Executive summary

Following the United States (US) Supreme Court's 20 February 2026 decision in Learning Resources Inc. et al. v. Trump, which held that the International Emergency Economic Powers Act (IEEPA) does not grant the President authority to impose tariffs, the Trump Administration moved swiftly to utilize alternative statutory tools. Accordingly, late on 20 February 2026, the President issued a proclamation titled "Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems," establishing a temporary 10% ad valorem global import tariff under Section 122 of the Trade Act of 1974, which permits the temporary imposition of tariffs of up to 15% ad valorem in cases of "large and serious" balance-of-payments deficits.

For more on the Supreme Court's decision, see EY Global Tax Alert, US Supreme Court rules IEEPA does not authorize presidents to impose tariffs, dated 20 February 2026.

(NOTE: Please register for and plan to attend EY's webcast, "Tariffs after IEEPA: what the Supreme Court's decision means for your business," scheduled for Wednesday 25 February 2026, 12 p.m. to 1 p.m. ET.)

Scope and effective dates

Rate and duration: The Proclamation adds a 10% ad valorem global import tariff on all articles imported, effective 12:01 a.m. ET on 24 February 2026, through 12:01 a.m. ET on 24 July 2026, unless expressly suspended, modified or terminated earlier, or extended by Congress (Section 122 permits up to 150 days, up to 15%).

HTSUS changes: The Harmonized Tariff Schedule of the United States (HTSUS) will be modified as provided in Annex I; the US Trade Representative (USTR) may issue additional technical modifications through a subsequent Federal Register notice.

Exceptions

The tariff does not apply to products detailed in Annex I and Annex II, including:

• Certain critical minerals
• Metals used in currency and bullion
• Energy and energy products
• Natural resources and fertilizers not available domestically in sufficient quantities
• Certain agricultural products (including beef, tomatoes, oranges)
• Pharmaceuticals and pharmaceutical ingredients
• Certain electronics
• Passenger vehicles, specified light/medium/heavy-duty vehicles and buses, and certain parts thereof
• Certain aerospace products
• Information materials, donations and accompanied baggage
• All articles and parts already subject to additional import restrictions under Section 232 of the Trade Expansion Act of 1962
• Goods of Canada or Mexico entered free of duty under the US-Mexico-Canada Agreement (USMCA) (general note 11 and related Chapter 98/99 subchapters)
• Textile and apparel goods entered free of duty under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR)

In-transit exception

An exception is provided for goods loaded onto a vessel and in transit on the final mode of transit prior to US entry before 12:01 a.m. ET on 24 February 2026 and entered for consumption (or withdrawn from a warehouse for consumption) before 12:01 a.m. ET on 28 February 2026.

Administration and precedence

The tariff is in addition to other duties, taxes, fees, exactions and charges, except it shall not apply in addition to Section 232 tariffs; if Section 232 applies to part of an import, the tariff applies only to the non-Section 232 portion.

Articles subject to the tariff admitted to US Foreign Trade Zones (FTZ) on or after the effective date (except those eligible for "domestic status") must be admitted as "privileged foreign status" and will be dutiable upon entry for consumption based on HTSUS classification.

The USTR will monitor conditions related to international payment problems and the effect of the tariff, and will advise on potential suspension, modification or termination. The USTR, International Trade Commission and Customs and Border Protection (CBP) may issue further HTSUS modifications and technical corrections via a Federal Register notice; CBP may take measures to administer the tariff.

What this means for businesses

Most imports will be subject to the 10% tariff unless they clearly fall within an enumerated exception or qualify for USMCA/CAFTA-DR duty-free treatment.

Exceptions reflect supply availability, raw-material needs, avoidance of serious supply dislocations, existing import restrictions and goods in transit; companies should assess eligibility carefully against Annexes I and II.

Businesses should prepare to adapt for the HTSUS modifications and FTZ operators must align to privileged foreign status for covered articles.

Actions to consider

Actions for businesses to consider, depending on their specific situations, include:

• Monitor USTR statements and White House updates detailing additional tariff measures and align internal policy tracking with potential sector-specific measures.
• Map inbound HTSUS classifications to identify exposure to the 10% Section 122 tariffs and quantify duty impact. Determine whether any products qualify for the Proclamation's exceptions and assemble supporting documentation to substantiate claims at entry.
• Update broker instructions and Automated Commercial Environment (ACE)/entry coding to reflect lifted IEEPA tariffs, new Section 122 entries and any applicable exemptions; monitor CBP tariff table (HTSUS) changes and Cargo Systems Messaging Service (CSMS) updates for technical filing guidance.
• Develop an internal refund workstream around IEEPA tariffs recovery reviewing entry records, and track lower-court guidance on remedies and processes to position for potential refunds.
• Verify rules-of-origin and certification processes to claim USMCA and CAFTA-DR preferences where applicable, recognizing these can provide exemptions from the Section 122 tariff.
• Renegotiate supplier and customer contracts to include tariff-adjustment and price-reopener clauses covering the 150-day tariff period and potential changes from forthcoming actions under Section 301 of the Trade Act of 1974.
• Identify shipments loaded and in transit before 24 February 2026 and prioritize filing consumption entries before 28 February 2026 to utilize the in-transit exemption.
• Leverage drawback opportunities where available for the Section 122 tariffs; review eligibility, timelines and documentation to prepare claims.