Fact Sheet: The Section 122 Temporary Import Surcharge
Following the recent Supreme Court ruling regarding IEEPA authority, the White House has moved quickly to implement a new trade measure under Section 122 of the Trade Act of 1974. This is a broad, temporary measure aimed at addressing the U.S. balance-of-payments deficit.+1
To help you navigate these changes, our team has broken down the proclamation into the key details you need to know for your upcoming shipments.
The Basics
- Effective Date: February 24, 2026, at 12:01 a.m. EST.
- Surcharge Rate: 10% ad valorem (This is a supplemental duty added on top of existing rates). Note: The administration has signaled an intent to potentially increase this to 15%; we are monitoring the Federal Register for an official amendment.+1
- Duration: 150 days (scheduled to expire July 24, 2026), unless extended by an Act of Congress.
The “On the Water” Exception
There is a very narrow window for goods currently in transit. The surcharge will not apply to goods that:
- Were “on the water” (exported to the U.S.) before 12:01 a.m. EST on February 24, 2026.
- Are entered for consumption before February 28, 2026.
Broker’s Note: If you have containers arriving this week, please contact us immediately to ensure we file your entries before the February 28 cutoff to avoid the 10% hit.
What is Exempt?
The administration has carved out several categories based on “economic necessity.” The 10% surcharge does not apply to:
- Regional Trade Partners: Goods entering duty-free under USMCA (Canada and Mexico) or CAFTA-DR (textiles and apparel).
- Existing Section 232 Goods: If your goods are already subject to Section 232 duties (Steel, Aluminum, etc.), the Section 122 surcharge generally does not “stack” on those specific items.
- Critical Commodities: * Energy products and certain critical minerals.
- Pharmaceuticals and active pharmaceutical ingredients.
- Specific agricultural products (e.g., beef, tomatoes, oranges).
- Fertilizers and natural resources not produced in sufficient quantity domestically.
- Specific Sectors: Certain electronics, aerospace products, passenger vehicles, and select automotive parts.
De Minimis and Postal Shipments
The order specifically addresses the “loophole” for low-value shipments:
- De Minimis ($800) Suspension: The suspension of duty-free treatment for $800-and-under shipments continues.
- Postal Network: For the first time, goods shipped through the international postal system will be subject to this 10% duty. The White House has directed CBP to establish a new process for collecting these duties from transportation carriers.
Why Is This Happening?
The administration is citing “fundamental international payments problems,” specifically a net international investment position of roughly -89% of GDP and a primary income balance that turned negative for the first time in decades. The stated goal is to incentivize domestic production and reduce the outflow of U.S. dollars.
What You Should Do Now
- Check your HTS Codes: We need to verify if your specific commodities fall under the “Annex I or II” exemption lists (Electronics and Auto Parts have very specific qualifiers).
- Review Customs Bonds: A 10% jump in duties can quickly exhaust your current bond limit. We can help you calculate if an increase is necessary.
- Audit Your Supply Chain: If your goods are coming from countries outside of USMCA/CAFTA-DR, your landed costs just changed significantly.
Questions? We are here to help. Reach out to your account representative or contact us via the “Contact Us” page for more information.