In a decision handed down on Friday, the Supreme Court of the United States ruled against the use of the International Emergency Economic Powers Act (IEEPA) to impose the previously enacted reciprocal and fentanyl-related tariffs.
The immediate result of this decision is the simultaneous cessation of IEEPA tariff collections and implementation of a new tariff framework established under Section 122 of the Trade Act of 1974. This mechanism, authorized by Presidential Proclamation, is intended to "address fundamental international payment problems."
The shift from the IEEPA framework to Section 122 introduces the following changes:
- Duties imposed pursuant to IEEPA, commonly referred to as the fentanyl and reciprocal tariffs, will no longer be in effect and will no longer be collected for goods entered for consumption, or withdrawn from warehouse for consumption, on or after on February 24, 2026.
- A new 10% temporary import surcharge (Section 122) will be applied to a wide range of goods imported into the United States from all countries, effective for all eligible articles entered for consumption, or withdrawn from warehouse for consumption, February 24, 2026 and after.
- Articles the product of any country that were in transit on the final mode of transport prior to entry into the United States, before February 24, 2026 and are entered for consumption, or withdrawn from warehouse for consumption, before February 28, 2026 will be exempt from the Section 122 tariff.
- Textile and apparel articles, as defined in subdivision (d)(v) of general note 29 of the HTSUS, that are entered free of duty as a good of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua under the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) shall be exempt from the Section 122 tariff.
The new Section 122 tariff of 10% is expected to be raised to 15% soon, according to a social media post from over the weekend, but the official guidance has not been issued yet.
The question of potential refunds for previously paid IEEPA tariffs is currently unanswered. The Supreme Court's decision did not address this possibility, and there is no current guidance on what mechanisms might be established for any potential refunds, if any. We recognize this is the primary concern for many and assure you we will communicate any new information immediately upon its availability.
Beyond the changes mentioned above, much of the scope and applicability of the Section 122 tariff remains identical to the previous schedule under IEEPA:
- All other tariffs remain unchanged and in effect. This includes, but is not limited to, Section 301, Section 232, and ADD/CVD.
- Products eligible under USMCA are exempt from Section 122 tariffs.
- Previous reciprocal tariff exemptions are still effective now, under Section 122 exemptions, as outlined in Annex 1 and Annex II to the Section 122 Presidential Proclamation.
- Goods subject to Section 232 will be exempt from Section 122, in the same manner that goods subject to Section 232 were previously exempt from reciprocal tariffs.
- For Section 232 goods declaring a partial value, the metal portion will be subject to Section 232 and exempt from Section 122. The non-metal portion will be exempt from Section 232 and subject to Section 122.
- The suspension of de minimis entry treatment remains in effect for all countries.
The introduction of the Section 122 temporary import surcharge mandates immediate attention from importers, supply chain managers, and customs brokers to ensure compliance with the new rules, particularly regarding in-transit cargo and the complex interplay with other existing tariff regimes.
Links:
Continued De Minimis Entry Suspension For All Countries
Fact Sheet: Temporary Import Duty Under Section 122
Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems
Annex I - Section 122 Applicability
Annex II - Exemptions To Section 122
