The Supreme Court has invalidated IEEPA tariff authority. CBP has confirmed all IEEPA duty collection ceases February 24, 2026, and has issued detailed implementation guidance for the replacement Section 122 surcharge. This advisory consolidates both CBP bulletins and outlines what importers need to know.
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Key Facts at a Glance
| Supreme Court Ruling | Learning Resources, Inc. v. Trump — IEEPA does not authorize presidential tariffs (Feb. 20, 2026) |
| IEEPA Duties End | 12:00 a.m. ET, February 24, 2026 |
| Replacement Authority | Section 122, Trade Act of 1974 (19 U.S.C. § 2132) |
| Section 122 Rate | 10% ad valorem (15% statutory maximum available) |
| Effective Period | Feb. 24, 2026 through July 24, 2026 (150 days) |
| Section 232 / 301 | Remain in effect; unaffected by these changes |
| CBP References | CSMS # 67834313 (IEEPA termination); CSMS # 67844987 (Section 122 implementation) |
Overview
On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. The decision struck down the IEEPA-based tariff regime that had been in place since early 2025, covering additional duties on imports from Canada, Mexico, China, Brazil, Russia, countries importing Venezuelan oil, and the broad reciprocal tariff program.
The administration responded with two coordinated executive actions the same day. First, the President signed an Executive Order titled “Ending Certain Tariff Actions,” formally terminating all IEEPA duty collection effective 12:00 a.m. ET on February 24, 2026. Second, the President issued a separate Proclamation invoking Section 122 of the Trade Act of 1974, imposing a replacement 10% ad valorem surcharge on imports, also effective February 24, 2026. CBP has since issued two CSMS bulletins providing implementation details for both actions.
IEEPA Tariff Termination (CSMS # 67834313)
CBP confirmed on February 22, 2026 that duties under the following executive orders, including all modifications and amendments, will no longer be collected for goods entered for consumption or withdrawn from warehouse on or after February 24, 2026:
- EO 14193 – Duties addressing illicit drug flows across the northern border (Canada)
- EO 14194 – Duties addressing the situation at the southern border (Mexico)
- EO 14195 – Duties on the synthetic opioid supply chain (China)
- EO 14245 – Tariffs on countries importing Venezuelan oil
- EO 14257 – Reciprocal tariffs to rectify trade practices contributing to U.S. trade deficits
- EO 14323 – Duties addressing threats from the Government of Brazil
- EO 14329 – Duties addressing threats from the Government of the Russian Federation
All HTSUS numbers applicable to IEEPA tariffs will be deactivated in ACE as of February 24, 2026. CBP will issue additional CSMS guidance as needed during the transition.
Section 122 Surcharge Implementation (CSMS # 67844987)
CBP has published detailed guidance on the Section 122 surcharge. The following summarizes the key operational parameters.
Duty Rate and Duration
An additional 10% ad valorem duty applies under HTSUS heading 9903.03.01 to articles of every country entered for consumption or withdrawn from warehouse on or after 12:01 a.m. ET on February 24, 2026, through 12:01 a.m. EDT on July 24, 2026. The statutory maximum under Section 122 is 15%, so the rate could be increased during this window.
Exemptions
The following categories of goods are exempt from the Section 122 surcharge, classified under HTSUS headings 9903.03.02 through 9903.03.11:
- In-transit goods (9903.03.02): Articles loaded onto a vessel and in transit before 12:01 a.m. ET on February 24, 2026, provided they are entered before February 28, 2026.
- Certain agricultural products (9903.03.04): Specific items including etrogs, tropical fruit, date palm branches, acai, coconut water, and certain religious-use products. Supporting documentation must be maintained.
- Civil aircraft and components (9903.03.05): Aircraft other than military, their engines, parts, subassemblies, and ground flight simulators.
- Section 232 and related goods (9903.03.06): Iron/steel and derivatives, aluminum and derivatives, passenger vehicles, light trucks and parts, semiconductors, copper products, wood products, and medium/heavy-duty vehicles and parts.
- USMCA-covered goods (9903.03.07 and 9903.03.08): Articles of Canada or Mexico entered duty-free under USMCA.
- CAFTA-DR textiles and apparel (9903.03.09): Qualifying goods from Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
- Humanitarian donations (9903.03.10): Food, clothing, medicine, and similar items donated to relieve human suffering.
- Informational materials (9903.03.11): Publications, films, photographs, artworks, news wire feeds, and similar materials.
