Section 122 Tariff Pivot: How the 10% Global Surcharge Is Replacing IEEPA Tariffs and Reshaping Import Strategy in 2026

On the morning of February 20, 2026, the U.S. Supreme Court delivered one of the most consequential trade rulings in decades. In Learning Resources, Inc. v. Trump, a 6-3 majority held that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. The taxing power, Chief Justice John Roberts wrote, belongs to Congress. Tariffs are taxes. IEEPA does not clearly grant the authority to levy them.

By that afternoon, the IEEPA tariffs were dead. By that evening, a new 10% global import surcharge under Section 122 of the Trade Act of 1974 was signed into effect. The old patchwork of country-specific rates—some as high as 145% on Chinese imports—was replaced overnight by a single, uniform levy on nearly all goods entering the United States.

For importers, the legal earthquake didn't simplify anything. It just changed the shape of the problem.

What Section 122 of the Trade Act of 1974 Actually Authorizes

Section 122 is a narrow and rarely invoked statute. It empowers the President to impose a temporary import surcharge of up to 15% ad valorem for a maximum of 150 days to address what the statute calls "fundamental international payments problems," including large and serious balance-of-payments deficits.

Unlike IEEPA—which the administration had used as a sweeping authority to impose tariffs of varying rates on virtually every trading partner—Section 122 comes with hard limits. The rate cannot exceed 15%. The duration cannot exceed 150 days without an act of Congress. And the justification must be rooted in international payments imbalances, not national security emergencies.

The White House fact sheet framed the surcharge as a response to the growing U.S. balance-of-payments deficit. The initial proclamation set the rate at 10%, effective February 24. By the following day, the President announced an increase to 15%—the statutory maximum—though at the time of writing, official documentation adjusting the proclamation has been inconsistent.

How the SCOTUS Ruling Forced the Pivot

The Court's reasoning was grounded in the major questions doctrine: Congress does not delegate "highly consequential power" through ambiguous statutory language, particularly when that power involves the core congressional function of taxation. The word "regulate" in IEEPA, the majority concluded, does not encompass the power to impose tariffs.

The decision invalidated the "Liberation Day" reciprocal tariffs, the fentanyl-related duties on Canadian and Mexican goods, and the baseline 10% tariff on all imports that had been in effect through most of 2025 and into 2026. According to FreightWaves, U.S. Customs and Border Protection had collected approximately $133.5 billion in IEEPA tariff revenue as of mid-December 2025, with the Penn Wharton Budget Model projecting total collections through the ruling date at $160 billion to $175 billion.

That money is now at the center of a refund battle involving nearly 2,000 importers who filed lawsuits in the U.S. Court of International Trade before the ruling landed. TD Securities estimates the refund process will take 12 to 18 months. Trade attorneys warn it could take longer.

The 150-Day Bridge Period: Uncertainty Versus Planning Opportunity

The Section 122 surcharge took effect at 12:01 a.m. ET on February 24, 2026. The 150-day clock expires on July 24, 2026—roughly four months before the midterm elections. As Jason Miller, associate professor of supply chain management at Michigan State University, told FreightWaves, there is virtually no chance Congress will vote to extend it.

That creates a paradoxical planning window. On one hand, importers now have something they haven't had since April 2025: a predictable, uniform tariff rate with a defined expiration date. On the other hand, the administration has already signaled its intent to use the 150-day window to launch new Section 301 and Section 232 investigations, meaning the post-July landscape could be just as volatile as what came before.

As Larry Gross, president of Gross Transportation Consulting, observed, the President will no longer have "unfettered ability to slap tariffs on any country for any reason." All remaining options involve review, procedures, and statutory limitations. The day-to-day volatility should decrease—but the strategic uncertainty extends well beyond July.

Old Patchwork Versus Uniform Surcharge: What Changed

The shift from IEEPA tariffs to Section 122 fundamentally altered the duty landscape. Under the IEEPA regime, importers navigated a maze of country-specific rates: 145% on many Chinese goods, 25% on Canadian and Mexican products linked to fentanyl enforcement, and a baseline 10% on everything else—with hundreds of product-specific exemptions that changed frequently.

The Section 122 surcharge replaces all of that with a single 10% rate (potentially 15% pending formal documentation) applied globally, but with significant carve-outs:

• USMCA-compliant goods from Canada and Mexico are exempt
• Section 232 tariffs on steel, aluminum, heavy trucks, auto parts, and copper remain in force—and do not stack with the new surcharge
• Critical minerals, pharmaceuticals, passenger vehicles, aerospace parts, and certain electronics are exempted
• CAFTA-DR textiles and apparel entering duty-free are excluded
• De minimis duty-free treatment remains suspended

For many importers, particularly those sourcing from non-China origins, the effective duty rate actually dropped significantly. A company importing consumer goods from Vietnam that previously faced a 46% reciprocal tariff now pays 10%. A company importing from the EU that faced 20% now pays 10%. The simplification is real—even if it's temporary.

Importer Strategies for the 150-Day Window

Smart importers are already treating the 150-day window as a strategic opportunity, not just a waiting period. Several approaches are emerging:

Accelerated purchasing and inventory building. With a known, lower tariff rate and a defined end date, some importers are pulling forward orders to lock in the 10% rate before potential Section 301 or 232 actions take effect later in the year. However, Paul Bingham, Director of Transportation Consulting at S&P Global Market Intelligence, cautioned that the massive front-loading that defined 2025 has largely run its course, and 2026 imports are forecast to be weaker overall.

Bonded warehouse and foreign trade zone optimization. The new surcharge applies to goods "entered or withdrawn from warehouse for consumption" on or after February 24. Importers with goods in bonded warehouses or FTZs scrambled over the weekend of February 22-23 to withdraw inventory before the Monday deadline. Going forward, strategic use of FTZs allows importers to defer duty payment and preserve flexibility if rates change again after July 24.

IEEPA refund claim preservation. Companies that paid IEEPA duties between April 2025 and February 2026 should be working with trade counsel to preserve refund rights. The Court of International Trade will determine the refund process, but importers who didn't file protective lawsuits before the ruling may face difficulty. More than 1,500 companies—including Costco, Revlon, and Kawasaki—had already filed suits before the decision.

Origin diversification and USMCA qualification. With USMCA-compliant goods exempt from the surcharge entirely, companies are accelerating nearshoring efforts and reviewing whether existing Mexico or Canada sourcing qualifies for the agreement's rules of origin.

How CXTMS Customs Automation Adapts to the New Tariff Regime

The whiplash from IEEPA to Section 122 exposed a fundamental weakness in manual trade compliance workflows. Companies relying on spreadsheets and email chains to track duty rates, exemptions, and filing deadlines found themselves scrambling over a single weekend to recalculate costs across their entire import portfolio.

CXTMS was built for exactly this kind of regulatory volatility. The platform's customs automation engine updates tariff schedules in real time, automatically applies exemptions based on product classification and country of origin, and flags entries that qualify for USMCA or CAFTA-DR preferential treatment. When the duty landscape shifts overnight—as it did on February 24—CXTMS recalculates landed costs across every open shipment without manual intervention.

For importers navigating the 150-day window and preparing for whatever comes after July 24, having automated trade compliance isn't a luxury. It's the difference between reacting to tariff changes and anticipating them.

Ready to see how CXTMS handles tariff volatility in real time? Request a demo today and stress-test your import strategy before the 150-day clock runs out.