De Minimis
CBP reminds the trade community that de minimis continues to be suspended in the wake of the Supreme Court ruling on the collection of IEEPA duties.
According to the Executive Order “ Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries” and subsequent CSMS message 67845486 issued by Customs on 2/23/2026, the application of de minimis on all items entered into the United States regardless of country of origin, remain ineligible, unless they are goods covered by the exception at 50 U.S.C. 1702(b), i.e., certain donations, information/informational materials, and accompanied baggage for personal use.
Implementation of Section 122
On February 20, shortly after the US Supreme Court handed down their opinion regarding the President’s authority under IEEPA for establishing additional ad valorem duties on items imported to the United States, effectively striking down the use of IEEPA tariffs, President Trump signed Executive Order 11012 invoking his authority under Section 122 of the Trade Act of 1974.
Section 122 gives the Executive emergency authority to prevent “depreciation of the dollar in foreign exchange markets” and to correct “an international balance-of-payments disequilibrium.” It allows up to a 15% duty for up to 150 days. Congress must approve to extend the duties beyond 150 days.
Effective at 12:01am EST on February 24, 2026, a 10% ad valorem import duty will apply to articles imported into the United States.
According to the Section 122 Fact Sheet issued by the White House:
“By taking this action, the United States can stem the outflow of its dollars to foreign producers and incentivize the return of domestic production. By increasing its domestic production, the United States can correct its balance-of-payments deficit, while also creating good paying jobs, and lowering costs for consumers.”
Exclusions
Items that are not subject to this order include:
- certain critical minerals, metals used in currency and bullion, energy, and energy products;
- natural resources and fertilizers that cannot be grown, mined, or otherwise produced in the United States or grown, mined, or otherwise produced in sufficient quantities to meet domestic demand;
- certain agricultural products, including beef, tomatoes, and oranges;
- pharmaceuticals and pharmaceutical ingredients;
- certain electronics;
- passenger vehicles, certain light trucks, certain medium and heavy-duty vehicles, buses, and certain parts of passenger vehicles, light trucks, heavy-duty vehicles, and buses;
- certain aerospace products; and
- informational materials (e.g., books), donations, and accompanied baggage.
Other goods not subject to Section 122
- all articles and parts of articles that currently are or later become subject to section 232 actions;
- USMCA compliant goods of Canada and Mexico; and
- textiles and apparel articles that enter duty-free as a good of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua under the Dominican Republic-Central America Free Trade Agreement.
On-the -Water Exclusion
In addition to these exclusions, the order established an “on the water” exclusion. This means that the Section 122 duties will not apply to goods that were loaded onto a vessel at the port of loading and in transit on the final mode of transit prior to entry into the United States, before 12:01 a.m. eastern standard time on February 24, 2026 and are entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. eastern standard time, February 28, 2026.
Effective Duty Rates
There has been some confusion over the tariff rate that has been established under Section 122. President Trump indicated in his social media post on February 20 that he will sign an Executive Order establishing a 10% tariff rate under Section 122. The next day on February 21, he posted another message indicating that the initial 10% rate will be raised to 15% “effective immediately”. However, when the official Executive Order was signed, the wording kept the original 10% rate. There has not yet been any subsequent Executive Order amending the original 10% tariff rate. Officially, as of February 20, 2026, the Section 122 duty rate is 10%, with the potential of rising to 15%. This tariff is scheduled to expire on July 24, 2026.
Challenging Section 122
Since the implementation of Section 122 duties on February 24, there have been 2 recent court cases filed in the Court of International Trade (CIT) contesting the legality of the basis of authority granted under Section 122.
On March 5, 2026, 24 US States’ Attorney Generals jointly filed suit and on March 9, another similar suit was filed by the Liberty Justice Center on behalf of 2 importers, Burlap and Barrel, Inc., and Basic Fun, Inc.
Both cases challenge the authority of the President justification of using Section 122’s “Balance-of Payment Deficit” reason to establish an additional 10% tariff, with threat of increasing to 15%, on all items from all countries imported into the United States, with limited exclusions.
