The Trump administration's IEEPA-based "reciprocal tariffs" — which imposed country-specific import duties ranging from 10% to 145% — were struck down by the US Court of International Trade in early February 2026. The Supreme Court affirmed that ruling on February 20, 2026, finding that the administration's use of the International Emergency Economic Powers Act exceeded the statute's authority to impose sweeping import tariffs.
Section 122 of the Trade Act of 1974 (19 U.S.C. §2132) grants the President authority to impose a temporary import surcharge when the US faces a "fundamental imbalance" in its balance of international payments. It is a distinct, congressionally authorized power — not an emergency declaration — which is why it survived the legal challenge that invalidated IEEPA tariffs.
| Feature | IEEPA Tariffs (struck down) | Section 122 (current) |
|---|---|---|
| Legal basis | International Emergency Economic Powers Act | Trade Act of 1974, §122 |
| Structure | Country-specific rates (10–145%) | Flat 15% across most countries |
| Duration | Indefinite (at presidential discretion) | Max 150 days (~Jul 24, 2026) |
| Legal status | Struck down by SCOTUS Feb 20, 2026 | Active and legally valid |
| Canada / Mexico | 10% (with USMCA exception) | EXEMPT (USMCA) |
| China rate | 145% | Section 301 still applies + 15% Section 122 on top |
Section 122 is an explicit, congressionally delegated power specifically for balance-of-payments situations. The Supreme Court ruling targeted IEEPA's use as a broad tariff authority — not the Trade Act's targeted provisions. Section 122's 150-day cap and statutory trigger requirements make it constitutionally distinguishable from IEEPA's open-ended emergency powers.
Not all imports are subject to the Section 122 surcharge. The White House proclamation carves out several categories:
The Annex II exemption list is published in the Federal Register as part of the February 20, 2026 White House proclamation. If your product code appears in Annex II, it is exempt from the 15% Section 122 surcharge even if it is not otherwise covered by Section 232 or USMCA. Verify against the official CBP guidance at cbp.gov/trade/programs-administration/trade-remedies.
One of the most important compliance questions is how Section 122 interacts with existing duty programs — Section 301, Section 232, and trade agreements. Here are the definitive stacking rules:
| Combination | Stack? | Notes |
|---|---|---|
| Section 122 + Section 301 (China) | YES — stacks | Both apply. China goods now face MFN + Section 301 + 15% Section 122. |
| Section 122 + Section 232 (Steel/Aluminum) | NO — does not stack | Section 232 goods are exempt from Section 122. Only Section 232 rate applies. |
| Section 122 + Section 201 (Safeguard) | Partial | Depends on specific product and proclamation — verify against Annex II. |
| Section 122 + USMCA (Canada/Mexico) | NO — exempt | USMCA-qualifying goods from Canada and Mexico are fully exempt from Section 122. |
| Section 122 + Antidumping / CVD | YES — stacks | Section 122 applies in addition to any existing AD/CVD orders. |
| Section 122 + CAFTA-DR textiles | NO — exempt | Qualifying CAFTA-DR textile and apparel goods are exempt. |
If a shipment contains both Section 232 goods and other goods in the same entry, Section 122 applies only to the non-Section 232 portion of the declared value. Proper classification and entry documentation is critical to avoid overpaying.
The table below shows representative effective duty rates under the current regime (MFN + applicable Section 301 + Section 122) for common trading partners.
| Country | MFN Rate | Sec 301 | Sec 122 | Effective Rate |
|---|---|---|---|---|
| China (manufactured goods) | 3.5% | +25% | +15% | ~43.5%+ |
| China (consumer electronics) | 0–2% | +7.5% | +15% | ~22.5–24.5% |
| Vietnam | 3.5% | — | +15% | ~18.5% |
| India | 3.5% | — | +15% | ~18.5% |
| Germany / EU | 3.5% | — | +15% | ~18.5% |
| Mexico (USMCA-qualifying) | 0% | — | EXEMPT | 0% |
| Canada (USMCA-qualifying) | 0% | — | EXEMPT | 0% |
| Steel from any country (Section 232) | varies | — | EXEMPT | MFN + 25% only |
Rates shown are indicative for general merchandise. Actual rates depend on HTS classification, product-specific exclusions, and Annex II status. Use the calculator for exact figures.
Section 122 of the Trade Act of 1974 limits the surcharge to a maximum of 150 days. The February 24, 2026 effective date puts the scheduled expiration at approximately July 24, 2026.
What happens at expiration is uncertain. Three scenarios are possible:
Model two scenarios for Q3 2026 procurement: one with Section 122 continuing (via legislative extension) and one where it expires July 24. The ~$15 billion/month in additional revenue this surcharge generates creates strong political incentive to extend or replace it.
Every cost-of-goods model built before February 24, 2026 needs to be updated. Section 122 adds 15% to your declared value (unless you're USMCA or Section 232 exempt). For a $100,000 shipment from Vietnam, that's $15,000 in additional duty you may not have budgeted for. Use the USTradeStack Landed Cost Calculator — updated for Section 122 — to get a complete breakdown.
If you source from Canada or Mexico, USMCA qualification is now more valuable than ever — it's the only major exemption from Section 122 for most importers. If you haven't formally documented USMCA origins (certificates of origin, regional value content calculations), do it now. USMCA claims are audit targets when they result in significant duty savings.
The ~1,100 HTS codes in Annex II of the proclamation are exempt from Section 122. Search your product codes against the published list before paying — overpaying is hard to recover after entry. CBP's formal guidance is at cbp.gov/trade/programs-administration/trade-remedies.
Section 232 exemption from Section 122 requires proper HTS classification under the steel, aluminum, copper, lumber, auto, or semiconductor categories. If your product is borderline — for example, steel-containing manufactured goods — the Section 232 applicability (and therefore Section 122 exemption) depends on correct classification at entry.
Section 122 has temporarily equalized the tariff advantage of many non-China Asian sourcing options (Vietnam, India, Bangladesh) — they now all carry the same 15% baseline. That said, if Section 122 expires in July and is not replaced, the advantage disappears. Use scenario modeling to compare landed costs from 3+ origins side-by-side before committing to supply chain changes.
Section 301 is completely unaffected by the IEEPA ruling and remains in effect at its current rates (7.5–25%+ depending on list). You now pay MFN + Section 301 + 15% Section 122. If you were already planning to diversify away from China, the math now strongly favors non-China sourcing for most non-232 product categories — at least through July 2026.
Full breakdown: MFN + Section 301 + Section 122 + MPF/HMF + all fees. Updated for the current regime.