From IEEPA to Section 122: What Changed on 20 February 2026

On 20 February 2026, the Supreme Court struck down President Trump's tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Within hours, the White House issued three presidential actions: one ending the IEEPA tariff orders, one reimposing tariffs under Section 122 of the Trade Act of 1974, and one continuing the suspension of de minimis treatment. Separately, USTR Greer signalled the ruling would not derail ongoing bilateral negotiations and announced plans to initiate new Section 301 investigations for future tariff actions. This explainer focuses on the Section 122 proclamation and how it compares to the IEEPA regime it replaces, and what a more aggressive Section 232 and 301 strategy could mean going forward.

The IEEPA tariffs imposed country-specific ad valorem rates. After a series of bilateral deals through late 2025 and early 2026, these rates varied by trading partner. India, for instance, got a total IEEPA rate of 18% following the deal announced in early February 2026. China was at 10% after successive reductions.

The Section 122 proclamation replaces all of this with a single baseline: an additional10 percentage points ad valorem on all imports, regardless of country of origin. There are no country-specific top-ups.

Section 122 of the Trade Act of 1974 authorises the President to impose temporary import surcharges of up to 15% ad valorem to address "fundamental international payments problems," specifically large and serious balance-of-payments deficits. The proclamation cites the $1.2 trillion goods trade deficit, the first-ever negative balance on primary income (2024), and a net international investment position of negative 90% of GDP.

The surcharge is explicitly temporary: 150 days from 24 February 2026, expiring 24 July 2026 unless Congress extends it. This is the maximum period Section 122 permits without congressional action. However, the President could, in theory, allow the surcharge to expire, declare a new emergency, and restart the 150-day period. This would create a de facto perpetual tariff instrument.

The proclamation preserves the same structural hierarchy as the IEEPA tariffs in several important respects.

Section 232 primacy. The surcharge does not stack on top of Section 232 duties. Products already subject to Section 232 tariffs (steel, aluminium, copper, lumber, automobiles and certain motor vehicles) are excluded from the 10% surcharge to the extent the 232 tariff applies. For products where only part of the value is covered by a Section 232 tariff (e.g. the content-weighted materials tariffs on aluminium, steel, copper, and lumber), the 10% surcharge applies only to the portion not covered by the 232 duty. This is the same structure the IEEPA orders used.

USMCA preferences. Articles entering duty-free under USMCA (general note 11 to the HTSUS) remain exempt from the surcharge. This mirrors the IEEPA treatment.

Civil aircraft parts and components. The proclamation grants exceptions for parts and components used in civil aircraft, consistent with the IEEPA approach. The specifics of the product list have changed (see below), but the principle is the same.

CAFTA-DR preferences. The proclamation now formally exempts textile and apparel articles entering duty-free under the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), covering Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. This is new as a standalone exception. Under the IEEPA regime, equivalent preferences for El Salvador and Guatemala had been introduced through bilateral deals earlier in February 2026, but CAFTA-DR as a treaty-based carve-out is a new structural feature of the Section 122 proclamation.

Aircraft list changes. The civil aircraft exceptions now include drones for the first time. At the same time, 19 product codes that appeared on the IEEPA aircraft exception lists have been removed. These 19 codes were not simply dropped, however: they now appear in the general exceptions of Annex II. This means they are exempt from the surcharge regardless of whether they are incorporated into civil aircraft. In practical terms, this is a liberalisation for those 19 product categories.

A tariff regime is defined as much by what it exempts as by what it covers. Annex II of the Section 122 proclamation contains 1,109 non-aircraft product exceptions. The IEEPA regime exempted 1,125 products from its baseline rate through its amended Annex II. The merger is almost exact. All 1,109 codes in the Section 122 Annex II were already exempt under IEEPA, either through its original Annex II or through the semiconductor exception. No new products were added.

Sixteen printed-matter codes present in the IEEPA Annex II do not appear in the Section 122 list. These are books, newspapers, periodicals, children's colouring books, sheet music, maps, architectural plans, and letter pads (Chapters 48 and 49 of the Harmonised Tariff Schedule). Their removal is almost certainly a cleanup rather than a policy change: six of the sixteen also appear in the IEEPA statutory exception list, which covers products exempt under the Florence Agreement on the Importation of Educational, Scientific, and Cultural Materials. The remaining ten are close cousins within the same tariff chapter. These products were arguably never meant to be taxed under either regime.