Chapter 98 Treatment
The Section 122 surcharge does not apply to goods properly entered under Chapter 98 provisions, with the following exceptions: for subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional duty applies to the value of repairs, alterations, or processing performed abroad. For heading 9802.00.80, the additional duty applies to the value of the article assembled abroad, less the cost or value of U.S.-origin components.
Foreign Trade Zones
Articles subject to the Section 122 surcharge that are admitted into a U.S. foreign trade zone on or after February 24, 2026 must be admitted under “privileged foreign status” (19 C.F.R. § 146.41), unless eligible for “domestic status” admission (19 C.F.R. § 146.43). Duties will be assessed at the rate in effect at the time of admission.
Drawback
Drawback is available on additional duties imposed under the Section 122 Proclamation.
HTS Reporting Sequence
For entry summaries involving Chapter 98 and/or Chapter 99 headings, CBP has specified the following reporting order:
- Chapter 98 (if applicable)
- Chapter 99 numbers for additional duties (if applicable)
- Trade remedies in the following sequence: Section 301 → Section 122 → Section 232 → Section 201 duties → Section 201 quota
- Chapter 99 for replacement duty or other use (e.g., Miscellaneous Tariff Bill)
- Chapter 99 for other quotas
- Chapters 1–97 commodity tariff classification
Entered value should be reported on the Chapter 1–97 classification unless Chapter 98 provisions require otherwise.
| Important: Duties That Remain in EffectThe termination of IEEPA duties and the new Section 122 surcharge do not affect tariffs imposed under Section 232 of the Trade Expansion Act of 1962 (steel, aluminum, autos) or Section 301 of the Trade Act of 1974 (China technology tariffs). These remain separately in force. Notably, goods already subject to Section 232 duties are themselves exempt from the Section 122 surcharge. |
Recommended Actions
- Assess the net duty impact. Compare current IEEPA exposure against the incoming 10% Section 122 surcharge. For many importers the effective rate will change significantly—model the financial and supply chain impact across affected product lines.
- Verify exemption eligibility. Determine whether goods qualify under USMCA, Section 232 carve-outs, CAFTA-DR, Chapter 98, or the other exemption categories listed above. Ensure supporting documentation is on file where required.
- Review entries on and after February 24. Confirm that IEEPA-related HTSUS numbers are no longer being applied and that Section 122 surcharges under heading 9903.03.01 are correctly reported in the prescribed HTS sequence.
- Reassess FTZ strategies. If goods are being admitted to foreign trade zones, confirm they are entered under privileged foreign status where required. Evaluate whether zone timing adjustments can mitigate exposure.
- Explore drawback opportunities. Drawback is available on Section 122 duties. Evaluate whether existing or new drawback programs can offset surcharge costs on qualifying entries.
- Evaluate refund and protest strategies for prior IEEPA duties. Engage with customs counsel to assess whether duties paid under the now-invalidated IEEPA authority are recoverable. Monitor CBP guidance on refund mechanisms.
- Flag entry filing errors promptly. Contact your CBP client representative or the ACE Help Desk immediately if you encounter errors during the transition. Policy questions can be directed to CBP’s Office of Trade Relations at traderelations@cbp.dhs.gov.
Outlook
The shift from IEEPA to Section 122 authority marks a significant but structurally temporary change. The 150-day statutory window—expiring July 24, 2026—creates a hard deadline for the administration to seek permanent legislative authority or identify an alternative legal basis. Congressional action, additional executive orders, or further litigation could alter the picture well before that date. The current 10% rate could also be raised to the 15% statutory cap at any time.
Questions regarding refunds for prior IEEPA-based collections remain unresolved and represent a significant area to watch. We will continue to monitor developments across all fronts and provide updates as formal guidance evolves.
Sources: CBP CSMS # 67834313 (Feb. 22, 2026); CBP CSMS # 67844987 (Feb. 23, 2026); EO “Ending Certain Tariff Actions” (Feb. 20, 2026); Presidential Proclamation, Section 122 Surcharge (Feb. 20, 2026); Learning Resources, Inc. v. Trump (U.S. Supreme Court, Feb. 20, 2026).
This advisory is provided for informational purposes only and does not constitute legal advice.
Join Our Live Webinar to Learn More
We’ll be discussing these developments in detail and answering questions live with Alba experts and a Customs and trade law representative. Join us Friday, February 27, 2026, at 10 am ET. Register here.
