border.

Executive Order 14194 imposed additional tariff of 25% on products of Mexico, effective February 4, 2025.

See: Executive Order 14194 of February 1, 2025 Imposing Duties To Address the Situation at Our Southern Border

Executive Order 14195 imposed additional tariff of 10% on products PRC, effective February 4, 2025.

See: Executive Order 14195 of February 1, 2025 Imposing Duties To Address the Synthetic Opioid Supply Chain in the People’s Republic of China

AVAILABLE NOW – Processing of IEEPA Refunds IMPORTANT

April 20, 2026, CSMS # 68396594 - AVAILABLE NOW – Consolidated Administration and Processing of Entries (CAPE) for IEEPA Refunds.

See: International Emergency Economic Powers Act (IEEPA) Duty Refunds.

On April 20, 2026, U.S. Customs and Border Protection (CBP) launched the first phase of the Consolidated Administration and Processing of Entries (CAPE) tool in the Automated Commercial Environment Secure Data Portal (ACE Portal). CAPE will simplify International Emergency Economic Powers Act (IEEPA) duty refund requests made pursuant to court order and in accordance with appropriate statutory authority by providing an electronic pathway to submit valid IEEPA duty refund claims.

CAPE is designed to consolidate refunds of IEEPA duties including interest rather than processing refunds on an entry-by-entry basis. CBP plans to implement CAPE through a phased development approach, adding more functionality in subsequent phases for more complicated scenarios. CAPE Phase 1 is limited to certain unliquidated entries and certain entries within 80 days of liquidation.

NOTE: Per CBP’s practice, liquidation typically occurs automatically 314 days after entry.

See: CRS Report IF13150.