The legal landscape for US imports has experienced a seismic shift in the last 24 hours. Following a Supreme Court ruling deeming tariffs imposed under the International Emergency Economic Powers Act (IEEPA) unconstitutional, the White House has terminated these duties.
However, this is not a tax cut. In a simultaneous move to maintain trade pressure, the Trump administration has immediately activated Section 122 of the Trade Act of 1974. For importers, one 10% tax has effectively been swapped for another, but the underlying legal basis and application have changed.
To avoid compliance disasters and accurate financial forecasting, every importer must understand exactly what was canceled, what was implemented, and how to calculate total landed duties starting February 24, 2026.
Part 1: The "Tariff Swap" Explained
Effective February 24, 2026, at 00:01 AM Eastern Time, the US tariff structure changes as follows:
WHAT IS CANCELED (The End of IEEPA): Due to the Supreme Court ruling, the following duties are officially terminated for goods entered for consumption on or after the effective date:
- The 10% Reciprocal Tariff is officially canceled.
- The 10% Fentanyl Tariff is officially canceled.
WHAT IS NEW (Section 122 Implemented): To replace the struck-down tariffs, President Trump has invoked Section 122 to address international payment imbalances:
- A new 10% Global Tariff Surcharge (Section 122) is effective immediately.
- Duration: This is a temporary measure mandated for 150 days, expiring on July 24, 2026.
- Note: While President Trump has threatened to raise this rate to 15%, the current effective rate is 10%. Importers should monitor for further executive orders.
Part 2: Definitive Duty Calculation Guide (Effective Feb 24)
The application of the new Section 122 tariff interacts differently with existing Section 301 and 232 duties. Below are the final calculation formulas based on product category.
Note: MFN = Most Favored Nation Base Tariff Rate.
Category 1: General Products (Not subject to Sec 301 or 232)
(This covers more than half of all imported products) These goods now face the base rate plus the new global surcharge.
Final Duty = Base Rate (MFN) + 10% (Section 122 Surcharge)
Category 2: Section 301 Products (The China Tariffs)
(Covers over 1/3 of products, including those taxed under Trump Term 1 and Biden) The new Section 122 surcharge stacks on top of existing 301 duties.
Final Duty = Base Rate (MFN) + 301 Duty (7.5% to 100%) + 10% (Section 122 Surcharge)
Category 3: Section 232 Products (Steel, Aluminum, Copper, Autos & Parts)
(Specific industrial goods) Based on current guidance, Section 122 is NOT applied to goods already subject to Section 232 national security tariffs.
Final Duty = Base Rate (MFN) + 232 Duty (25% or 50%)
Category 4: Overlap Products (Subject to both Sec 301 and 232)
(A very small percentage of products) For these rare items, the Section 122 surcharge is not added.
Final Duty = Base Rate (MFN) + 301 Duty (7.5% to 100%) + 232 Duty (25% or 50%)
Category 5: De Minimis Packages (<$800 Value)
(Cross-border e-commerce shipments) The tax-free ride for small parcels is effectively over. A massive new tax regime now applies to these shipments.
Final Duty = A flat 54% ad valorem tariff OR a specific tariff of $100 per package (whichever is applicable based on enforcement guidance).
Critical Addition: AD/CVD If your product is subject to Antidumping (AD) or Countervailing Duties (CVD), these must always be added to the final calculations above.
Part 3: Immediate Operational Action (Goods In-Transit)
US Customs and Border Protection (CBP) will update the ACE system programming on Feb 24 to deactivate IEEPA HTSUS numbers.
CRITICAL OPPORTUNITY: The 9-Day Window While the official termination date is Feb 24, importers have a brief window for retroactive relief. If your goods were released in the 9 days prior to February 24, you can amend your Entry Summaries to remove the now-unconstitutional IEEPA duties (the 10% Reciprocal and 10% Fentanyl tariffs). Contact your customs broker immediately to file these amendments before the window closes.
Part 4: The $1.3 Trillion Question – Can I Get a Refund?
Since the Supreme Court ruled the collection of IEEPA tariffs unconstitutional, many importers are asking if they can recover previously paid duties.
The short answer: Not immediately, and it will be difficult.
- The Court's Role: The Supreme Court only ruled to stop future collection. It has not ruled on refunds for past payments. The decision on refunds rests with the US Court of International Trade (CIT).
- The Scale: According to CBP data from December, approximately $1.3 trillion has been collected under these now-unconstitutional tariffs. This is unprecedented; never before has a tariff involving such vast sums been declared unconstitutional.
- The Litigation Nightmare: Hundreds of major corporations, including Costco, have already filed lawsuits demanding refunds. President Trump himself has acknowledged that the legal battle over refunds could take "five years."
Recommendation: Importers with significant exposure should consult trade counsel regarding preserving their rights to a potential refund, but should not count on this liquidity in the near to medium term.
24 Feb, 2026
