If Section 122 Tariffs Are Struck Down, Here’s Whether Importers Get Their Money Back

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No president had ever used Section 122 of the Trade Act of 1974 in its fifty-year history. That changed on the morning of February 20, 2026, when the Supreme Court struck down the IEEPA tariffs and President Trump signed a replacement the same day. The new regime: a 10 percent flat tariff on nearly all merchandise entering the United States. Same scope as the struck-down program, same exemptions, same policy objective. Different legal framework entirely.

For American importers, that distinction is not just theoretical. Between February 24 and July 24, 2026, Customs and Border Protection is collecting Section 122 duties at 10 percent on tens of thousands of daily import entries. Budget Lab at Yale estimates the tariff will collect approximately $30 billion over its 150-day lifespan. The question this article addresses is the one every importer is now asking: if courts later strike down Section 122, does that money come back?

The short answer is: probably yes, if you act fast enough. The longer answer involves steps and deadlines that are already running.

Our earlier coverage explains how IEEPA refund rights work under current law. This article addresses what changes now that the legal authority has shifted to Section 122, whether your existing IEEPA protests preserve rights against the new duties, and what the 150-day clock means for any realistic shot at a judicial refund.

Why Section 122 Is Harder to Challenge Than IEEPA

Section 122 survived the same constitutional test that killed IEEPA. The difference comes down to four words Congress wrote in 1974.

When Chief Justice John Roberts wrote the majority opinion in Learning Resources v. Trump striking down the IEEPA tariffs, his core argument was about the text. IEEPA authorized the president to “regulate importation,” but even that broad phrase does not include the power to tax. Tariffs are taxes. Congress does not hand over taxing power through vague statutory wording. The president needed clear authorization, and IEEPA didn’t provide it.

Section 122 provides it. The statute says the president may proclaim “a temporary import surcharge of up to 15 percent of the goods’ value (ad valorem, meaning calculated as a percentage of the goods’ value).” Surcharge. Duties. The statute names them explicitly. The Court’s majority opinion emphasized that explicit congressional authorization was exactly what the IEEPA tariffs lacked. Section 122 has it.

But explicit authorization comes with explicit limits, and those limits matter enormously for the refund question. IEEPA had no rate cap. Trump imposed duties as high as 145 percent on Chinese goods. Section 122 caps rates at 15 percent. IEEPA had no time limit. Trump imposed tariffs for over a year. The 150-day maximum under Section 122 requires Congress to affirmatively vote to extend.

These limits make Section 122 constitutionally stronger — Congress gave the president a specific, limited tool, not a blank check. They also create clearer boundaries for judicial review: if the president exceeded those limits, the violation is clear, and if courts find the required legal condition was never met, the refund case is straightforward.

The Balance-of-Payments Problem: Section 122’s Real Vulnerability

The realistic refund scenario has nothing to do with constitutional doctrine.

The statute does not authorize tariffs whenever a president wants them. It authorizes tariffs only when “fundamental international payments problems require special import measures” to address a “large and serious United States balance-of-payments deficit.” In plain terms, it only applies when there is a genuine crisis in how the U.S. pays for its international obligations — conditions the president must prove exist before the law can be used.

The Trump administration’s fact sheet cites a current account deficit of 4.0 percent of GDP. That deficit is the broadest measure of what the U.S. Spends abroad versus earns. It also cites a net international investment position of approximately negative $27.61 trillion, meaning foreigners own far more U.S. Assets than Americans own abroad.

“Balance-of-payments deficit” is a specific technical concept in international finance, not the same thing as a trade deficit, though politicians often treat them as synonymous.

Under a freely floating exchange rate system — which the U.S. has used since 1973, following Nixon’s 1971 actions that dismantled Bretton Woods — the balance of payments must equal zero by definition. When the U.S. runs a large goods trade deficit, that deficit is automatically offset by capital inflows: foreign investors buying Treasury securities, foreign companies acquiring U.S. assets. The trade deficit and the capital surplus cancel each other out.

A genuine balance-of-payments crisis occurs when a country can no longer get that financing through normal capital flows. That happens when foreign investors lose confidence and stop buying the country’s debt. The country’s emergency currency reserves run dry and the value of its money collapses. Think Argentina in 2001, not the United States in 2026.

Joe Brusuelas, chief economist at RSM US LLP, has published a detailed assessment concluding that the current U.S. Position does not meet the statutory standard. His argument: the U.S. Treasury market trades $1.2 trillion daily; the dollar is involved in roughly 90 percent of all currency transactions worldwide; the dollar makes up 57 percent of global foreign exchange reserves. These are not the signs of a country struggling to finance its external position. They are the signs of the world’s reserve currency.

The Trump administration treats the trade deficit and the net international investment position gap as equivalent to a balance-of-payments problem requiring corrective action — a characterization that does not hold under standard economic definitions. Courts have traditionally deferred to presidential factual determinations in trade and national security contexts, and the bar for overturning such a finding is high.

