Section 122 Tariff Explained (2026): The 15% Surcharge That Replaced IEEPA

What is the Section 122 tariff?

Section 122 of the Trade Act of 1974 is a rarely-used statute that lets the President impose a temporary import surcharge of up to 15% ad valorem on imports for up to 150 days. The statute requires a finding that the United States faces "large and serious balance-of-payments deficits" or similar fundamental international payments problems.

It sat unused for decades. In February 2026, the Trump administration invoked Section 122 within hours of the Supreme Court striking down the President's IEEPA-based tariff authority — using Section 122 as a stopgap replacement for the revenue from the invalidated tariffs.

How we got here: SCOTUS strikes down IEEPA tariffs

On 20 February 2026, the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc. that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. Chief Justice John G. Roberts Jr. authored the majority opinion. The decision invalidated:

• The "Reciprocal Tariffs" imposed in April 2025 on "Liberation Day"
• The "Trafficking and Immigration Tariffs" relating to fentanyl

Penn-Wharton Budget Model estimates that IEEPA-based tariff collections totalled approximately $175-179 billion before the ruling. Within hours, President Trump issued an executive order terminating all IEEPA-based tariffs (CBP halted collection at 12:00 am ET on 24 February 2026) and signed Proclamation 11012 under Section 122 authority, imposing an initial 10% global tariff surcharge.

The amendment to 15%

On 22 February 2026, the President amended Proclamation 11012 to raise the Section 122 surcharge rate from 10% to 15% — the statutory maximum allowed under the Trade Act. The 15% rate became effective 24 February 2026, the same day CBP halted IEEPA collection.

Who pays it?

All importers bringing goods into the United States pay the 15% Section 122 surcharge at customs clearance, unless their HTSUS code falls within one of the Annex II exemption categories (CBP collects exempted entries under HTSUS subheadings 9903.03.02 through 9903.03.11). Importers must reference the proclamation's Annex II directly to confirm whether their specific code is included.

Practically, the surcharge is passed through to US consumers via higher landed costs — visible on platforms like Temu, Shein, AliExpress, and traditional importer-distributor channels.

Legal challenges: CIT ruling and Federal Circuit stay

On 7 May 2026, the US Court of International Trade (CIT) held in a divided 2-1 decision that the Section 122 surcharge exceeded the President's statutory authority. The court concluded that the statutory conditions required to invoke Section 122 (a fundamental international payments problem) were not satisfied.

Critical limitation: the resulting permanent injunction applies only to the three plaintiffs — Burlap & Barrel, Inc., Basic Fun, Inc., and the State of Washington. For everyone else, the 15% surcharge continues to be collected.

On 12 May 2026, the Federal Circuit Court of Appeals issued an administrative stay of the CIT ruling pending the government's appeal. On 20 May 2026, the CIT separately denied the government's stay motion — but the Federal Circuit's administrative stay remains in force.

When does it end?

Section 122 authority is statutorily capped at 150 days from the effective date. From 24 February 2026, that puts the expiration at approximately 24 July 2026.

Important: only Congress can extend the surcharge beyond 150 days — the statute does not delegate unilateral extension authority to the President. So unless Congress acts (or a court strikes down the surcharge entirely first), 15% applies through late July 2026, then ends automatically.

What to do if you're importing

• Re-cost any active or upcoming orders — the 15% surcharge applies to entries cleared after 24 February 2026 and adds materially to your landed cost.
• Check your HTSUS code against Annex II — if exempted (collected under 9903.03.02 through 9903.03.11), the surcharge does not apply to you.
• Plan post-24-July pricing — if you can defer non-urgent shipments until after the expiration, you may save 15% on landed cost. But timing risk is real (Congress could extend, or the appeals process could change the picture).
• Stay aware of court developments — the Federal Circuit appeal could reshape collection rules at any point.
• Talk to a licensed customs broker — they have current CBP CSMS guidance and can confirm exact treatment of your goods.

The bigger picture

The Section 122 surcharge is a stopgap. The Supreme Court closed off IEEPA as a tariff authority on 20 February 2026; Section 122 is the most powerful remaining tool the President can use unilaterally — but it's capped at 15% and 150 days. After 24 July 2026, the administration will need either congressional action (a real tariff bill) or another statutory hook (Section 232 expansions, Section 301 reconfiguration, Section 338, etc.) to maintain similar revenue.

For importers, the practical reality through late July 2026 is: 15% Section 122 on top of everything else. After July, the picture is genuinely uncertain and will depend on Congress, the Federal Circuit appeal, and the administration's next move.

For the most current verification of rates and dates as they evolve, see our marketplace fee & US trade policy change log, which we update whenever new official guidance is published.