What Is Section 122 and Is It Refundable?
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TL;DR – Section 122 is a 10% tariff surcharge introduced February 24, 2026 under the Trade Act of 1974. It uses HTS codes 9903.03.xx. It is not refundable through CAPE — it's a completely separate authority from IEEPA. It expires July 24, 2026 and can only be extended by Congress, not the President. Two federal lawsuits challenging it had a court hearing on April 10, 2026, with a ruling pending.
What Is Section 122?
Section 122 of the Trade Act of 1974 grants the President authority to impose a temporary surcharge on imports to address balance-of-payments deficits. On February 24, 2026, a 10% surcharge took effect under this authority, using codes in the 9903.03.xx range. President Trump signed the order on February 20, 2026 — the same day the Supreme Court struck down IEEPA tariffs.
The timing is notable: February 24, 2026 is also the date CBP deactivated IEEPA codes in the TR-011 report — the same day IEEPA's duty collection period effectively ended. Importers who had been paying IEEPA duties immediately began paying Section 122 duties instead.
Section 122 Is Not Refundable Through CAPE
CAPE covers only IEEPA tariffs — duties collected under the International Emergency Economic Powers Act using codes 9903.01.xx and 9903.02.xx. Section 122 was imposed under entirely different statutory authority and is not part of the IEEPA refund program.
There is no announced refund mechanism for Section 122 duties. If your entries from late February 2026 onward show 9903.03.xx codes, those duties cannot be recovered through CAPE.
How to Tell Section 122 from IEEPA
| HTS Code | Program | Authority | Start Date | Refundable? |
|---|---|---|---|---|
| 9903.01.xx | IEEPA fentanyl + reciprocal | IEEPA | Feb 2025 | ✅ Yes (CAPE) |
| 9903.02.xx | IEEPA replacement rates | IEEPA | Apr 2025 | ✅ Yes (CAPE) |
| 9903.03.xx | Section 122 surcharge | Trade Act 1974 | Feb 24, 2026 | ❌ No |
The simplest check: look at your entry date. Entries from February 2025 through early February 2026 may contain IEEPA codes. Entries from late February 2026 onward contain Section 122 codes. Pull your ES-003 and filter by HTS code prefix to confirm. An entry with both IEEPA codes and Section 122 codes would have to span the February 24 transition date, which is unusual but possible for entries near that date.
Expiration: July 24, 2026
Section 122 tariffs have a statutory 150-day limit. The current surcharge expires on July 24, 2026. This date is set by statute and cannot be extended by the President alone — only an act of Congress can extend Section 122 tariffs beyond 150 days.
The administration has signaled awareness of the July deadline. USTR launched accelerated Section 301 investigations in early 2026 specifically designed to produce replacement tariff authority before Section 122 expires. If Section 301 investigations conclude before July 24, new tariffs under different authority could be put in place to replace Section 122. Monitor Federal Register notices for any Section 301 actions.
Active Legal Challenges
Two federal lawsuits challenging Section 122 tariffs were filed in the Court of International Trade in March 2026:
Oregon v. Trump (CIT No. 26-01472) — filed March 5, 2026 by 24 state attorneys general. The complaint argues Section 122 tariffs violate the nondelegation doctrine by granting the President effectively unlimited tariff authority without an intelligible limiting principle, similar to the constitutional argument that succeeded against IEEPA.
Burlap & Barrel v. Trump (CIT No. 26-01606) — filed March 9, 2026 by a private importer. Raises similar constitutional arguments about the scope of presidential authority under Section 122.
A three-judge CIT panel held a hearing on April 10, 2026. As of late April 2026, a ruling is pending.
What this means for importers: If the CIT strikes down Section 122, importers who paid the 10% surcharge on goods imported between February 24, 2026 and the date of any ruling could potentially become eligible for a second round of refunds — separate from and following the IEEPA CAPE process. No refund mechanism for Section 122 currently exists. Monitor case developments at courtlistener.com or cbp.gov for any CBP response if a ruling issues.
Section 122 Exemptions
Not all goods are subject to the Section 122 surcharge. The following are explicitly excluded:
- Civil aviation products (9903.03.05)
- Steel, aluminum, automobiles, copper, lumber, semiconductors, and other goods already subject to Section 232 tariffs (9903.03.06)
- Canadian goods qualifying under USMCA (9903.03.07)
- Mexican goods qualifying under USMCA (9903.03.08)
If your goods fall into one of these categories, confirm the exemption code appears on your entries before assuming Section 122 applies.
Frequently Asked Questions
I have both IEEPA and Section 122 codes on different entries — what happens? Your IEEPA entries (9903.01/9903.02, February 2025 – early February 2026) are eligible for CAPE. Your Section 122 entries (9903.03, late February 2026 onward) are not. These are separate entry populations with separate treatment. File CAPE for your IEEPA entries and treat Section 122 duties as a current business cost unless the court challenges succeed.
Can the President extend Section 122 past July 24? No. The 150-day limit is statutory. Only Congress can extend Section 122 tariffs beyond that date. The President cannot unilaterally renew or extend them. If Congress does not act and the tariffs aren't replaced by another authority (such as Section 301), they expire automatically on July 24, 2026.
What happens after Section 122 expires or is struck down? If Section 122 expires without replacement, the 10% surcharge ends and importers pay only base rates plus any remaining Section 232 tariffs. If the CIT strikes down Section 122 and it is later confirmed on appeal, importers who paid the 10% surcharge may have a path to refunds — but no mechanism currently exists for that scenario. Watch for CBP announcements if a ruling issues.
Will Section 122 be replaced by Section 301? Possibly. USTR launched accelerated Section 301 investigations in early 2026 specifically to create tariff authority that could replace Section 122 before July 24. Section 301 investigations typically take 12+ months, but the administration is pursuing expedited timelines. Whether new Section 301 tariffs would cover the same goods at the same rate as Section 122 depends on investigation outcomes.
When does Section 122 expire exactly? July 24, 2026. That is 150 days from the February 24, 2026 effective date.
Is Section 122 the same as IEEPA? No. IEEPA was imposed under the International Emergency Economic Powers Act. Section 122 is imposed under the Trade Act of 1974, Section 122. Different statute, different HTS codes, different legal basis, different expiration structure. The Supreme Court's February 2026 ruling striking down IEEPA had no direct effect on Section 122 — Section 122 faces its own separate legal challenges.