Still, there is a paper trail suggesting the government’s own lawyers had doubts. When the Learning Resources case was argued at the Federal Circuit level, the Department of Justice admitted in a brief that Section 122 has “no obvious application” to a situation involving trade deficits, as opposed to balance-of-payments deficits. The brief stated that “the concerns the President identified in declaring an emergency arise from trade deficits, which are conceptually distinct from balance-of-payments deficits,” meaning the law probably wasn’t designed for this situation.

The government dropped that argument before the Supreme Court. But the admission exists and is on the record. Plaintiffs challenging Section 122 will cite it.

If courts agree that the statutory predicate was never satisfied, the duties become illegal, collected beyond the government’s legal authority, and must be refunded. That is a basis for a refund separate from any constitutional question about whether Section 122 itself is valid.

Your IEEPA Protest Does Not Cover Section 122 Duties

A protest filed against IEEPA tariffs before February 24, 2026 is aimed directly at IEEPA authority. It argues, in some form, that the tariff assessed on your goods was unlawful because IEEPA does not authorize tariffs. That argument is now moot for entries that CBP had already finalized before February 24, because the Supreme Court already agreed with you. It does not apply to entries liquidated after February 24, as those entries carry Section 122 duties, not IEEPA duties.

A court could treat your IEEPA protest as simply not addressing the Section 122 duty at all, even if both applied to identical goods — different statute, different legal theory, different protest required.

CBP has not published guidance clarifying whether a pre-February 24 protest “carries over” to Section 122 duties on related entries. That silence is telling: the agency has not resolved the question internally.

Trade attorneys at Troutman Pepper and Foley & Lardner are advising clients to file separate protests specifically citing Section 122 authority, rather than rely on existing IEEPA protests. This is the safer legal position. It creates a clean paper trail showing you formally disputed the new duties and removes any doubt about whether rights were preserved.

If you filed an IEEPA protest, file a Section 122 protest too, directed specifically at the duties assessed after February 24. The 180-day deadline to file a formal dispute under federal customs law (19 U.S.C. § 1514) runs from the date CBP finalizes the duty amount on each shipment.

Entries filed on February 24 will typically liquidate around February 2027, putting the protest deadline around August 2027. That sounds far away. It will not feel far away when you are managing hundreds of entries across multiple tariff authorities.

The 150-Day Race: Why the Expiration Date Is a Trap

The Section 122 tariff expires July 24, 2026 — a date with strategic implications.

Even expedited trade cases at the Court of International Trade typically take six to eighteen months to reach a decision. A Section 122 challenge involves statutory interpretation, economic fact-finding, and potentially analysis under the Supreme Court’s rule that Congress must explicitly authorize major policy decisions (called the major questions doctrine). It is not going to be simple or fast. The 150-day maximum is the statutory ceiling. It means the tariff will almost expire before any court can rule on its validity.

Some analysts, including Scott Lincicome, Vice President of General Economics at the Cato Institute, have raised questions about the 150-day cap’s strategic implications. Congress could in theory vote to extend the tariff, but bipartisan opposition to tariffs in polling makes that unlikely. Courts, meanwhile, cannot rule in 150 days. If the administration wants tariff revenue and wants to shield that revenue from refund exposure, choosing a duration that expires before courts can act serves that goal.

An importer files an entry on March 1, 2026. CBP typically liquidates entries about one year later, putting liquidation around March 2027. The importer then has 180 days to file a protest, bringing the deadline to around September 2027. By that time, the Section 122 tariff has been expired for almost a year. CBP might argue it cannot refund a tariff that is no longer active.

This creates a procedural Catch-22. The importer cannot get a refund before the tariff expires because the entry has not yet liquidated. After liquidation, the tariff has expired and CBP may resist processing refunds for a dead program.

Federal law (19 U.S.C. § 1505) says that any duties collected that shouldn’t have been must be paid back, with interest. The statute does not distinguish between duties collected under different authorities, and it does not say refunds are unavailable after a tariff expires. The law is clear: unlawfully collected duties must be returned.

This is why customs attorneys are advising importers with significant Section 122 exposure to file protective lawsuits at the Court of International Trade under 28 U.S.C. § 1581(i), before the tariff expires. These cases are designed to preserve your refund rights even if the tariff expires before a ruling. An early-filed case creates a record of judicial review that continues even if the underlying policy lapses. Ropes & Gray’s trade team has noted that early filings also give importers a seat at the table in any large-scale court process to decide refund claims, rather than waiting for a blanket court ruling that may or may not cover their specific shipments.

The Stacking Problem: When Multiple Tariff Authorities Apply to the Same Goods

Many importers are dealing with Section 122 on top of Section 232 on top of Section 301, and the refund logic becomes far more complicated when those layers are separated.

The Section 122 proclamation exempts goods already subject to Section 232 actions (steel, aluminum, copper, and automotive products). So an importer of steel products does not face Section 122 on top of Section 232. The Section 232 tariff applies instead. But an importer of a manufactured good that contains steel components may face Section 232 on the steel content and Section 122 on the non-steel content, with the total duty on a single entry coming from two separate statutory authorities.

