Section 122 Tariff 2026: What Importers Should Do Before July 24

Published: May 24, 2026

The Section 122 tariff — the 10% global surcharge the Trump administration imposed in February 2026, later announced at 15%, after the Supreme Court struck down IEEPA authority — has been ruled unlawful by a federal trade court. An appeals court froze that ruling days later. Duties are still being collected. The tariff expires on July 24, 2026.

That two-month window is the operative window for every U.S. importer. Refunds are not automatic. The right to recover what you've paid is not guaranteed — but it is preservable, if you act before the window closes.

This article explains what the rulings mean, who is affected, and exactly what to do before July 24.

What Is the Section 122 Tariff?

Section 122 of the Trade Act of 1974 is a rarely used statute that authorizes the president to impose temporary import surcharges of up to 15% for up to 150 days when the United States is experiencing "fundamental international payments problems." No president had invoked it since it was enacted — until February 2026.

On February 20, 2026, the U.S. Supreme Court struck down the Trump administration's tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in Learning Resources, Inc. v. Trump. Within hours, President Trump signed Presidential Proclamation 11012, invoking Section 122 to impose a 10% surcharge on virtually all imports from virtually all countries, effective February 24, 2026. On February 22 — before the tariff took effect — the president announced via social media his intention to raise the rate to 15%, the statutory maximum. The formal Federal Register notice (2026-03824, February 25, 2026) references 10% creating a legal ambiguity that remains unresolved; court proceedings have largely addressed the tariff as the "10% Section 122 surcharge."

For a full breakdown of how this tariff fits into the broader U.S. tariff landscape that emerged after the IEEPA decision, see our earlier analysis here.

Key details of the Section 122 surcharge:

• HTSUS subheading: 9903.03.01 (this code appears on every entry subject to the surcharge — essential for tracking refund eligibility)

• Effective date: February 24, 2026, 12:01 AM EST

• Statutory expiry: July 24, 2026 (150 days from effective date)

• Extension: Requires an act of Congress — the president cannot extend Section 122 unilaterally

  
  

What is exempt from Section 122:

• USMCA-qualifying goods from Canada and Mexico → exempt (zero rate)

• Section 232-covered goods (steel, aluminum, most automobiles) → generally not stacked with Section 122

• Critical minerals, pharmaceuticals, certain agricultural products and energy goods → exempt under Annex II of the proclamation

• Goods that were already loaded onto a vessel before February 24 and entered before February 28 → transitional exemption

  
  

How it stacks with other tariffs: For most imports, Section 122 is an additional layer on top of existing MFN duties. For Chinese-origin goods, the combined exposure is significant: Section 301 (25%) + Section 122 (10–15%) puts the effective rate on many products above 35%. Section 232-covered goods from any origin are generally excluded from Section 122 stacking, but finished goods that contain Section 232 inputs without being Section 232 products themselves may still be subject to the surcharge.

CIT Ruling, May 7, 2026: The Tariff Is Unlawful — But Only for Three Plaintiffs

On May 7, 2026, the U.S. Court of International Trade issued a divided 2–1 decision holding that the 10% global surcharge imposed under Section 122 exceeds the president's statutory authority.

The legal question was narrow but consequential: what counts as proof of a balance-of-payments deficit? Section 122 requires a "large and serious" balance-of-payments deficit, but the statute never defines the term. The two-judge majority referenced the legislative record from 1974, finding that Congress had specific metrics in mind — liquidity balance, official settlements balance, and basic balance. The Trump administration's proclamation pointed instead to trade deficits and current account shortfalls. The majority found those measures too broad to satisfy the statute.

At oral argument in April, the government acknowledged that liquidity and basic balance are no longer considered relevant economic measures today — an admission the majority found significant.

The dissenting judge argued the majority resolved the case on grounds neither plaintiff had raised without providing proper notice for briefing, and that the question of what "balance-of-payments" means in 1974 statutory language is more open than the majority allowed.

Who received relief: The permanent injunction covers only the three plaintiffs who demonstrated standing as direct importers — Burlap & Barrel (a New York spice importer), Basic Fun (a Florida toy company), and the State of Washington (through the University of Washington, which imports directly through a customs broker). The remaining 23 state plaintiffs were dismissed for lack of standing: their alleged harm came from tariff costs passed through by third-party importers, which the court found insufficient.

No nationwide relief was granted. Every other importer in the United States continues to pay the surcharge.

The Federal Circuit Stay and What Happened Next

The Trump administration appealed immediately. On May 12, 2026, the U.S. Court of Appeals for the Federal Circuit issued an administrative stay — pausing the CIT's permanent injunction while it considers the government's motion for a longer stay pending the full appeal. The Federal Circuit also consolidated the companion cases into a single appeal and set an expedited briefing schedule.

On May 20, 2026 — a development that postdates most published coverage of this issue — the CIT denied the government's separate motion to stay enforcement of its own judgment pending appeal. Nevertheless, the Federal Circuit's administrative stay remains in place and takes precedence.

What this means today: Despite a federal court ruling that the tariff is unlawful, Section 122 duties continue to be collected from all importers. CBP has no obligation to pause collection while the appeal proceeds. A court ruling against a tariff does not automatically translate into operational or financial relief — as importers who followed the IEEPA litigation learned in 2025.

Will the Ruling Hold on Appeal?

