Tariffs Redux: What Importers Should Know About IEEPA Refunds and Section 122

By Brett W. Johnson, Derek Flint, T. Troy Galan, and Thomas Williams

Following the U.S. Supreme Court’s decision in Learning Resources, Inc. v. Trump,¹ which invalidated both the “reciprocal” tariffs and the drug-trafficking tariffs imposed under the International Emergency Economic Powers Act (IEEPA), President Trump moved immediately to implement a new tariff regime. Specifically, the President invoked Section 122 of the Trade Act of 1974 to impose a 10% global tariff on all imports entering the United States, subject to a few narrowly tailored exceptions.²

Section 122 authorizes tariffs for only 150 days (unless extended by Congress), which provides the Administration with a limited-duration mechanism while it evaluates potential actions under Sections 232 and 301. Tariff actions that comply with the statutory requirements have generally been upheld by the courts, even if not previously used at the scale seen in 2025 under IEEPA. In practical terms, the Administration appears to be using Section 122 as a stopgap measure to transition tariff policy to different, less transitory statutory authorities. And the Administration is sending a clear message that the Learning Resources decision will not precipitate a change in policy direction with respect to tariffs.

I. New Tariffs Under Section 122

Section 122 authorizes the President to impose a temporary import surcharge of up to 15% ad valorem for a maximum of 150 days to address “fundamental international payments problems,” including “large and serious United States balance-of-payments deficits.”³ The Section 122 tariffs became effective on February 24, 2026, and will expire on July 24, 2026, unless Congress enacts legislation extending them past the 150-day statutory limitation.⁴

Notably, unlike IEEPA, Section 122 specifically contemplates tariff authority.⁵ The Administration justified invoking Section 122 based on what it characterized as fundamental international payments imbalances: a $1.2 trillion annual goods trade deficit, a negative balance on primary income, and a net international-investment position of negative 90% of GDP at the end of 2024.⁶

II. Key Differences and Exemptions

The Section 122 tariffs differ from the invalidated IEEPA tariffs in several important respects. First, Section 122 tariffs must apply globally and cannot be country-specific; the statute requires the “temporary import surcharge” to apply in a “broad and uniform application,” except in cases where the President determines that certain articles should be exempted based on the needs of the U.S. economy.⁷

Second, the tariffs are subject to a 15% rate cap and 150-day time limit, whereas the IEEPA tariffs had no such constraints — rates on most Chinese imports, for instance, reached as high as 145%.⁸

Third, the Section 122 tariffs do not “stack” on top of tariffs imposed under Section 232, meaning products already subject to 25% to 50% Section 232 duties (such as steel and automobiles) are not subject to an additional 15% ad valorem tariff under Section 122.⁹

The Proclamation also exempts numerous categories of goods, largely mirroring prior exemptions under the invalidated IEEPA tariff regime.¹⁰ Exempted goods include:

Taken together, these exemptions reflect continuity of tariff policy rather than a substantive shift. In large measure, the Section 122 exclusions track the same categories of goods that were carved out under the prior IEEPA tariff regime, signaling that the Administration’s objective is to preserve the overall structure of the earlier tariff program while substituting a different statutory authority.

III. Potential Legal Challenges to Section 122 Tariffs

Although the U.S. Supreme Court’s decision in Learning Resources did not address the legality of tariffs under Section 122, the plaintiffs argued that Section 122 displaced IEEPA tariff authority.¹² Justice Kavanaugh’s dissent stated that “the Court’s decision might not prevent Presidents from imposing most if not all of these same sorts of tariffs under statutory authority,” including Section 122.¹³ Nevertheless, potential plaintiffs may challenge the legality of the new Section 122 tariffs if they exceed the statutory scope.  

IV. What Comes Next After Section 122

The Administration has already indicated that it is evaluating follow-on actions under Sections 232 and 301. Unlike IEEPA or Section 122, those statutes generally require the Administration to proceed through formal investigative and determination-based processes before new tariffs can be imposed or expanded.

Section 232 actions are predicated on national security investigations conducted by the U.S. Department of Commerce and culminate in findings and recommendations to the President. Section 301 actions are tied to investigations by the Office of the U.S. Trade Representative into foreign trade practices and typically involve public notices, opportunities for comment, and a developed administrative record supporting any eventual trade action. As a result, any future tariffs under these authorities will be shaped by the scope of the investigation, the evidentiary record, and the sufficiency of the government’s findings, and any legal challenges are likely to focus on those procedural and substantive foundations.

For importers, this is a pivotal planning moment. Companies that have not recently reviewed their Harmonized Tariff Schedule (HTS) classifications should consider doing so. Companies should also consider an assessment of whether Foreign Trade Zones, duty-deferral programs, or other mitigation structures are available for their supply chains, and should review supply and pricing agreements to understand how tariff costs and potential future changes are allocated. 

Further, importers should consider either directly or in support of trade groups, submitting comments and other evidence to the U.S. Department of Commerce and U.S. Trade Representative to help establish the record either in support or against any tariffs. Such comments are important for further judicial review and even standing if an importer determines that a lawsuit is necessary.

V. Update on IEEPA Tariffs

The Administration has indicated that it intends to allow the Court of International Trade (CIT) to address any obligation and related process as to potential refunds of the already paid IEEPA tariffs that were determined unconstitutional. The CIT has previously held that it will consider relief requests for any matters in which it has jurisdiction. As the Customs liquidation protest system has already been determined to be inadequate for handling any IEEPA refunds (absent changes), the real result is that any importer of recorder will likely need to file a lawsuit in the CIT to preserve their right to a tariff refund. The major reason for this is in regard to timing, because as import entries are liquidated, the clock towards challenging the liquidation determination begins to run. For many importers of record, this clock started in December 2025, if not earlier.

VI. Conclusion 

The U.S. Supreme Court’s Learning Resources decision marks a significant limitation on executive tariff authority under IEEPA, but it does not end the Administration’s tariff agenda. The pivot to Section 122, and the stated focus on Sections 232 and 301, indicate that the Administration will continue to pursue tariff policy through different statutory frameworks.

Importers that have largely stayed on the sidelines should consider engaging in a review of tariff classification positions, evaluate mitigation strategies, assess contractual risk allocation, prepare for the continuation of a high-tariff environment, and consider the merits of filing a lawsuit in the CIT to recover past IEEPA tariffs.

***Opinions expressed are those of the authors and not necessarily the firm’s or their colleagues’.