A protest challenging the Section 122 component does not cover the Section 232 component. If Section 122 is later struck down but Section 232 remains in effect, the refund is partial: only the Section 122 portion is recoverable.

This means keeping separate records of which duties were imposed under which law and filing separate protests for each authority you dispute. Any refund will be item-by-item, not a blanket recovery of the “tariff overpayment” on your goods.

Trade lawyers familiar with multi-authority tariff regimes — including Gary Horlick, formerly Deputy Assistant Secretary of Commerce for Import Administration — have noted that the stacking problem creates both a protest-filing burden and a refund calculation burden that most importers are not currently able to handle without professional customs assistance. CBP guidance on multi-authority entries under Section 122 has not yet been published. Customs brokers are advising clients to record entry-by-entry which tariff authority applies to each good — a task that may require detailed cost accounting and analysis of how each good is classified under the Harmonized Tariff Schedule of the United States (HTSUS), especially for goods made of multiple materials.

For importers in exempted categories (USMCA-compliant goods from Canada and Mexico, steel, aluminum, copper), the relevant caution is different: do not assume “exemption from Section 122” means freedom from all tariffs. You likely remain subject to Section 232 or other authorities. The exemption is a fact you must prove, not one CBP will apply automatically.

If CBP incorrectly assesses Section 122 duties on your goods, you need documentation of your exemption status to support a refund protest. Your USMCA certification, proof of where your goods were made, and the correct tariff classification codes should be ready now. Do not wait until CBP makes a mistake and charges you duties you don’t owe.

Refund Mechanics If Section 122 Is Struck Down

The customs protest procedure, the Court of International Trade jurisdiction, and the interest accrual rules apply the same way to Section 122 duties as to IEEPA duties, because those rules come from underlying customs law, not from the specific tariff statute.

For entries not yet liquidated by CBP, an importer can file a post-summary correction, a formal request to CBP to fix the entry before it’s finalized, asking them to remove the Section 122 duty component. CBP can process these within days or weeks. This is the fastest path to a refund, and the window closes once CBP liquidates the entry.

For entries already liquidated, the importer must file a formal protest within 180 days of liquidation. CBP must either approve or reject the protest. If denied, the importer can appeal to the Court of International Trade. If the court finds the duty was unlawfully assessed, the United States must refund the amount collected plus interest at the rate set by law — currently 6 percent for corporations and 7 percent for non-corporations as of Q1 2026, set by IRS Revenue Ruling 2025-22.

The interest provision matters more than it might seem. Section 122 expires after 150 days, so litigation into 2028 or 2029 would concern refund claims rather than the tariffs themselves — but interest on duties collected in early 2026 would still build for two or three years through that refund litigation. On an approximately $30 billion tariff program, that is a significant number. As we detailed in our earlier analysis of potential IEEPA refund liability, the interest the government owes when courts throw out large tariff programs can reach into the billions.

The administration could argue that once Section 122 has expired, refunds should not be processed for a dead program and that Congress should decide whether to approve them. That argument would almost certainly fail in court, but it could delay the refund process by months or years — and delay, for importers who paid duties in February and March 2026, is itself a cost.

Key Differences Between Section 122 and IEEPA, and What They Mean for Refunds

Source: U.S. Code, Title 19, Section 2132

Critical Dates Importers Cannot Miss

Source: Foley & Lardner

Congressional Extension and Refund Legislation: Both Unlikely

One scenario the procedural analysis above largely ignores is Congress acting to either extend Section 122 or authorize refunds through legislation.

Section 122 expires automatically on July 24 unless Congress votes to extend it. Given the current political environment, that vote appears unlikely. Bipartisan polling opposition to tariffs is strong, and the administration would need to actively lobby for an extension of a tariff program that courts are already scrutinizing. The more likely scenario is that Section 122 expires on schedule. The administration would then shift to Section 232 and Section 301 authorities as replacement mechanisms, as our earlier coverage of alternative tariff authorities anticipated.

Congress could also pass legislation authorizing refunds if Section 122 is found unlawful, skipping the protest and court process entirely. No clear historical precedent for such refund legislation exists, making this path speculative. The more common pattern is that importers who protected their claims by filing protests and lawsuits on time receive refunds through the administrative process. Importers who did not preserve their rights receive nothing, regardless of what Congress does later.

The statutory framework is clear that unlawfully collected duties must be refunded — but only for importers who took the procedural steps to preserve their claims. The system is not designed to find you. You have to find it before deadlines that are already running.

The open question is whether the balance-of-payments condition the law requires holds up when courts examine it. If it does, no refunds. If it does not, the refund machinery exists and is ready to operate. The administration’s own lawyers once admitted the predicate was questionable. Whether that admission matters to a court that has already shown it gives presidents wide latitude on trade decisions is the one thing nobody can predict with confidence.

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