Administration to impose a temporary 10% surcharge on all U.S. imports under Section 122 and expand Section 301/232 tariff use following Supreme Court IEEPA ruling.

REGULATORY BRIEFING – USTR / ADMINISTRATION RESPONSE TO SUPREME COURT IEEPA DECISION

1. What changed

The Supreme Court issued a decision limiting the President’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), specifically affecting President Trump’s Reciprocal and Fentanyl Tariffs.

In response, the Administration announced a shift to other statutory tools that directly affect U.S. import duties:

• Immediate imposition of a temporary 10% surcharge on articles imported into the United States under Section 122 of the Trade Act of 1974.
• Initiation of multiple new Section 301 investigations targeting a wide range of trading partners and practices, with tariffs identified as a likely remedy where unfair practices are found.
• Continuation of ongoing Section 301 investigations (including those involving Brazil and China), with tariffs remaining a potential outcome.
• Maintenance of existing Section 232 and Section 301 tariffs, which currently cover about 30% of U.S. imports, with rates ranging from 7.5% to 100% (Section 301) and 10% to 50% (Section 232).

This is a major, systemic change to the duty environment for U.S. imports, with both immediate and prospective impacts.

2. Affected products

a) Section 122 temporary 10% surcharge

• Scope: "Articles imported into the United States" – the announcement indicates a broad, near-universal application across imported goods.
• At this stage, no exclusions, HTS carve‑outs, or product‑specific limitations are specified in the statement.
• In practice, implementation details (e.g., whether any categories such as certain FTA-origin goods, essential goods, or specific Chapters are excluded) will be defined in forthcoming Presidential Proclamation(s), Federal Register notices, or CBP guidance.

b) Existing Section 301 tariffs (unchanged but reaffirmed)

• Products: Wide range of goods from China (and potentially other countries under existing 301 actions), already subject to additional duties.
• Rates: 7.5% to 100% additional duties, depending on the product.
• Coverage: Part of the 30% of U.S. imports currently affected by Section 301 and Section 232 measures.
• HTS: Product‑specific; defined in existing Section 301 lists (e.g., List 1–4A for China). Importers must continue to reference the applicable HTS subheadings in those lists.

c) Existing Section 232 tariffs (unchanged but reaffirmed)

• Products: Sectoral tariffs, historically including steel, aluminum, and certain derivative products, among others.
• Rates: 10% to 50% additional duties, depending on the product.
• Coverage: Included in the 30% of U.S. imports currently covered by trade remedy tariffs.
• HTS: Defined in existing Section 232 proclamations and annexes.

d) Future Section 301 investigations (prospective impact)

The Administration will initiate several new Section 301 investigations covering “most major trading partners” and focusing on:

• Industrial excess capacity
• Forced labor
• Pharmaceutical pricing practices
• Discrimination against U.S. technology companies and digital goods and services
• Digital services taxes
• Ocean pollution
• Practices related to trade in seafood, rice, and other products

If these investigations find unfair trade practices and responsive action is warranted, tariffs are explicitly identified as a potential remedy. This could lead to new, country‑ and product‑specific additional duties on:

• Technology and digital services‑related goods
• Pharmaceuticals and related products
• Seafood, rice, and other agricultural/food products
• Products linked to forced labor or industrial overcapacity

Specific HTS codes will only be known once USTR publishes investigation reports and proposed action lists.

