Side-by-side comparison: IEEPA tariffs vs Section 122 surcharge
Legal authority: IEEPA tariffs were imposed under the International Emergency Economic Powers Act, citing the trade deficit as a national emergency. Section 122 surcharge is imposed under Section 122 of the Trade Act of 1974, citing a balance-of-payments emergency. The Supreme Court struck down IEEPA as exceeding statutory authority; Section 122 has explicit trade surcharge authorization.
Rates: Both IEEPA and Section 122 impose a 10% ad valorem rate. However, IEEPA had no statutory rate cap, while Section 122 is limited to a maximum of 15% by statute.
Duration: IEEPA tariffs had no time limit and could remain in effect as long as the emergency declaration persisted. Section 122 is limited to 150 days by statute, expiring July 24, 2026. IEEPA was in effect for approximately 12 months; Section 122 cannot exceed 5 months.
Scope: Both apply globally to virtually all imports. IEEPA tariffs covered all countries of origin. Section 122 similarly applies regardless of origin. Neither is targeted at specific countries the way Section 301 targets China.
Congressional approval: Neither required Congressional approval to impose. However, Section 122 has a built-in sunset that effectively forces Congressional action if the surcharge is to continue. IEEPA had no such forcing mechanism.
Refund eligibility: IEEPA tariffs paid between February 2025 and February 2026 are now refundable following the Supreme Court ruling. Section 122 surcharges are legally authorized and not refundable.
Timeline of events: from IEEPA to Section 122
February 2025: Executive order imposes 10% global tariff under IEEPA authority, citing the U.S. trade deficit as a national emergency. The tariff applies to virtually all imported goods effective immediately.
March 2025: Multiple legal challenges filed by trade associations, importers, and foreign governments. Cases are consolidated in the U.S. Court of International Trade.
June 2025: Court of International Trade issues preliminary injunction, which is stayed pending appeal. IEEPA tariffs continue to be collected during litigation.
October 2025: U.S. Court of Appeals for the Federal Circuit upholds the lower court's finding that IEEPA does not authorize tariffs. Government appeals to the Supreme Court.
January 2026: Supreme Court grants certiorari and expedites briefing.
February 20, 2026: Supreme Court rules 6-3 in National Foreign Trade Council v. United States that IEEPA does not authorize import tariffs. IEEPA tariffs are immediately invalidated.
February 24, 2026: Administration terminates IEEPA tariff collection and invokes Section 122 of the Trade Act of 1974 to impose a new 10% temporary import surcharge. CBP begins collecting Section 122 surcharge on all new entries.
July 24, 2026 (scheduled): Section 122 surcharge expires automatically after 150 days unless Congress passes new legislation.
Net impact: are importers paying more or less?
For ongoing imports, the bottom line is essentially unchanged. The 10% IEEPA tariff has been replaced by a 10% Section 122 surcharge. The total duty rate on any given product remains the same as it was before the Supreme Court ruling, assuming no other tariff changes.
The major financial impact is the refund of past IEEPA payments. Importers who paid IEEPA tariffs from February 2025 through February 2026 can now claim those payments back, plus 6% interest. For a company that imported $10 million in goods during that period, the IEEPA component at 10% was $1 million, plus approximately $30,000 to $60,000 in interest. This represents a significant cash recovery.
The net forward-looking impact depends on timing. Section 122 expires July 24, 2026. If Congress does not pass replacement legislation, the 10% surcharge goes away entirely, reducing total duty rates by 10 percentage points across the board. Importers who can delay shipments past the expiration date may realize meaningful savings.
Scenario examples for common import categories
Consumer electronics (HTS 8471.30.01, laptops from China): Before the ruling, total duty was MFN Free + Section 301 25% + IEEPA 10% = 35%. After the ruling, total duty is MFN Free + Section 301 25% + Section 122 10% = 35%. Net change: 0%. But IEEPA refund recovery on prior entries could be substantial.
Steel products (HTS 7210.49.00, zinc-coated steel from Germany): Before, MFN Free + Section 232 25% + IEEPA 10% = 35%. After, MFN Free + Section 232 25% + Section 122 10% = 35%. Net change: 0%. Same total rate under different legal authority.
Apparel (HTS 6109.10.00, cotton t-shirts from Vietnam): Before, MFN 16.7% + IEEPA 10% = 26.7%. After, MFN 16.7% + Section 122 10% = 26.7%. Net change: 0%. After July 24, if Section 122 expires, the rate drops to just 16.7% MFN.
Automotive (HTS 8703.23.00, passenger vehicles from Japan): Before, MFN 2.5% + Section 122 Auto 25% + IEEPA 10% = 37.5%. After, MFN 2.5% + Section 122 Auto 25% + Section 122 Surcharge 10% = 37.5%. Net change: 0%.
What happens after July 24 when Section 122 expires?
The 150-day statutory limit on Section 122 means the surcharge automatically terminates on July 24, 2026. There is no provision for renewal under this authority. Several outcomes are possible.
Scenario 1: Congress passes new tariff legislation. This is the most likely outcome if there is bipartisan support for maintaining a baseline import surcharge. New legislation could set any rate and duration, as Congress has plenary authority over tariffs under the Constitution. This would likely take the form of an amendment to the Tariff Act or a standalone bill.
Scenario 2: The surcharge simply expires. If Congress does not act, the 10% surcharge goes away on July 24. Import costs drop by 10 percentage points across the board. This would be a significant reduction for importers but would also reduce federal revenue by tens of billions of dollars annually.
Scenario 3: The administration pursues alternative trade authorities. Section 201 safeguard investigations, expanded Section 301 actions, or other trade remedies could be used to impose duties on specific product categories, though none provide the same broad-based authority as IEEPA or Section 122.
Importers should model all three scenarios in their cost planning. Use TariffCalc at tariff.normsuite.com to compare duty rates with and without the 10% surcharge for your specific HTS codes.