Presidential Proclamation Summary: Temporary Import Surcharge Implementation & the Use of Section 122
Below is a summary of the Presidential Proclamation, “Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems”, by invoking Section 122 of the Trade Act of 1974, issued on February 20, 2026.
To review the Presidential Proclamation, White House Fact Sheet & U.S. Customs and Border Protection Cargo Systems Messaging Service CSMS # 67844987 – Imposing Temporary Section 122 Duties documentation in full, please click on the links below.
CSMS # 67844987 – Imposing Temporary Section 122 Duties
UPDATE: CSMS # 67844987 – Imposing Temporary Section 122 Duties
- Presidential Proclamation issued February 20, 2026 imposes temporary import surcharge under Section 122 of the Trade Act of 1974
- Purpose: Address fundamental international payments problems through additional duties on imported goods
- Duration: 150-day period with specific implementation timeline
Implementation Details
- Additional duty rate: 10% ad valorem on imported articles from all countries
- Effective period: February 24, 2026 (12:01 a.m. EST) through July 24, 2026 (12:01 a.m. EDT)
- Scope: Articles entered for consumption or withdrawn from warehouse for consumption during specified timeframe
- HTSUS classification: Applied under heading 9903.03.01
General Application
- Covers: All articles that are products of any country, as defined in subdivision (aa) of U.S. note 2 to subchapter III of chapter 99 of the HTSUS
- Excludes: Products for personal use in accompanied baggage of arriving persons
Exemptions
The following bullet points summarize the key exemptions under HTSUS heading 9903.03.01 that allow products to avoid the additional 10% ad valorem duty:
Transit and Timing Exemptions
- In-Transit Goods (9903.03.02): Products loaded onto vessels and in transit before February 24, 2026 at 12:01 a.m. EST, entered for consumption before February 28, 2026 at 12:01 a.m. EST
- General Subdivision Exemptions (9903.03.03 & 9903.03.04): Products covered under specific subdivisions of U.S. note 2 to subchapter III of chapter 99
Religious and Agricultural Products (9903.03.04)
- Religious Items: Etrogs, date palm branches, myrtus branches, religious baked goods, communion wafers, and essential oils for religious purposes only
- Specialty Foods: Frozen tropical fruits, acai products, coconut water, citrus juices (excluding orange, grapefruit, lime), and acai beverage preparations
- Documentation Required: Filers must maintain supporting documentation proving intended religious use where applicable
Transportation and Industrial Exemptions
- Civil Aircraft (9903.03.05): All non-military aircraft, engines, parts, components, subassemblies, and ground flight simulators
- Industrial Materials (9903.03.06): Iron, steel, aluminum products and derivatives, passenger vehicles, light trucks, semiconductors, copper products, wood products, and medium/heavy-duty vehicles and buses
Trade Agreement Exemptions
- USMCA Products (9903.03.07 & 9903.03.08):
- Canadian products entered duty-free under United States-Mexico-Canada Agreement
- Mexican products entered duty-free under United States-Mexico-Canada Agreement
- CAFTA-DR Textiles (9903.03.09): Textile and apparel products from Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua meeting CAFTA-DR rules of origin
Humanitarian and Informational Exemptions
- Humanitarian Donations (9903.03.10): Food, clothing, medicine, and other donations by U.S. persons intended for human suffering relief
- Informational Materials (9903.03.11): Publications, films, posters, records, photographs, microfilms, tapes, CDs, CD-ROMs, artworks, and news wire feeds
Key Compliance Requirements
- Documentation: Proper supporting documentation must be maintained for recordkeeping purposes, particularly for religious-use items and civil aircraft
- Classification: Products must be properly classified under their respective HTSUS subheadings
- Timing: Critical deadlines apply for in-transit goods exemptions
- Origin Rules: Trade agreement exemptions require compliance with specific rules of origin
Chapter 98
- Chapter 98 Exemptions: Additional duties imposed by heading 9903.03.01 do not apply to most goods properly entered under Chapter 98 provisions, with specific exceptions for certain subheadings (9802.00.40, 9802.00.50, 9802.00.60, and 9802.00.80)
- Limited Application: For excepted subheadings, additional duties apply only to:
- Value of repairs, alterations, or processing performed (subheadings 9802.00.40-.60)
- Value of assembled articles abroad, minus U.S. product costs (heading 9802.00.80)
Foreign Trade Zone Requirements
- Privileged Foreign Status: Articles subject to the February 2026 ad valorem duty must enter U.S. foreign trade zones as “privileged foreign status” (not domestic status) starting February 24, 2026, at 12:01 a.m. EST
- Duty Application: These articles face both the new duties and standard HTSUS rates upon entry for consumption, based on rates effective when admitted to the trade zone
Drawback Availability
- Relief Provision: Drawback procedures are available for additional duties imposed under the February 2026 proclamation, providing potential duty recovery mechanisms
HTS Sequence Requirements
Critical Filing Order for entry summaries claiming Chapter 98/99 headings:
- 1. Chapter 98 (if applicable)
- 2. Chapter 99 additional duties (if applicable)
- 3. Trade Remedies in specific sequence:
- Section 301 duties
- Section 122 duties
- Section 232 duties
- Section 201 duties and quotas
- 4. Chapter 99 replacement duties/Miscellaneous Tariff Bill provisions
- 5. Other quotas not covered above
- 6. Chapter 1-97 commodity tariff classification
Value Reporting: Enter product values on Chapter 1-97 classifications unless Chapter 98 provisions specify otherwise
Overview
- Primary Purpose: The President has issued a proclamation to impose temporary import surcharges as a response to fundamental international payments problems threatening the US economy and national security interests.
