Section 122 Tariff 2026: The Complete Importer’s Guide to the 10% Global Surcharge

On February 20, 2026, the US Supreme Court ruled in Learning Resources, Inc. v. Trump that IEEPA does not authorise the President to impose tariffs. Within hours, the White House invoked an entirely different legal authority: Section 122 of the Trade Act of 1974. Effective February 24, 2026 at 12:01 AM EST, a 10% ad valorem surcharge applies to virtually all goods imported into the United States. On February 22, 2026, before the tariff took effect, President Trump announced an amendment raising the rate to 15%. The current operative rate is therefore 15% ad valorem, at the statutory maximum permitted under Section 122. The Section 122 tariff 2026 is temporary by statute, set to expire on July 24, 2026, unless Congress acts to extend it. But temporary does not mean simple. The Section 122 tariff has its own exemption structure, its own HTSUS subheadings, its own interaction rules with Section 301 and Section 232, and its own implications for drawback, FTZ admissions, and supply chain cost modelling that every importer needs to understand before the deadline. This guide covers every verified fact about the Section 122 tariff 2026 that importers, customs brokers, and trade compliance teams need to act on now.

What the Section 122 Tariff 2026 Is, Where It Comes From, and Why It Matters

Section 122 of the Trade Act of 1974 grants the President authority to impose temporary import surcharges of up to 15% ad valorem to address “fundamental international payments problems,” specifically large and serious US balance-of-payments deficits. The authority is explicitly temporary: the statute limits surcharges to a maximum of 150 days without further Congressional action. President Trump’s proclamation, titled “Imposing a Temporary Import Surcharge to Address Fundamental International Payment Problems,” justified invoking Section 122 on three grounds: a USD 1.2 trillion annual goods trade deficit, a negative balance on primary income for the first time in modern history, and a net international investment position of negative 90% of GDP at end of 2024.

The full text of the proclamation is published on the White House official proclamation page and is the authoritative source for all exemption lists and HTSUS subheading assignments.

Section 122 Tariff 2026: The Verified Timeline From SCOTUS to July 24

• February 20, 2026: Supreme Court issues Learning Resources, Inc. v. Trump at 10:00 AM, ruling IEEPA does not authorise tariffs. Within hours, President Trump issues three presidential actions: ending IEEPA tariff orders, imposing Section 122 surcharge, and continuing de minimis suspension
• February 22, 2026: CBP issues guidance confirming IEEPA duties will cease for goods entered or withdrawn from warehouse on or after 12:00 AM EST on February 24, 2026. All related IEEPA HTSUS subheadings deactivated in ACE
• February 23, 2026: CBP issues technical guidance confirming Section 122 does not apply to goods qualifying for duty-free entry under Chapter 98 of the HTSUS. De minimis suspension confirmed continuing
• February 22, 2026: President Trump announces amendment raising the Section 122 rate from 10% to 15%, the statutory maximum. No separate formal proclamation has been confirmed as of April 2026 but the 15% rate is widely reported and reflected in trade-weighted average calculations
• February 24, 2026, 12:01 AM EST: Section 122 tariff takes effect at the amended 15% rate. HTSUS subheading 9903.03.01 activated for Section 122 duty. Exemption subheadings 9903.03.02 through 9903.03.11 activated for applicable exceptions
• July 24, 2026: Section 122 tariff statutory expiry date. 150 days from effective date. Expires unless Congress enacts legislation to extend beyond the statutory limit

Section 122 Tariff 2026 Scope: What It Covers and What Rate Applies

The Section 122 tariff applies a flat 10% ad valorem surcharge on all articles imported into the United States from all countries, entered for consumption or withdrawn from warehouse for consumption on or after 12:01 AM EST on February 24, 2026. Unlike the IEEPA tariffs it replaces, the Section 122 tariff is uniform. There are no country-specific rates. There are no differentiated rates from bilateral Agreements on Reciprocal Trade. India, which had negotiated an 18% total IEEPA rate under bilateral agreements, is now subject to the same 10% as every other country. China, which was at 10% after successive IEEPA reductions, faces the same 10% under Section 122 but with Section 301 tariffs still stacked on top.

