From IEEPA to Section 122: The Tariff Reset Shippers Can't Afford to Ignore

Tariff policy does not wait for anyone’s planning cycle. 

Just when shippers thought they had a handle on the IEEPA-based framework, the U.S. Supreme Court struck it down, and the White House turned to a different tool: Section 122 of the Trade Act of 1974. Effective February 24, 2026, a broad import surcharge is now live across U.S. imports, and yes, that likely means you.

But now, 24 states just sued the federal government to block these tariffs entirely. That is not a minor legal footnote. That is a direct challenge to the surcharge now sitting on top of your U.S. imports, filed in the U.S. Court of International Trade, with refunds of already-collected duties on the table.

However, here is what that lawsuit does not do: it does not pause your compliance obligations today. Until a court orders otherwise, the tariff is live, and your shipments are subject to it.

So how did we get here? 

Consider this your straight-talking advisory, not a panic button.

What’s Transpired? How We Got Here

Think of this as a tariff regime reset. The legal basis changed, the mechanics changed, and the litigation risk changed, all within weeks. Here is the sequence that brought us to where we are today.

The Authority Behind the Surcharge

When the Supreme Court struck down the IEEPA-based framework, the White House turned to Section 122 of the Trade Act of 1974, a statute that allows the President to impose a temporary import surcharge up to 15% for up to 150 days. Proclamation 11012 put that authority to work, placing a 10% ad valorem duty on covered imports starting February 24, 2026 and running through July 24, 2026. 

Worth noting: this surcharge does not stack on top of existing Section 232 tariffs, and goods entering Foreign Trade Zones after the effective date must be admitted under privileged foreign status.

What Gets Exempted (and Why Classification Is Everything)

CBP implemented the surcharge under HTSUS 9903.03.01, with exemption codes running through 9903.03.11. The in-transit carve-out is narrow and time-boxed. Annex II covers a long list of exclusions, but the proclamation is explicit: those exclusions are HTS-driven, not description-driven. Your product’s label means nothing. The HTS code means everything.

The Lawsuit That Has Everyone Watching

On March 5, 2026, twenty-four states filed suit in the Court of International Trade to permanently block Section 122 tariffs and recover duties already paid. Their argument centers on whether a trade deficit qualifies as the kind of “fundamental international payments problem” the statute was written to address. The court has not ruled, and no injunction is in place. Tariffs are still live. Your compliance obligations have not changed.

Where Does Mallory Alexander Fit In?

The lawsuit is real, the tariff is live, and the timeline is anyone’s guess. When Section 122 tariffs can tighten, loosen, or get thrown out by a court before July, the biggest risk for shippers is not paying more duty. It is making confident decisions with incomplete information and getting hit later by avoidable entry errors, unexpected cash flow strain, or customer disputes you did not see coming. That is exactly where we come in at Mallory Alexander.

• Landed Cost Modeling You Can Actually Use: We translate Section 122 into SKU- and lane-level landed cost scenarios so your pricing and procurement teams are working from real numbers, not gut instinct. We also model rate drift scenarios so you can quote with guardrails instead of hope.
• HTS Classification and Exemption Mapping: Exemptions live and die by HTS classification and correct Chapter 99 handling. We validate classifications, map them to Annex-driven exclusions, and align documentation so your entries reflect the intended treatment under CBP’s Section 122 framework.
• Entry Strategy and Cash Flow Protection: Section 122 duties are treated as regular customs duties, which affects bond sufficiency, payment timing, and working capital. We help you pressure-test entry timing, warehouse withdrawal planning, and trade program options so duty exposure does not become a surprise liquidity event.
• Routing and Mode Options When the Cost Structure Changes: When duties change, the cheapest route on paper can become the most expensive once dwell time, compliance friction, and inventory penalties surface. We evaluate routing, consolidation, and mode tradeoffs with the new duty reality factored in, without overreacting or rewriting your entire network overnight.
• Continuous Tariff Monitoring Without the Noise: Proclamation mechanics, CBP guidance, and CIT litigation can all move independently of each other. We monitor the authoritative signals, including CBP CSMS updates, Federal Register actions, and court developments, and translate them into clear, actionable updates for your next shipment.

If you want a quick Section 122 impact check, send us:

• Your top 20 HTS codes (or a product list),
• Countries of origin, and
• The next 30-60 days of inbound ETAs.

We’ll help you prioritize what to validate first and where the biggest landed-cost and compliance risks sit.

Reach out to us at any time. 

CBP states it cannot immediately comply with the Court’s order to remove IEEPA duties from entries and process refunds at scale. 

The numbers involved are staggering:

▪️ 53 million import entries include IEEPA duties

▪️ 20.1 million entries remain unliquidated

▪️ Over $166 billion in duties were collected under IEEPA

▪️ 330,000+ importers are affected 

CBP explained its current systems were not designed for mass removal of a single tariff program across millions of entries.

Some of the operational challenges highlighted in the filing:

• Entries often contain multiple HTS provisions on a single line, requiring manual recalculation to isolate IEEPA duties.

• ACE can only process 10,000 entry summary lines per batch, meaning hundreds of thousands of manual updates would be required.

• Processing refunds entry-by-entry would require over 4.4 million labor hours from CBP personnel. 

CBP is proposing a different approach:

➡️ Development of new ACE functionality that would allow importers to submit a declaration identifying affected entries, after which the system would automatically recalculate duties and aggregate refunds by importer.

The agency estimates this system could be ready in approximately 45 days.

ACE Portal Reminder for Importers – Don’t Miss Potential Refunds!

1. A quick reminder for importers to sign up for an ACE Secure Data Portal account immediately, if you haven’t already. You can apply here: Applying for an ACE Secure Data Portal Account | U.S. Customs and Border Protection.
2. When completing the application, please make sure your company name and address match exactly with what U.S. Customs and Border Protection (CBP) has on file, as any differences may delay the process.
3. Importers should also be sure to enroll in electronic refunds through ACE (as mentioned in the CSMS message shared in our previous advisories).
4. If you’d like M-PACT to assist with processing refunds within the ACE portal, you can simply grant us Cross Account Access to your ACE account. ACE Portal Cross Account Access 

As always, feel free to reach out if you have any questions — we’re happy to help!