The outcome is genuinely uncertain, and the arguments on both sides are serious.

Factors that could favor the CIT majority: The Supreme Court's February IEEPA decision established a clear principle — presidential tariff authority requires explicit congressional authorization, and the president must meet the statutory conditions on the statute's own terms. The CIT majority applied that same logic directly to Section 122. The government's admission at oral argument that the metrics Congress had in mind in 1974 are no longer economically relevant cuts against the government's position.

Factors that could favor the government: The dissent's procedural argument — that the majority resolved the case on grounds not raised by the parties — is a legitimate appellate issue. The government may also argue that courts should defer to executive branch determinations on economic conditions, particularly in foreign affairs and trade contexts.

Timing: The Section 122 tariff is set to expire on July 24, 2026. This statutory sunset may reduce the urgency of expedited review at the Federal Circuit level, and could make the Supreme Court less likely to take the case before expiry. However, a final ruling on the scope of Section 122 authority would affect any future attempt to invoke the statute — making the precedential value high regardless of when a final decision arrives.

Section 122 Tariff Refunds: Who Qualifies and What the Process Looks Like

If the CIT's ruling is ultimately upheld on appeal, the path to refunds will be narrow and will require action that importers need to take now — not after the Federal Circuit decides.

Who is automatically entitled to refunds today: Only the three named plaintiffs. No other importer has a standing court order entitling them to a refund.

What happens to everyone else: Drawing from CBP's posture during the IEEPA refund process, the government is likely to resist refunding entries that have already been liquidated beyond the 90-day reliquidation window. CBP may also take the position that only importers who have filed their own legal challenges are entitled to refunds — a position consistent with the CIT's emphasis on individual standing requirements.

The liquidation window is critical. Once an entry liquidates and the protest period closes, the ability to recover those duties narrows significantly. Knowing which of your entries are still unliquidated is the single most important data point for assessing your refund exposure.

Refund infrastructure: If the ruling is upheld, refunds would likely flow through CBP's existing system — potentially the CAPE system already used for IEEPA duty refunds. The mechanics would be similar: entries identified, liquidation status verified, refund claims processed. But access to that system will likely require that importers have taken prior action to preserve their claims.

What Importers Should Do Before July 24: A Step-by-Step Checklist

The window between now and July 24 is the operative window. These are the steps that matter:

1. Calculate Your Section 122 Tariff 2026 Exposure

Total the surcharge paid on all entries since February 24, 2026. Use HTSUS 9903.03.01 as the identifier in your entry data. For most importers moving volume through the U.S., three months of a 10–15% surcharge on dutiable imports represents a material number — larger than it may appear before you run the calculation.

2. Verify Which of Your Products Are Actually Subject to the Surcharge

Check your HTS subheadings against the Annex II exemption list. USMCA-qualifying goods, Section 232-covered products, and the Annex II categories (critical minerals, pharmaceuticals, energy, certain agriculture) may not be subject to Section 122. If you've been paying when you shouldn't have, that is recoverable regardless of how the litigation resolves.

3. Track Your Entry Liquidation Dates

Pull your open entry list and identify which entries are still within the unliquidated window. These are your most recoverable entries. Entries that have liquidated and passed the protest period are significantly harder to recover — this is the same pattern that defined the IEEPA refund process.

4. Evaluate Your Litigation Options

The CIT's standing analysis makes the implication clear: importers who want the right to stop paying and recover what they've paid need to be parties to the litigation — or file their own challenge. Discuss with trade counsel whether filing a case or joining an existing action is viable given your volume and exposure. For any importer with meaningful import volume since February, the calculation is worth running before July 24.

5. Monitor the July 24 Expiration and Any Replacement Action

The Section 122 tariff expires on July 24 unless Congress acts to extend it — the president cannot extend it unilaterally. However, the administration has signaled that Section 301 investigations initiated in February will produce country-specific tariff actions later this year. For importers from Vietnam, Thailand, Cambodia, India, and the EU, replacement Section 301 rates could exceed the current flat Section 122 rate significantly. Plan for a scenario where July 24 brings relief on Section 122 but introduces new exposure elsewhere.

6. Separate Section 122 from Your Other Active Tariff Exposures

Section 301 (China-specific, up to 25%+), Section 232 (steel, aluminum, automobiles), and any successor actions are distinct legal instruments. The Section 122 litigation does not affect them. Your total duty burden after July 24 will depend on how those measures evolve — independent of how the Federal Circuit rules on Section 122 itself.

The Bottom Line

A federal court has ruled that the Section 122 tariff is unlawful. An appeals court has paused that ruling. Duties continue to be collected while the appeal proceeds — and the tariff expires in two months regardless.

Importers are in a holding pattern: paying a surcharge on a measure a court has deemed invalid, while the legal process runs its course on a timeline that may outlast the tariff itself. That is an uncomfortable position, but it is a manageable one — if you act on the information available now rather than waiting for certainty that may not arrive before July 24.

The entries you have made between February 24 and the expiration date are the ones at stake. The documentation you maintain, the liquidation windows you track, and the legal steps you take in the coming weeks will determine whether you can recover any of those costs.

Tracking Section 122 exposure across your shipments, managing overlapping tariff obligations, or trying to understand how the July 24 expiration affects your supply chain costs? Get in touch with the Movargo team — we monitor duty landscapes, coordinate customs documentation, and help importers understand where their real exposure sits.