Section 122 Just Replaced IEEPA. Here's What Every Importer Needs to Know.

Three days after the Supreme Court killed IEEPA tariffs, Congress replaced them. Section 122 of the Trade Act took effect February 24, 2026. If you haven't updated your landed cost calculations, you're working with the wrong numbers.

This is what changed, who it affects, and what the new tariff stack actually looks like.

The 30-Second Version

• IEEPA tariffs: struck down by the Supreme Court on February 20, 2026
• Section 122: replaced IEEPA effective February 24, 2026
• Section 122 rate: 10% flat on most imports into the United States
• Section 122 expiration: July 24, 2026 (150-day authority under the Trade Act)
• Exempt: USMCA partners (US, Mexico, Canada)
• Exempt: Products subject to Section 232 (steel, aluminum, derivatives)

How Section 122 Stacks With Your Other Tariffs

This is the part that confuses most people. Section 122 doesn't replace all tariffs. It replaces IEEPA specifically. Your Section 301 China tariffs still apply. Your Section 232 steel and aluminum tariffs still apply. Section 122 adds 10% on top of the MFN base rate for most non-USMCA, non-232 goods.

Here's what the full stack looks like for a common scenario, electronics from China:

Compare that to the same product imported from Mexico under USMCA:

That 37+ percentage point spread is the arithmetic behind the China Plus One strategy. It isn't new, but the Section 122 USMCA exemption makes the gap wider than it was under IEEPA, because IEEPA still hit USMCA-origin goods with fentanyl surcharges in many cases.

The USMCA Exemption Is the Most Important Part

Under IEEPA, Mexico-manufactured goods that qualified under USMCA were still subject to the 25% fentanyl surcharge if CBP couldn't confirm full USMCA compliance. Section 122 removes that layer entirely for USMCA-compliant goods.

For companies that have invested in nearshoring to Mexico, this is the first clean signal that USMCA qualification translates directly to tariff relief, without a separate IEEPA layer sitting on top.

For companies that have been considering a Mexico move, this changes the refund math on both sides: you can now calculate what you would have saved on IEEPA in prior periods, and model what your forward-looking cost looks like under Section 122 vs. staying in China.

Section 232 Products Are Exempt Too, With a Catch

Steel (HS chapters 72, 73) and aluminum (chapter 76) products are exempt from Section 122 because they're already subject to Section 232 tariffs. The exemption also covers downstream derivative products, but here's where it gets complicated.

Not all derivative products are auto-exempt. If your product contains steel or aluminum but isn't primarily classified as steel or aluminum, a material determination may be required before the Section 232 exemption applies. Triangle's tariff calculator flags these products and routes them through the preflight questions before applying the exemption.

What to Do in the Next 30 Days

Recalculate your landed costs. The tariff stack changed on February 24. If you're still quoting customers or making sourcing decisions based on IEEPA rates, your numbers are stale.

Verify your USMCA qualification status. If you manufacture in Mexico, your qualification documentation needs to be current. The Section 122 exemption only applies if you can actually prove USMCA origin. CBP will audit.

Check your Section 301 exclusions. There are 125 active exclusions that may reduce or eliminate the Section 301 layer for specific HS codes. The exclusion check is included in Triangle's free tariff lookup.

Model the China vs. Mexico comparison. The current tariff spread between China-origin and USMCA-qualified Mexico-origin goods is at its widest point in years. If you've been running the numbers and they were close before, run them again.