What is the difference between Section 122 tariffs and IEEPA tariffs?

IEEPA tariffs were imposed under the International Emergency Economic Powers Act, declared unconstitutional by the Supreme Court on February 20, 2026. They were country-specific (China 145%, Canada 25%, Mexico 15%) and indefinite in duration. Section 122 tariffs are imposed under the Trade Act of 1974, apply a uniform 10-15% rate to all countries, and are constitutionally valid but limited to 150 days (expiring July 24, 2026) unless Congress extends them.

Do Section 122 tariffs affect my right to IEEPA refunds?

No. Section 122 tariffs are prospective only — they apply to imports entering after February 24, 2026. IEEPA tariffs were collected from approximately 2019 through February 24, 2026. These are completely separate legal authorities covering different time periods. Paying Section 122 tariffs does not reduce or offset your IEEPA refund claim.

Can Section 122 tariffs be legally challenged?

Yes, but the legal arguments are weaker than against IEEPA. Section 122 was specifically designed as a tariff authority (unlike IEEPA), so the constitutional argument that 'IEEPA isn't a tariff statute' doesn't apply. However, challengers argue: (1) Section 122 was designed for monetary/balance of payments crises, not general trade policy; (2) it violates separation of powers; and (3) it doesn't satisfy the statute's consistency requirements. Twenty-four states filed suit making these arguments in March 2026.

How were IEEPA tariff rates different from Section 122 rates?

IEEPA tariffs were highly variable by country: China faced up to 145% (List 4 plus fentanyl emergency), Canada faced 25%, Mexico faced 15-25%, and Liberation Day tariffs applied 10-50% depending on country. Section 122 tariffs apply a flat uniform rate — initially 10%, raised to 15% — to virtually all imports from all countries, with limited exemptions.

What are the exemptions from Section 122 tariffs?

Section 122 tariff exemptions include goods already subject to Section 232 tariffs (steel, aluminum, and derivatives), certain goods entering under FTA preferential rates with countries that have bilateral arrangements, and specific humanitarian goods. Unlike IEEPA tariffs, there is no country-specific exemption mechanism and no product exclusion process established yet. Check CBP's official guidance for the current exemption list.

Section 122 vs IEEPA: How the New 10% Tariff Affects Your Business

🔄 The Quick Switch

February 20, 2026: SCOTUS strikes down IEEPA tariffs at 3:47 PM ET

February 20, 2026: Trump signs Section 122 executive order at 6:22 PM ET

February 24, 2026: Section 122 tariffs take effect (10% on virtually all imports)

July 24, 2026: Section 122 authority expires (150-day maximum)

What Section 122 Actually Is

Section 122 of the Trade Act of 1974 grants the President emergency authority to impose temporary, uniform tariffs to address balance of payments crises. It's been used exactly twice before:

• 1971: Nixon imposed a 10% surcharge for 4 months
• 1985: Reagan briefly considered it but never implemented

Unlike IEEPA's broad "emergency powers," Section 122 is specifically designed for tariff imposition — which is why it survived constitutional scrutiny.

Side-by-Side Comparison

Feature	IEEPA Tariffs (Struck Down)	Section 122 Tariffs (Current)
Legal Authority	IEEPA (unconstitutional per SCOTUS)	Trade Act of 1974 (constitutional)
Rate Structure	Country-specific: China 145%, Canada 25%, Mexico 15%, etc.	Uniform: 10% on all countries
Duration	Indefinite (until revoked)	Maximum 150 days (expires July 24, 2026)
Scope	Targeted products and countries	All imports except specific exemptions
Stacking with 232	Yes (IEEPA + Section 232 both applied)	No (Section 122 replaces, doesn't stack)
Refund Rights	Full refunds ordered by SCOTUS	No refund rights (prospective only)

The Winners and Losers

📉 Net Tariff Decrease

Chinese importers: 145% → 10% (massive savings)

Canadian imports: 25% → 10% (60% reduction)

Mexican imports: 15% → 10% (33% reduction)

Steel/aluminum imports: Section 232 + IEEPA → just 10%

📈 Net Tariff Increase

EU imports: 0% → 10% (new tariff)

Japanese imports: 0% → 10% (new tariff)

UK imports: 0% → 10% (new tariff)

Most other countries: 0% → 10% (new tariff)

Section 122 Exemptions

Unlike IEEPA's targeted approach, Section 122 applies broadly but includes specific exemptions:

Countries Exempt from Section 122

• Israel: Free trade agreement protection
• Jordan: Free trade agreement protection
• Australia: Security alliance carve-out

Note: USMCA countries (Canada/Mexico) are NOT exempt — Trump explicitly included them

Products Exempt from Section 122

• Petroleum and petroleum products (HTS Chapter 27)
• Natural gas and LNG (HTS 2711.11-2711.29)
• Critical minerals (lithium, rare earths — see Federal Register notice)
• Pharmaceutical APIs (designated life-saving drugs)
• Emergency medical supplies (HTS 3006, 9018-9022 specified items)

⚠️ Exemption Fine Print

Exemptions require specific HTS classifications and, in some cases, certificate filings. Work with your customs broker to ensure proper classification — misclassification can trigger penalties plus the 10% tariff.