3. Rate changes

a) New Section 122 surcharge

• New rate: Temporary 10% surcharge on articles imported into the United States.
• Old rate: No prior across‑the‑board Section 122 surcharge.
• Effect: This 10% is in addition to existing MFN/column 1 duties and any other applicable additional duties (e.g., Section 301, Section 232, ADD/CVD, Section 201, etc.).
• Example (illustrative):
• If a product currently has:
• Base MFN duty: 5%
• Section 301 additional duty: 25%
• New Section 122 surcharge: 10%
• Total ad valorem duty burden would become approximately 40% (5% + 25% + 10%), subject to how CBP instructs calculation and interaction of surcharges.

b) Existing Section 301 tariffs (unchanged)

• Current range: 7.5% to 100% additional duties, depending on the product.
• No rate reduction or removal is announced; instead, the Administration explicitly states these tariffs “will remain in place.”

c) Existing Section 232 tariffs (unchanged)

• Current range: 10% to 50% additional duties, depending on the product.
• These tariffs are also confirmed to remain in place, with ongoing investigations to be concluded.

d) Future Section 301 actions (prospective)

• No specific rates announced yet.
• Historically, Section 301 actions have often used 10%–25% additional duties, but the statement leaves open the possibility of higher or lower rates, depending on findings and policy choices.

4. Dates

The statement provides limited explicit dating but includes the following timing elements:

• Supreme Court decision: “today” (date not specified in the text provided; users must confirm the exact calendar date from the Court’s docket or USTR press release page).
• Immediate action: The Administration will “immediately impose a temporary 10 percent surcharge” under Section 122.
• Effective date: To be confirmed via the implementing Presidential Proclamation and/or Federal Register notice. For compliance purposes, importers should assume near‑term effect and closely monitor official publications.
• Duration: Described as “temporary,” but no specific expiration date or review period is provided in the statement.
• Section 301 investigations:
• New investigations will be initiated “in short order” and conducted “on an accelerated timeframe,” but still “in keeping with the Section 301 statute’s substantive and procedural requirements.”
• This implies:
• Forthcoming Federal Register notices announcing initiation, scope, and timelines.
• Public comment periods and potential hearings.
• Final determination and any tariff implementation dates to follow.
• Existing Section 301 and 232 measures: Remain in effect with no announced sunset or modification date.

Compliance teams must track the exact effective date of the Section 122 surcharge and the initiation and conclusion dates of each new Section 301 investigation as they are formally published.

5. Required actions for importers, brokers, and compliance teams

a) Prepare for the Section 122 10% surcharge

1) Monitor official publications

• Watch for:
• Presidential Proclamation(s) invoking Section 122 of the Trade Act of 1974.
• Federal Register notices detailing:
• Effective date and time (including whether based on entry date, date of export, or date of liquidation).
• Scope of coverage (all HTS codes vs. specified exclusions).
• Any country, product, or program‑specific exemptions.
• CBP guidance (CSMS messages, Cargo Systems Messaging Service) on:
• New Chapter 99 or other HTS provisions to report the surcharge.
• Calculation methodology and interaction with other duties.

2) Systems and HTS configuration

• Coordinate with brokers and internal IT/ERP teams to:
• Add any new Chapter 99 or surcharge indicator codes once published.
• Ensure duty calculation logic can apply an additional 10% ad valorem surcharge on top of existing duties.
• Update landed cost models, pricing tools, and budgeting assumptions.

3) Financial and supply chain planning

• Recalculate landed costs for all imported SKUs assuming an additional 10% duty.
• Identify high‑value and low‑margin products where the surcharge materially affects profitability.
• Consider:
• Renegotiating supplier pricing.
• Adjusting order quantities or timing (subject to effective date and any anti‑stockpiling rules).
• Evaluating alternative sourcing (domestic or from countries/products that may be exempt, if any exemptions are later defined).

b) Maintain and reassess exposure to existing Section 301 and 232 tariffs

1) Confirm current coverage

• Review your product portfolio against:
• Existing Section 301 HTS lists (e.g., China Lists 1–4A and any other active 301 actions).
• Existing Section 232 HTS coverage (e.g., steel, aluminum, derivatives, and any other sectoral measures).
• Verify that brokers are using correct HTS classifications and any required Chapter 99 numbers.

2) Evaluate cumulative duty impact

• For products already subject to Section 301 or 232, the new 10% surcharge will stack on top of existing additional duties.
• Update cost and margin analyses to reflect combined rates (e.g., MFN + 301 + 232 + 122 surcharge, as applicable).

