Section 122 Duty: What Importers Need to Know

For importers, customs brokers, sourcing teams, and supply chain leaders, Section 122 duty has quickly become one of the most important tariff topics to understand. It is broad, temporary, legally controversial, and potentially expensive.

Section 122 is not a normal customs duty. It is not an antidumping duty. It is not a Section 301 China tariff. It is a special presidential authority under the Trade Act of 1974 that allows the United States to impose temporary import surcharges or quotas when certain international payment problems exist.

As of May 9, 2026, the current Section 122 surcharge is also under serious legal challenge. On May 7, 2026, the U.S. Court of International Trade ruled that the recent 10 percent Section 122 tariff was unlawful as applied to certain plaintiffs, but the court did not issue a nationwide injunction for all importers. That means companies should continue monitoring the legal status closely and should not assume the issue is fully resolved.

What is Section 122?

Section 122 refers to 19 U.S.C. 2132, also known as the balance of payments authority. The statute allows the President to impose temporary import restrictions when fundamental international payments problems require special measures to restrict imports.

The law identifies three general triggers:

1. A large and serious U.S. balance of payments deficit

2. An imminent and significant depreciation of the U.S. dollar in foreign exchange markets

3. The need to cooperate with other countries in correcting an international balance of payments disequilibrium

If those conditions exist, the President may impose a temporary import surcharge, quotas, or both. The surcharge cannot exceed 15 percent ad valorem, and it cannot last more than 150 days unless Congress extends it. The statute also says the surcharge is imposed in addition to duties already imposed and is treated as a regular customs duty.

In practical terms, Section 122 gives the executive branch a short term emergency tool to raise import costs across a broad group of products.

What happened in 2026?

On February 20, 2026, the President issued a proclamation imposing a temporary 10 percent ad valorem import surcharge under Section 122. CBP guidance stated that the surcharge applied to articles that are the product of any country, entered for consumption or withdrawn from warehouse for consumption, from February 24, 2026 through July 24, 2026, unless an exemption applied.

The Federal Register notice explained that the administration was relying on Section 122 because it determined that fundamental international payments problems existed and that an import surcharge was required to address large and serious U.S. balance of payments deficits.

How does Section 122 duty work with other tariff duties?

The most important concept is stacking.

Section 122 is generally an additional duty, not a replacement duty. That means an importer may owe ordinary customs duty plus other applicable trade remedy duties, plus Section 122, unless a specific exception applies.

• For example, an imported product could potentially face:

• Normal HTS dutySection 301 duty

• Antidumping or countervailing duty

• Merchandise Processing Fee

• Harbor Maintenance Fee, if applicable

• Section 122 surcharge

The statute itself says the surcharge may be imposed “in addition to those already imposed,” and CBP guidance treated the 2026 surcharge as an additional 10 percent ad valorem duty.  

There is one especially important carveout: according to EY’s summary of the 2026 proclamation, the Section 122 tariff was in addition to other duties and fees, but it did not apply in addition to Section 232 tariffs. If Section 232 applied only to part of an import, Section 122 could apply to the portion not covered by Section 232.

That makes classification and product level analysis critical. A company cannot simply ask, “Do I import?” The better question is, “Which HTS lines, countries of origin, trade programs, Chapter 99 provisions, and special duty regimes apply to each SKU?”

Who is exposed to Section 122 duty?

The short answer: almost any U.S. importer can be exposed, unless the product falls within a listed exemption or a qualifying trade preference.

The 2026 CBP guidance described the surcharge as applying to articles that are the product of any country, unless specifically exempt. That means exposure was not limited to China, Mexico, Europe, or any single trade partner.

Companies most exposed include:

1. Importers with low margin products

A 10 percent surcharge can wipe out margin quickly, especially where landed cost was quoted before the duty was imposed. This is especially painful for distributors, retailers, and manufacturers locked into customer pricing.

2. Companies importing from many countries

Because Section 122 can be broad and country neutral, shifting sourcing from one country to another may not solve the problem unless the new source qualifies for an exemption or trade preference.

3. Importers without strong HTS and origin controls

Section 122 exposure depends on entry data. Bad HTS classification, weak origin support, or poor broker instructions can lead to overpayment, underpayment, or missed exemption claims.

4. Companies using foreign trade zones

CBP guidance stated that covered goods admitted into a U.S. Foreign Trade Zone on or after the effective date generally had to be admitted in privileged foreign status, unless eligible for domestic status.

5. Companies with goods in transit during the effective date

CBP guidance included an in transit exception for certain goods loaded before the effective time and entered before the deadline. That type of exception is narrow and document driven, so timing, vessel records, entry date, and shipment documentation matter.

6. Companies relying on trade agreements

Some goods may avoid exposure if they qualify for specific preferential treatment. EY noted that goods from Canada or Mexico entered free of duty under USMCA, and certain CAFTA DR qualifying textiles, were among the listed exceptions.

This makes origin qualification more valuable. But it also raises the risk of unsupported claims. Importers should have certificates, rules of origin analysis, bills of material, production records, and supplier backup ready before claiming relief.

What products may be exempt?

The 2026 proclamation included several categories of exceptions. EY identified examples such as certain critical minerals, energy products, pharmaceuticals, specified electronics, vehicles and parts, aerospace products, information materials, donations, accompanied baggage, products already subject to certain Section 232 restrictions, qualifying USMCA goods, and certain qualifying CAFTA DR textiles.

The key word is qualifying. An importer should not assume an exemption applies just because the product sounds similar to an exempt category. The exemption depends on the exact HTS provision, product description, origin, entry treatment, and Chapter 99 reporting.

Why the legal challenge matters

The legal risk around Section 122 is not academic. On May 7, 2026, the Court of International Trade held that the President exceeded statutory authority in imposing the temporary 10 percent duty on nearly all imports under Section 122. The court granted relief to specific plaintiffs, but it did not stop the tariff nationwide for every importer.

For businesses, this creates a practical problem. Importers may still need to pay, file correctly, preserve records, monitor liquidation, and evaluate protest or refund strategies depending on how the litigation develops.

A company should not treat the ruling as automatic relief unless it has reviewed its own entries, legal standing, liquidation status, and protest deadlines with trade counsel.

What should importers do now?

Importers should take a disciplined approach.

First, map all imported SKUs by HTS code, country of origin, duty rate, Section 301 status, Section 232 status, AD CVD risk, and trade agreement eligibility.

Second, quantify the Section 122 impact by part number, supplier, customer, and program. This helps separate urgent commercial exposure from minor exposure.

Third, review exemption eligibility. Do not rely on broad product names. Confirm against the actual HTS and Chapter 99 provisions.

Fourth, update broker instructions. Entry coding matters, especially when Chapter 98 or Chapter 99 provisions are involved.

Fifth, preserve refund rights. Track affected entries, liquidation dates, protest windows, drawback eligibility, and litigation developments.

Sixth, review contracts. Purchase orders, supply agreements, and customer contracts should clearly address who bears new duties, temporary surcharges, refunds, and retroactive tariff changes.

Bottom line

Section 122 duty is a temporary import surcharge designed for balance of payments emergencies. It can be broad, fast moving, and layered on top of existing customs duties. For importers, the biggest risks are not only the extra duty cost, but also incorrect entry treatment, missed exemptions, unsupported origin claims, and failure to preserve refund rights.

Even with the May 2026 court ruling, Section 122 remains a topic importers need to understand. The safest approach is to treat it as a live customs exposure until the legal and administrative landscape becomes clearer.