According to the complaint filed by the 24 collective US States,
“The President’s purported justification is fatally flawed. First, the President is contorting the term “balance of payments,” redefining it contrary to its meaning and cherry-picking only the negative components that make up the balance of payments, while ignoring entirely the huge net positive financial inflow components that also make up the balance of payments. Second, a balance of payments crisis is a currency crisis that was of great concern when Congress enacted Section 122, but which can no longer exist following the formal end of the fixed-rate currency exchange system in 1976. For these reasons, the President cannot meet the statutory requirements of Section 122, and his effort to impose tariffs under this statute is unlawful”
Similarly, the case filed by the Liberty Justice Center states,
“Section 122 permits the President to impose tariffs for 150 days under specific circumstances, to address specific problems: either (1) “to deal with large and serious United States balance-of-payments deficits;” (2) “to prevent an imminent and significant depreciation of the dollar in foreign exchange markets;” or (3) “to cooperate with other countries in correcting an international balance-of[1]payments disequilibrium.” The Section 122 Proclamation claims the United States has a balance-of[1]payments issue, in the form of large and persistent trade deficits—the first category. The President has not made assertions relevant to the second and third categories”
Both cases requested a 3 Judge panel to hear the case, similar to how the CIT originally heard the complaint against the President’s use of IEEPA, where they ultimately ruled in favor of the Plaintiffs.
Section 122 tariffs are only in place for 150 days according to law. This litigation could take longer than 150 days and Section 122 duties could have come and gone. However, depending on the outcome of these two cases, and any subsequent case filed, the duties collected under Section 122 could come into question after the fact and suffer the same fate as IEEPA. Importers could be looking at managing duty refunds on 2 fronts.
Who’s Entitled to Refunds?
With IEEPA no longer a legal option for the Trump Administration to use in their tariff policies, comes the long and bumpy road of refunds, if they’re even granted at this point. The CIT will be working on this in the meantime.
One major question that has been raised is… if a refund is granted, who really gets that refund? In the complex world of trade and logistics, many costs associated with the increase in tariffs have been burdened by more than just importers. Depending on how supplier purchase agreements and agreements with US based Customers were arranged, many of the extra tariff costs were either accounted for by either foreign suppliers lowering their costs, OEMs reimbursing importers for their tariff burden or the cost simply passed on to the ultimate consumer. If an importer gets an IEEPA refund, is the importer legally, or at least morally responsible or obligated to distribute those funds to suppliers, customers, or individual consumers?
To help answer these questions, there have been a few recent class action court cases filed last week in various courts across the country against shipping companies such as UPS and FedEx and against eyewear company EssilorLuxottica (who owns brands such as Ray-Ban and Oakley). These cases bring to light the fact that UPS and FedEx charged extra fees to help individual importers navigate and pay IEEPA duties, and the plaintiffs want to be guaranteed to be refunded those fees when the IEEPA refunds start flowing. In the EssilorLuxottica case, the suspicious rise in eyeglasses prices at the time IEEPA duties came into effect is being questioned and plaintiffs are requesting EssilorLuxottica to issue refunds of the increased in those prices as it’s presumed the increase was due to IEEPA duties.
Based on how these cases end, it could be the start of how IEEPA refunds could be handled and how they’re distributed out to others who may be entitled to refunds, past just the importer.
This article provides a timely and well-structured overview of two major developments affecting the trade community: the continued suspension of de minimis eligibility and the implementation of Section 122 tariffs under the Trade Act of 1974.
The summary of CBP’s guidance clearly explains that de minimis treatment remains suspended for most imports following the Supreme Court ruling affecting the administration’s use of IEEPA. By outlining the limited statutory exceptions and referencing the relevant Executive Order and CSMS guidance, the piece offers helpful clarity for importers navigating current entry requirements.
Equally valuable is the explanation of the administration’s use of Section 122 authority to impose a 10% ad valorem tariff on imports, effective February 24, 2026. The discussion of exclusions, the temporary 150-day timeline, and the “on-the-water” provision provides practical insight for companies evaluating the impact on their supply chains.
The article also thoughtfully highlights ongoing Court of International Trade challenges and the potential implications for duty refunds, reminding the trade community that tariff policy developments often carry both operational and legal consequences.
Overall, this update serves as a concise and informative resource for trade professionals monitoring the rapidly evolving U.S. tariff landscape and is well written.