3) Continue to use available relief mechanisms

• Where applicable, continue to:
• Use valid exclusions or quota arrangements under Section 232 or 301 (if still in effect).
• Explore duty drawback, FTZs, or bonded warehouses to mitigate duty exposure, subject to legal and operational feasibility.

c) Prepare for new Section 301 investigations and potential tariffs

1) Identify risk areas by product and country

• Map your imports by:
• Country of origin (especially “most major trading partners”).
• Product categories potentially implicated by the announced focus areas:
• Technology and digital goods/services‑related hardware and equipment.
• Pharmaceuticals and medical products.
• Seafood, rice, and other agricultural/food products.
• Products linked to industrial overcapacity (e.g., certain metals, chemicals, machinery).
• Goods potentially associated with forced labor concerns.

2) Monitor USTR announcements

• Track USTR’s website and Federal Register for:
• Notices of initiation of each new Section 301 investigation.
• Descriptions of the practices under review and countries targeted.
• Timelines for comments, hearings, and final determinations.

3) Participate in the process where appropriate

• Consider submitting comments or participating in hearings to:
• Explain the impact of potential tariffs on your business, workers, and supply chains.
• Provide data on availability of alternative sources, domestic capacity, and economic harm.

4) Scenario planning

• Develop scenarios for potential additional duties (e.g., 10%, 15%, 25%+) on at‑risk product lines.
• Identify alternative sourcing options and potential reshoring opportunities in line with the Administration’s stated objectives.

d) Broker and internal controls

• Communicate with customs brokers to:
• Ensure they are aware of the new Section 122 surcharge and any implementing HTS/Chapter 99 codes.
• Confirm that entry summaries will correctly reflect all applicable additional duties.
• Update internal SOPs and training materials to:
• Reflect the new surcharge and ongoing Section 301/232 obligations.
• Emphasize accurate HTS classification and origin determination, as misclassification could now have even greater financial impact.

6. References and source documents

Primary announcement (USTR / Administration statement)

• Title: “Ambassador Greer Issues Statement on Supreme Court IEEPA Decision”
• Source: Office of the United States Trade Representative (USTR)
• URL (homepage for press releases; specific link to be located by date/title):
• https://ustr.gov/about-us/policy-offices/press-office/press-releases

Key statutory authorities referenced

• Section 122 of the Trade Act of 1974
• Statute text: 19 U.S.C. § 2132
• Section 301 of the Trade Act of 1974
• Statute text: 19 U.S.C. §§ 2411–2420
• Section 232 of the Trade Expansion Act of 1962 (note: statement cites 1963, but Section 232 is codified in the 1962 Act)
• Statute text: 19 U.S.C. § 1862
• International Emergency Economic Powers Act (IEEPA)
• Statute text: 50 U.S.C. §§ 1701–1707

Existing tariff program references (for detailed HTS lists and rates)

• Section 301 tariffs on China and other countries:
• USTR Section 301 page: https://ustr.gov/issue-areas/enforcement/section-301-investigations
• Federal Register notices and annexes linked therein for specific HTS codes and rates.
• Section 232 tariffs:
• U.S. Department of Commerce Section 232 page: https://www.commerce.gov/tags/section-232
• Presidential Proclamations and annexes listing covered HTS codes and rates.

Next steps for compliance teams

• Immediately:
• Begin monitoring for the formal Section 122 implementing documents and CBP guidance.
• Model the impact of a 10% surcharge on all imports and identify high‑risk SKUs.
• Short term (weeks):
• Update systems and broker instructions once HTS/Chapter 99 details are published.
• Track and, where appropriate, engage in new Section 301 investigations.
• Ongoing:
• Maintain robust classification and origin controls.
• Continuously reassess sourcing and pricing strategies in light of cumulative duty burdens and evolving trade remedies.