The surcharge applies in addition to all other applicable duties and tariffs, including standard MFN duty rates, Section 301 tariffs on Chinese-origin goods, and Section 201 safeguard tariffs where applicable. The critical interaction rule is with Section 232:

• Section 232 goods are exempt from Section 122 stacking: Products already subject to Section 232 tariffs on steel, aluminium, copper, lumber, and automobiles are excluded from the Section 122 surcharge to the extent Section 232 applies. If Section 232 applies only to part of an import, Section 122 applies to the non-Section 232 portion
• Section 301 goods are NOT exempt: Chinese-origin goods subject to Section 301 tariffs face Section 122 stacking. The 10% Section 122 surcharge applies on top of Section 301 rates. A product subject to 25% Section 301 from China now faces 25% Section 301 plus 10% Section 122 plus the standard MFN duty rate
• Section 201 goods are not exempt: Safeguard tariffs under Section 201 do not exclude the product from Section 122

Section 122 Tariff 2026 Exemptions: Every Category That Avoids the Surcharge

The Section 122 proclamation provides a structured set of exemptions across two annexes. Understanding these exemptions is the most commercially significant compliance task for importers in affected product categories:

USMCA Exemption

Goods qualifying for duty-free entry under the United States-Mexico-Canada Agreement are exempt from the Section 122 surcharge. This is the single most commercially significant exemption for businesses with North American supply chains. For businesses that have invested in USMCA origin qualification, the exemption preserves the zero-tariff cost advantage on qualifying goods from Mexico and Canada. USMCA Certificates of Origin must be correctly completed and on file for each qualifying shipment. CBP’s USMCA audit activity is increasing as the volume of USMCA claims rises. The exemption is not automatic. It must be actively claimed with supporting documentation on every entry.

CAFTA-DR Textile and Apparel Exemption

Textile and apparel articles entering duty-free under the Dominican Republic-Central America Free Trade Agreement are exempt. This covers qualifying goods from Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. This is a new structural feature of the Section 122 proclamation compared to the IEEPA regime. Apparel importers sourcing from these markets should confirm their origin documentation is in place to claim the exemption on every entry.

Section 232 Exclusion

Products subject to Section 232 national security tariffs on steel, aluminium, copper, lumber, and automobiles are excluded from the Section 122 surcharge on the Section 232-covered portion. For mixed imports where only part of the product falls under Section 232, the Section 122 applies to the remainder.

Annex II Product Exceptions

Approximately 1,100 product codes are exempted from the surcharge under Annex II of the proclamation. This list is narrower than the IEEPA Annex II exception list, which had already shrunk from 1,326 codes to approximately 1,084 by the time of the SCOTUS ruling. The Annex II exceptions include certain critical minerals, energy products, pharmaceuticals, specified electronics, and civil aircraft parts including drones for the first time. The HTSUS exemption subheadings 9903.03.02 through 9903.03.11 correspond to the Annex II exception categories. Importers must reference the proclamation Annex II directly to confirm whether their specific HTSUS codes are included, as the exception list is product-code specific, not category-generic.

Chapter 98 Duty-Free Provisions

Goods qualifying for duty-free entry under Chapter 98 of the HTSUS, which incorporates specialised duty-free provisions including goods returned to the US, articles for diplomatic use, and other specific categories, are not subject to the Section 122 surcharge. CBP confirmed this in its February 23, 2026 technical guidance.

In-Transit Exception

Goods loaded onto a vessel at the port of loading and in transit on the final mode of transit to the United States before 12:01 AM EST on February 24, 2026, and entered for consumption before 12:01 AM EST on February 28, 2026, are exempt. This narrow exception applied only to goods already at sea at the moment of proclamation. It is no longer available for new shipments.

Section 122 Tariff 2026 vs IEEPA: The Five Key Differences Every Importer Must Know

What Happens to the Section 122 Tariff 2026 After July 24

Section 122 expires at 12:01 AM EDT on July 24, 2026 unless Congress enacts legislation to extend it beyond the 150-day statutory limit. Three scenarios are commercially plausible and importers should model their landed cost assumptions against all three:

• Scenario 1: Section 122 expires and is not replaced. MFN duty rates plus Section 301 on Chinese goods apply. For goods from countries that had bilateral IEEPA deals reducing rates below 10%, the Section 122 expiry would produce a lower total effective rate than the current 10% surcharge. For most other countries, expiry returns the rate to standard MFN only
• Scenario 2: Congress extends Section 122. This requires legislative action. The statutory 150-day limit cannot be extended by presidential proclamation alone. Global Trade Alert analysis notes that the President could theoretically allow Section 122 to expire and then invoke it again under a new proclamation, creating a de facto perpetual mechanism through sequential proclamations
• Scenario 3: Section 122 is replaced by expanded Section 232 and Section 301 actions. The White House has signalled this is the intended direction. USTR Greer announced new Section 301 investigations covering industrial excess capacity, forced labour, pharmaceutical pricing, and discrimination against US digital services in multiple trading partners. Section 232 investigations into semiconductors, pharmaceuticals, and other sectors are also active. Section 232 and Section 301 tariffs, unlike Section 122, have no statutory expiry date

The July 24 deadline is therefore not simply the date Section 122 ends. It is the decision point at which the US tariff structure for the next trade policy phase becomes clear. Importers building procurement strategies around current landed costs should plan for all three scenarios and have a documented response to each.

Section 122 Tariff 2026 Drawback: How to Recover Costs Already Paid

CBP confirmed in its February 24, 2026 guidance that drawback remains available for Section 122 duties under standard drawback procedures and eligibility rules. Drawback allows importers to claim a refund of up to 99% of import duties paid when the imported goods are subsequently exported or destroyed. For businesses that import goods subject to the Section 122 surcharge and then re-export those goods or use them in the manufacture of products that are subsequently exported, drawback provides a mechanism to recover the 10% surcharge on the exported proportion.

Three drawback types are available for Section 122 duties:

• Manufacturing drawback: Where imported goods are used as inputs in US manufacturing and the finished product is exported, up to 99% of the Section 122 duties paid on the imported inputs can be recovered
• Unused merchandise drawback: Where goods imported subject to Section 122 are exported without being used in the US, up to 99% of duties paid can be recovered. The export must occur within five years of the original import date
• Rejected merchandise drawback: Where imported goods do not conform to specification or are defective and are returned to the foreign supplier, duties including Section 122 can be recovered

For businesses that have been paying the 10% Section 122 surcharge on goods subsequently re-exported, a systematic drawback programme filing through ACE can recover material amounts. Our Global Trade Compliance team assesses Section 122 drawback eligibility and manages drawback filing for qualifying import and re-export operations.

Section 122 Tariff 2026 FTZ Admissions: What Changes for Foreign Trade Zones

Section 122-covered merchandise admitted to US Foreign Trade Zones on or after February 24, 2026 must be admitted as privileged foreign status unless eligible for domestic status. This is the same treatment that applied under the IEEPA tariff regime. The practical implication is that goods admitted to FTZs after February 24 will be dutiable upon entry for consumption based on their HTSUS classification at the time of admission, including the Section 122 surcharge where applicable. The privileged foreign status requirement may affect duty planning strategies for FTZ operators who previously used zone manipulation to minimise tariff exposure. Businesses operating FTZ programmes should review their admission procedures with their customs compliance team to confirm correct status assignments on all post-February 24 admissions.

What Every Section 122 Tariff 2026 Importer Must Do Before July 24

1. Confirm your HTSUS codes against the Annex II exemption list. Every importer should cross-reference their active product codes against the Annex II exceptions to the Section 122 proclamation. If any of your products fall within the approximately 1,100 exempted codes, you should be filing entries with the appropriate HTSUS exemption subheading (9903.03.02 through 9903.03.11) rather than paying the 10% surcharge. Incorrect subheading assignment on qualifying exempted goods produces unnecessary duty payments that can be recovered through entry amendment within the statutory window
2. Confirm USMCA origin qualification for all Canada and Mexico sourcing. The USMCA exemption is the largest single duty-saving mechanism available under Section 122. Every shipment from Canada or Mexico that qualifies for USMCA duty-free treatment should be declared as such with a complete, accurate USMCA Certificate of Origin. CBP USMCA audit activity is increasing. The origin documentation must be in place and defensible for the full five-year record retention period
3. Model your landed cost under all three July 24 scenarios. Build a landed cost model for your top import corridors under Scenario 1 (Section 122 expires, no replacement), Scenario 2 (Section 122 extended), and Scenario 3 (Section 232 and 301 expand to cover your product categories). The scenario that produces the highest effective tariff rate is the one to prepare procurement and pricing decisions against. Note that current landed cost models should reflect the 15% Section 122 rate, not the initial 10%
4. Assess drawback eligibility for all Section 122 duties paid since February 24. If any proportion of your imports subject to the 10% Section 122 surcharge has been or will be re-exported, manufacturing drawback, unused merchandise drawback, or rejected merchandise drawback may allow recovery of up to 99% of the surcharge paid. Drawback claims have a five-year filing window but documentation must be maintained from the original import date. Begin the assessment now while records are current

