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In our previous alert, we reported that the U.S. Supreme Court struck down President Donald Trump's tariffs imposed under the International Emergency Economic Powers Act (IEEPA) and that the President was considering other alternative tariffs. Since that time, there have been many developments across the tariff galaxy.
IEEPA Tariff Collection Ends
U.S. Customs and Border Protection (CBP) issued instructions on Feb. 22 to end the collection of all IEEPA tariffs, effective Feb. 24, at 12 a.m. Eastern time.
As of today, importers are no longer required to deposit IEEPA tariffs. However, CBP's instructions did not address whether there would be a refund of IEEPA tariffs already paid by importers.
New Section 122 Tariffs Imposed
Shortly after the release of the Supreme Court decision on IEEPA tariffs, President Trump issued a proclamation on Feb. 20 titled, "Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems," levying an across-the-board additional tariff of 10% under Section 122 of the Trade Act of 1974.
Pursuant to this proclamation, CBP issued instructions on Feb. 23 to begin collecting Section 122 tariffs on all entries for consumption made on or after Feb. 24 at 12:01 a.m. Eastern time.
In other words, the new Section 122 duties became effective as soon as the IEEPA tariffs ended. Additionally, the CBP notice provided the following guidance on Section 122:
- Section 122 duties will not be collected on goods that were (1) loaded on a vessel at a foreign port and in transit before 12:01 a.m. on Feb. 24; and (2) that enter the United States or are withdrawn from a bonded warehouse for consumption before 12:01 a.m. Eastern time on Feb. 28.
- The 10% Section 122 duties are "additional" duties on all imported products (with certain exemptions) from all countries to be paid on top of the "general" duty rate applicable to the specific product as shown in the Harmonized Tariff Schedule of the United States (HTSUS).
- In accordance with the Presidential Proclamation, the guidance sets forth the excluded products, such as civil aircraft, certain agricultural commodities, and items eligible for the U.S.-Mexico-Canada Trade Agreement (USMCA).
- Articles subject to Section 232 (e.g., steel, aluminum, copper, autos/auto parts) are also exempt from Section 122. However, unlike IEEPA, the instructions do not address whether Section 122 duties would apply to the non-steel, non-aluminum or non-copper content of Section 232 derivative articles.
- The Section 122 duties will be collected through 12:01 a.m. Eastern on July 24, 2026, which reflects the 150-day limit under the statute. As previously reported, Section 122 duties can be continued past 150 days if approved by Congress.
Although the additional Section 122 duties are now being collected at a rate of 10%, the White House announced that it is working on an increase to the maximum level allowed under the statute of 15%. At this time, there is no update on the timing of that increase.
Continued Suspension of Duty-Free De Minimis Treatment
The presidential proclamation on Feb. 20 indicated that the previously imposed suspension of duty-free de minimis treatment would be continued for all countries. CBP issued instructions on Feb. 23 for the continued suspension.
This means that even low-value importations will be subject to the Section 122 duties unless covered by an exemption.
Status of Bilateral Trade "Framework Agreements"
The state of the bilateral trade "framework agreements," in which the Administration agreed to lower IEEPA tariffs in exchange for market access concessions, is unclear.
The Administration has stated that it expects the United States' trading partners to abide by the agreements. In the case of the European Union (EU), however, the addition of the Section 122 tariffs exceeds the tariff rates promised to the EU in the bilateral agreement, and the EU reacted by suspending implementation of the deal.
Meanwhile, a delegation from India was scheduled to travel to Washington this week to finalize a trade agreement, but the Indian delegation cancelled the visit after the Supreme Court ruling.
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