Planning Implications for Your Business

Immediate Impact (March-July 2026)

Cash flow implications vary dramatically by sourcing mix:

• Heavy China importers: Massive cash flow improvement (135% tariff reduction)
• European/Japanese sourcing: New 10% cost increase to absorb or pass through
• Diversified importers: Net impact depends on country mix

The July 24 Cliff

Section 122 expires exactly 150 days after implementation — July 24, 2026. After that date:

• No automatic extension (unlike IEEPA's indefinite duration)
• Congress must act to extend or make permanent
• Section 301 replacement tariffs under development (country-specific)
• Possible return to pre-IEEPA rates if no replacement enacted

Strategic Sourcing Decisions

Short-term arbitrage opportunities:

• Accelerate Chinese imports while Section 122 rates are low
• Delay European/Japanese imports until July 24 (if possible)
• Lock in fixed-price contracts with suppliers in newly-tariffed countries

Long-term supply chain planning: The July expiration creates planning uncertainty. Most procurement teams are maintaining diversified sourcing rather than making dramatic short-term shifts.

How Section 122 Affects Your IEEPA Refund Claim

Critical point: Section 122 tariffs are completely separate from your IEEPA refund rights.

✅ Your Refund Rights Are Unchanged

• Past IEEPA duties remain refundable regardless of Section 122
• Supreme Court ruling applies retroactively to all IEEPA collections
• Section 122 applies only to future imports (February 24 forward)
• No "offset" or "setoff" between refunds and new duties

Cash Flow Timing Considerations

The combination of Section 122 costs and expected IEEPA refunds creates cash flow planning opportunities:

• Chinese importers: Lower current costs + large refund coming = strong liquidity position
• European importers: Higher current costs + modest IEEPA refunds = potential cash squeeze
• Mixed importers: Model both streams to optimize working capital

What's Coming After July 24

The Trump administration has signaled its post-Section 122 strategy:

Section 301 Investigations Launched

USTR has initiated Section 301 investigations on:

• China: "Continued unfair trade practices" (targeting 60-100% rates)
• EU: "Digital services tax and subsidies" (targeting 25-40% rates)
• Canada/Mexico: "USMCA violations" (targeting 15-25% rates)

Section 301 tariffs would be country-specific (unlike Section 122's uniform approach) and have no time limit.

Congressional Dynamics

Congress faces a choice by July 24:

• Extend Section 122: Requires new legislation (unlikely given uniform 10% rate)
• Let it expire: Return to pre-IEEPA tariff levels
• Enact permanent tariffs: Through regular legislative process

Most Hill watchers expect Section 122 to expire on schedule, with selective Section 301 tariffs replacing it.

Action Items for Your Business

1. Recalculate your landed costs under Section 122 vs. IEEPA by sourcing country
2. Model cash flow scenarios for Section 122 costs + IEEPA refund timing
3. Review exemption eligibility for your product mix and HTS classifications
4. Plan for the July 24 cliff — inventory strategy if Section 122 expires
5. Monitor Section 301 investigations that could affect your key sourcing countries
6. Pursue IEEPA refunds independently — Section 122 doesn't affect your claim rights

The Bottom Line

Section 122 is a significant shift from IEEPA's country-specific approach to a uniform 10% rate. For most importers, it's either a major cost reduction (if you were hit hard by IEEPA) or a new cost to manage (if you weren't).

But here's what didn't change: your right to recover every dollar of IEEPA duties you paid. Section 122 is prospective. Your IEEPA refund claim looks backward. They're completely separate.

Focus on both: optimize your supply chain for the new Section 122 environment while aggressively pursuing your IEEPA refund claim. Do them in parallel — not sequentially.

Did Section 122 Change Your Math?

Our calculator models both your IEEPA refund potential AND your ongoing Section 122 costs. See the full picture — how much you'll recover vs. how much you'll pay going forward.

Calculate Both Streams →

This article is for informational purposes only and does not constitute legal, financial, or tax advice. Consult qualified counsel before making decisions about your tariff refund claims.

For details on our calculation approach, see our Methodology.