How Carra Globe Supports Importers Under the Section 122 Tariff 2026

Carra Globe provides Global Trade Compliance services covering Section 122 tariff impact assessment, Annex II exemption eligibility review, USMCA origin qualification for Canadian and Mexican supply chains, drawback eligibility assessment and filing coordination, and landed cost modelling under all post-July 24 tariff scenarios. Our Importer of Record service, explained fully in our guide to what an Importer of Record does, ensures all US-bound shipments are declared with the correct Section 122 HTSUS subheadings, applicable exemptions are claimed on every qualifying entry, and FTZ admission procedures comply with the privileged foreign status requirement. Our Delivered Duty Paid service incorporates the current 10% Section 122 surcharge into full landed cost calculations for all US-bound shipments, with scenario modelling for post-July 24 outcomes included in cost visibility for procurement decisions. For businesses navigating the full US tariff transition from IEEPA to Section 122, see our related guides to the SCOTUS IEEPA ruling, Section 301 tariffs 2026, and Liberation Day tariffs 2026.

Frequently Asked Questions: Section 122 Tariff 2026

What is the Section 122 tariff and when did it take effect?

The Section 122 tariff 2026 is a 15% ad valorem surcharge on virtually all goods imported into the United States, amended from the initial 10% rate on February 22, 2026, invoked by President Trump under Section 122 of the Trade Act of 1974 on February 20, 2026. It took effect February 24, 2026 at 12:01 AM EST and is set to expire July 24, 2026 unless Congress acts to extend it. It replaced the IEEPA tariffs struck down by the Supreme Court on the same day it was proclaimed.

Are goods from Canada and Mexico subject to the Section 122 tariff 2026?

Goods that qualify for duty-free treatment under USMCA are exempt from Section 122. Goods from Canada and Mexico that do not qualify for USMCA treatment are subject to the 10% surcharge. USMCA qualification requires a valid Certificate of Origin covering each shipment and the goods must genuinely originate in Canada or Mexico under USMCA rules of origin. The exemption must be actively claimed on each entry declaration.

Does the Section 122 tariff 2026 stack on top of Section 301 on Chinese goods?

Yes. Chinese-origin goods subject to Section 301 tariffs face both the Section 301 rate and the 10% Section 122 surcharge. A product subject to 25% Section 301 from China now faces 25% plus 10% plus the applicable MFN duty rate. Section 232 goods are the only tariff category explicitly excluded from Section 122 stacking. Section 301 carries no such exclusion.

What HTSUS subheading do I use for Section 122 entries?

HTSUS subheading 9903.03.01 is the Section 122 duty subheading for goods subject to the surcharge. Exemption subheadings 9903.03.02 through 9903.03.11 apply to goods qualifying for specific exceptions under Annex I and Annex II of the proclamation. CBP activated these subheadings in ACE on February 24, 2026. Entries filed without the correct 9903 subheading will produce incorrect duty calculations.

Can I claim drawback on Section 122 tariff 2026 duties?

Yes. CBP confirmed drawback remains available for Section 122 duties under standard procedures. Manufacturing drawback, unused merchandise drawback, and rejected merchandise drawback all apply. Up to 99% of the 10% surcharge paid on imported goods that are subsequently exported or used in exported manufactured products can be recovered. Drawback claims have a five-year filing window from the original import date.

What happens when the Section 122 tariff 2026 expires on July 24?

The 15% Section 122 tariff 2026 surcharge expires at 12:01 AM EDT on July 24, 2026 unless Congress extends it. The White House has signalled that expanded Section 232 and Section 301 actions are intended as the longer-term tariff mechanism once Section 122 expires. Unlike Section 122, Section 232 and 301 tariffs have no statutory expiry date. Importers should model landed costs under multiple post-July 24 scenarios rather than assuming either full expiry or simple continuation of current rates.