Voided Tariffs Replaced with Section 122 Tariffs: Rates Broadly Applied at 15%

Following the Supreme Court’s decision to invalidate IEEPA tariffs, the administration replaced those tariffs with Section 122 tariffs under the Trade Act of 1974. The new tariffs apply at a uniform rate of 15% and are scheduled to remain in place for 150 days, from February 24 through July 24, 2026.

The administration may request an extension from Congress or shift duties to other authorities, including Sections 232 and 301, which were not affected by the Court’s ruling and remain in effect.

The announcement also included an “in-transit” provision. Goods loaded onto a vessel before 12:01 a.m. on February 24 and entered into the United States before 12:01 a.m. on February 28 may qualify for relief from the new rate.

Our tariff specialists analyzed the ruling and Section 122 and outlined key considerations for affected organizations.

What is Section 122?

Section 122 allows the President to impose temporary import surcharges or quotas to address significant trade imbalances. The authority is limited to 150 days unless Congress approves an extension, and rates cannot exceed 15 percent. Unlike other trade tools that target specific countries or products, Section 122 applies broadly and uniformly.

Exemptions under Section 122

According to a White House Fact Sheet, the following goods are exempt from Section 122:

• USMCA-qualified goods
• Goods already subject to Section 232
• Certain previously exempt agricultural, pharmaceutical, electronic, vehicle, aerospace, and information technology products
• Certain textiles and apparel under the Dominican Republic Central America Free Trade Agreement

What this means for businesses

For companies that were paying IEEPA tariffs at higher rates, the shift to a 15 percent uniform tariff may reduce total duty costs. At the same time, the short time frame creates uncertainty. Businesses must plan for the possibility that these tariffs expire, are adjusted, extended, or are replaced under another authority.

Refund opportunities related to prior IEEPA payments are still unresolved. Now is the time to review payments made in 2025 and 2026 and gather supporting documentation in case guidance is issued.

Companies should also reassess their exposure under Sections 232 and 301, confirm classification and valuation practices, and understand how the temporary 15% rate affects pricing and contracts.

Trade policy continues to change, and each shift carries financial and reporting implications. Contact your tax advisor to review your tariff exposure, documentation, and planning strategy.

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