Section 122 Tariffs: The Law That Replaced IEEPA After the Supreme Court Ruling

What Is Section 122?

Section 122 of the Trade Act of 1974 (codified at 19 U.S.C. § 2132) grants the President authority to impose a temporary import surcharge of up to 15% when the United States is experiencing a “large and serious” balance-of-payments deficit. Unlike IEEPA, which is an open-ended emergency authority, Section 122 is a specific, bounded delegation of tariff power with built-in limits:

• Rate cap: No more than 15% (the administration set the rate at 10%)
• Time limit: No more than 150 days without congressional reauthorization
• Trigger requirement: A large and serious balance-of-payments deficit must exist
• Universal application: The surcharge applies to all imports, without country discrimination in its basic form

Section 122 was enacted as part of the major trade legislation of the 1970s and has never been used before the February 2026 invocation. It was designed as a temporary pressure valve for balance-of-payments crises, not as a permanent trade policy tool.

Why the Administration Turned to Section 122

After the Supreme Court struck down IEEPA tariffs in V.O.S. Selections v. United States, the administration needed a legally defensible replacement that could maintain some level of import duties while more durable legislative or regulatory solutions were developed. Section 122 fit that need for several reasons.

First, Section 122 was not the statute challenged in the IEEPA litigation. The Supreme Court’s ruling was specifically about IEEPA and does not address Section 122’s constitutionality. Second, Section 122 provides a more specific and bounded delegation than IEEPA — the major questions doctrine is less likely to be applied to a statute that explicitly authorizes tariffs as one of its listed remedies. Third, Section 122 could be invoked quickly without new legislation.

The administration invoked Section 122 on February 24, 2026 — four days after the Supreme Court’s IEEPA ruling.

Section 122 vs. IEEPA: Key Differences

Feature	IEEPA Tariffs	Section 122 Tariffs
Authority	International Emergency Economic Powers Act	Trade Act of 1974, §122
Rate	10%–46% (country-specific)	10% (universal)
Duration	Open-ended	150 days maximum
Constitutional status	Struck down by SCOTUS	Not yet definitively litigated
Refundable?	Yes (via CAPE)	No
Effective dates	Feb 4 – Feb 20, 2026	Feb 24, 2026 – ~Jul 24, 2026

The 150-Day Expiration: What Happens Around July 24, 2026

Section 122 tariffs expire automatically at the 150-day mark unless Congress acts to extend them or the administration revokes them. The invocation date of February 24, 2026 means the 150-day window closes around July 24, 2026.

Several outcomes are possible as that date approaches:

Expiration without replacement: The tariffs simply end. Imports revert to pre-IEEPA duty rates (MFN rates under normal trade relations). This is the most legally straightforward outcome.

Congressional action: Congress could pass legislation extending Section 122 tariffs, creating new tariff authority, or establishing a framework for ongoing import surcharges. The composition of Congress and political dynamics will determine whether any such action is possible.

New executive action: The administration could attempt to invoke other statutory authorities. Section 201 (safeguard tariffs) requires an ITC investigation and finding of injury. Section 301 applies to specific unfair trade practices by specific countries. Section 232 requires a national security finding. None of these are quick tools for replacing a universal 10% tariff.

Legal challenges to Section 122: Several state attorneys general and industry groups had already filed challenges to Section 122 tariffs in the CIT as of April 2026. If those challenges succeed, Section 122 tariffs could be enjoined before the 150-day expiration.

What Section 122 Means for Importers Right Now

Ongoing duty exposure: Importers are currently paying a 10% Section 122 surcharge on most imports. This is on top of normal MFN duty rates and any applicable FTA preferential rates.

No refund available: Section 122 duties are not part of the IEEPA refund. They were imposed under a different legal authority, were not the subject of the V.O.S. Selections ruling, and have not been found unlawful. Filing a CAPE claim does not affect Section 122 obligations.

Planning for expiration: Businesses should model scenarios for what happens around July 24, 2026 — whether duties drop, continue under new authority, or remain in legal limbo. Supply chain planning, pricing decisions, and inventory management all depend on this.

Are Section 122 Tariffs Constitutional?

This is an open legal question. Section 122 provides a more specific delegation than IEEPA and explicitly authorizes tariff surcharges as a balance-of-payments remedy, which makes it less vulnerable to the major questions doctrine analysis that felled IEEPA. However, critics argue that the administration’s balance-of-payments finding is politically motivated and that the statute requires a genuine BOP crisis, not merely a persistent trade deficit.

CIT litigation on Section 122 tariffs was ongoing as of April 2026. We will update this guide as that litigation progresses.