The IEEPA Annex II was amended twice during 2025, well before the transition to Section 122. In September, 84 copper and chemical product codes were removed. In October, 158 wood products lost their exemptions. By the time the Supreme Court ruled on 20 February 2026, the IEEPA exception list had already shrunk from its original 1,326 codes to 1,084. The Section 122 proclamation inherited the list in its narrowed form.

USTR Ambassador Greer has stated publicly that the tariff deals negotiated under the IEEPA regime remain in force. The legal picture is more complicated than that.

The deals negotiated since April 2025 contain commitments that rest on different legal bases. Some elements were implemented as modifications to the IEEPA reciprocal tariffs. Others involve Section 232 tariff adjustments, regulatory commitments, or procurement pledges that have nothing to do with IEEPA. The Supreme Court ruling and the subsequent rescission of the IEEPA tariff orders do not touch those non-IEEPA elements. They remain in force.

The IEEPA-dependent elements are a different matter. The tariff rates, floor mechanisms, and product-specific exemptions negotiated under these deals were all implemented through modifications to the IEEPA executive orders and given effect through HTSUS headings in subchapter III of chapter 99. When the Court struck down the IEEPA tariffs and the rescission order formally ended them, those HTSUS headings ceased to have legal force. The implementation mechanism has fallen away.

Take the Swiss deal as an example. The tariff floor (a minimum effective rate of 15 percentage points) was implemented through CBP guidance as a modification to the IEEPA reciprocal tariffs, using HTSUS headings 9903.02.82 and 9903.02.83. Those headings sit within the IEEPA tariff subchapter. With the IEEPA tariffs rescinded, there is currently no legal instrument giving effect to the floor. The same logic applies to deals structured as rate reductions, such as India's reduction from 25% to 18%: the rate being reduced no longer exists.

There is, however, a credible argument that the deals could be reimplemented relatively quickly. EO 14346 ("Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements"), signed on 5 September 2025, was not rescinded. That order authorised the Secretary of Commerce and USTR to take all necessary actions to implement trade and security framework agreements, including modifications to the HTSUS through Federal Register notice. If the national emergency declaration underlying EO 14346 still stands, and the authority it grants to Commerce and USTR still stands, then the administration may have a route to reimpose deal terms under the Section 122 framework without needing new legislation.

But that requires an affirmative administrative act. It does not happen automatically. As of this writing, we have not seen a Federal Register notice or CBP guidance reimplementing any deal terms under Section 122. Until that happens, the IEEPA-dependent elements of the bilateral deals are legally inoperative, and all trading partners face the flat 10% Section 122 surcharge.

USTR Ambassador Greer also announced the intention to initiate several new Section 301 investigations. These are expected to cover most major trading partners and a wide range of concerns, from industrial excess capacity to discrimination against United States technology companies and digital services taxes. They will proceed on an "accelerated timeframe".

The administration can also act under investigations already initiated. The Section 301 investigation into Brazil’s digital trade practices, launched in July 2025, remains active. So does the investigation into digital service taxes, which targeted Canada, France, Austria, Italy, Spain, Turkiye, and the United Kingdom.

As noted above, Section 232 tariffs remain intact. Recall, too, that Section 232 investigations on robotics, wind turbines, drones, and pharmaceuticals are also underway.

Both Section 232 and Section 301 tariffs are considered more legally durable than the Section 122 surcharge. The tariff landscape will therefore look different in the months ahead, and lower for most trading partners in the immediate term. Yet the administration's long-term tariff ambitions remain intact. The trajectory of Section 301 and Section 232 investigations warrants close monitoring.

The Section 122 proclamation substantially migrates the same tariff architecture onto a different statutory foundation, forced by the Supreme Court's invalidation of the IEEPA tariffs.

The flat 10% replaces the country-specific IEEPA rates. For countries that faced rates above 10%, the surcharge is lower. For countries where floor deals set minimums above MFN + 10% (EU, Japan, Korea, Switzerland/Liechtenstein), effective rates may remain above 10%.

The exception list is narrower, but only slightly. Sixteen printed-matter product codes lost their Annex II exemptions. The larger reductions to the exception list (wood and copper products) had already occurred under the IEEPA regime during 2025.

The surcharge is, in principle, time-limited. Unlike the IEEPA tariffs, which had no built-in expiry, the Section 122 surcharge expires after 150 days. Congress must act to extend it. More durable tariffs will be enacted using Section 232 and 301.