By Steve Levine · Updated August 13, 2026 · 6 min read
Quick Answer
Section 122 of the Trade Act of 1974 lets the President impose a temporary import surcharge of up to 15% for no more than 150 days, and only to address a serious balance-of-payments problem. It is one of the narrowest tariff powers Congress has delegated. After the Supreme Court invalidated the IEEPA tariffs in February 2026, Section 122 was used to impose a 10% surcharge on nearly all imports. The Court of International Trade held that use unauthorized in May 2026, the Federal Circuit stayed that ruling pending appeal, and the surcharge then expired on its own 150-day clock on July 24, 2026. The duties collected during those five months have not been refunded.
On this page
- What Section 122 authorizes
- The three built-in limits
- How it was used in 2026
- The court fight
- Expiring is not the same as being struck down
- Frequently asked questions
Section 122 of the Trade Act of 1974, codified at 19 U.S.C. section 2132, is a stopgap. Congress wrote it for a specific scenario: the United States is running large and serious balance-of-payments deficits, or facing some other fundamental international payments problem, and the executive needs to act before Congress can legislate. In that situation the President may impose a temporary surcharge on imports.
It is a real delegation of tariff power, which distinguishes it from IEEPA. The Supreme Court's February 2026 ruling pointedly noted that Congress has delegated tariff authority elsewhere, but always with express ceilings on duration, amount and scope. Section 122 is the clearest example of exactly that kind of bounded grant.
The boundaries are what make the statute unusual, and they are worth stating plainly because they are the reason it cannot substitute for a permanent tariff program.
- A rate ceiling. The surcharge may not exceed 15% ad valorem.
- A time limit. It may run no longer than 150 days. Continuing past that point requires Congress to act.
- A stated predicate. It must address a balance-of-payments deficit or comparable payments problem — not a trade deficit generally, not industrial policy, and not a negotiating objective.
That third limit is the one that generated litigation. A ceiling and a clock are easy to measure. Whether the required economic condition actually exists is a judgment a court can review.
Four days after the Supreme Court held that IEEPA could not support tariffs, Proclamation 11012 invoked Section 122 to impose a temporary 10% surcharge on virtually all imports, effective February 24, 2026. The rate sat below the statutory ceiling, and the proclamation was written to run to July 24, 2026 — exactly 150 days.
The practical effect was to hold much of the prior tariff structure in place while the administration developed longer-term authority. The rate was lower and the legal basis different, but for an importer clearing goods that spring, the surcharge was a continuation of the cost.
On May 7, 2026, in Slip Opinion 26-47, the Court of International Trade held by a 2-1 vote that the surcharge exceeded the President's Section 122 authority. The reasoning turned on the statutory predicate: the proclamation had not identified the kind of large and serious balance-of-payments deficit the statute requires, and the court concluded that prevailing economic conditions did not supply one.
The remedy was far narrower than the holding. The court entered a permanent injunction only for the parties that prevailed — two importers and one state — and declined broader relief for most of the other state plaintiffs. So even in the moment of the ruling, the surcharge continued to apply to importers generally.
The government appealed. The Federal Circuit issued an administrative stay on May 12, 2026, and then granted a stay pending appeal on June 11, 2026, pausing the injunction as to the covered parties while it considers the merits. As of this writing the appeal remains undecided.
This distinction causes more confusion than any other part of the story, and it decides real money.
When the surcharge lapsed on July 24, 2026, it did so because its 150-day clock ran out — not because a court ordered it removed. An expiration stops future collection. It does nothing about duties already paid, which remain lawfully collected unless and until a court says otherwise. That question is precisely what the Federal Circuit appeal will resolve.
If that court affirms and relief reaches importers generally, a second refund pool opens, separate from the roughly $166 billion IEEPA pool, and the pass-through questions that drive the consumer tariff class actions would repeat with a new set of dates. If the court reverses, there is nothing to refund and nothing to pass through. Neither outcome should be assumed while the case is pending — and no legitimate process exists today for a consumer to claim a Section 122 refund, because the refund itself does not yet exist and, if it ever does, would run to the importer of record.
What is the difference between Section 122 and IEEPA tariffs?
IEEPA is an emergency powers statute that says nothing about tariffs, which is why the Supreme Court held in February 2026 that it cannot support them. Section 122 is a trade statute that does expressly authorize an import surcharge, but on a short leash: a ceiling of 15 percent, a hard limit of 150 days, and a stated purpose of addressing balance-of-payments problems. The legal fight over Section 122 was therefore not whether the President may ever use it, but whether the conditions the statute requires were actually present.
Were Section 122 duties refunded when the surcharge expired?
No. Expiring and being struck down are different things. The surcharge simply ran out its 150-day clock on July 24, 2026, which stopped collection going forward but did not undo what had already been collected. Whether those duties are returned depends on how the Federal Circuit resolves the government's appeal of the Court of International Trade ruling.
Did the Court of International Trade ruling help all importers?
No. The May 7, 2026 decision was 2-1 and granted permanent injunctive relief only to the parties that prevailed — two importers and one state — rather than to importers generally. The Federal Circuit then stayed even that narrow injunction on June 11, 2026 while the appeal proceeds, so collection continued as to those parties pending further order.
Could Section 122 produce a second round of tariff refunds?
It is possible but unresolved. If the Federal Circuit affirms that the surcharge exceeded the President's authority and relief is broadened beyond the original plaintiffs, duties collected between February 24 and July 24, 2026 could become refundable to importers, creating a second refund pool separate from the IEEPA one. If the court reverses, the money stays collected. No outcome should be assumed while the appeal is pending.