- Economic Threats Identified: The United States faces significant challenges including large balance-of-payments deficits, potential currency depreciation in foreign exchange markets, and international payment system imbalances that could undermine economic stability.
- National Security Implications: These economic problems pose risks to America’s ability to finance government spending, maintain investor confidence, and preserve financial market stability – all critical to national security.
Legal Framework and Authority – Section 122
- Legislative Basis: The action is authorized under Section 122 of the Trade Act of 1974 (19 U.S.C. 2132), which empowers the President to implement special import restrictions during fundamental international payments crises.
- Policy Tools Available: Federal law provides the President with various mechanisms including surcharges, quotas, and other import restrictions to protect economic and national security interests.
- Strategic Importance: Import restrictions serve as crucial tools for economic policy, national security protection, and foreign policy implementation during international payment emergencies.
Advisory Process and Expert Consultation
- Comprehensive Analysis: Senior government officials conducted thorough evaluations of the US balance-of-payments situation, dollar stability in foreign exchange markets, and international payment system dynamics.
- Multi-faceted Assessment: Advisors examined various analytical methods, including current-account statistics, to evaluate the severity of balance-of-payments deficits from multiple perspectives.
- Professional Recommendations: Economic and national security experts provided detailed opinions on whether special import measures were necessary to address identified fundamental payment problems.
Critical Findings and Determinations
- Deficit Classification: Presidential advisors unanimously determined that the United States currently experiences “large and serious balance-of-payments deficits” under any reasonable interpretation of Section 122 requirements.
- Surcharge Necessity: Expert analysis concluded that ad valorem duty surcharges are required as the appropriate mechanism to address these significant payment imbalances effectively.
- Analytical Consensus: Regardless of the evaluation methodology employed, all assessment approaches confirmed the existence of substantial balance-of-payments deficits requiring immediate intervention.
Implementation Strategy, Exceptions & Alignment with Section 122
- Targeted Approach: The surcharge will be implemented as ad valorem duties, providing a percentage-based additional cost on imported goods to help correct payment imbalances.
- Strategic Exemptions: Certain products will be excluded from the surcharge based on critical US economic needs, ensuring the policy serves broader national interests while addressing payment problems.
- Compliance Framework: Recommended exceptions align with Section 122 limitations, statutory purposes, and overall US national interest objectives, creating a balanced implementation approach.
Economic Context and Justification
- Global Leadership Role: The proclamation acknowledges America’s pivotal position in shaping the global economy while recognizing the need to protect domestic economic interests.
- Market Confidence Protection: The measures aim to prevent further erosion of investor confidence and financial market distress that could result from unchecked payment imbalances.
- International Cooperation: The surcharge strategy includes provisions for cooperating with other nations to correct broader international balance-of-payments disequilibrium affecting global economic stability.
Policy Implications
- Temporary Nature: The import surcharge is designed as a temporary measure to address current fundamental international payments problems rather than permanent trade policy.
- Multi-objective Tool: The policy serves simultaneously as an economic stabilization measure, national security protection mechanism, and foreign policy instrument.
- Balanced Implementation: The approach considers both the urgency of addressing payment deficits and the need to maintain essential economic functions through strategic product exemptions.
Import Surcharge Implementation
- A temporary 10% import surcharge will be imposed for 150 days starting February 24, 2026, to address fundamental balance-of-payments problems
- Strategic exemptions will apply to certain products based on US economic needs to maximize effectiveness
Surcharge Exemptions
Major Product Categories Exempted from Section 122 Surcharges:
- Critical minerals and metals – Including currency metals and bullion essential for monetary systems
- Energy sector products – All energy and energy-related products receive complete exemption
- Essential natural resources – Fertilizers and raw materials that cannot be domestically produced in sufficient quantities
- Agricultural products – Specific exemptions for beef, tomatoes, oranges, and other key food items
- Healthcare essentials – Pharmaceuticals and pharmaceutical ingredients maintain duty-free status
- Technology and transportation – Certain electronics, passenger vehicles, light trucks, medium and heavy-duty vehicles, buses, and related parts
- Aerospace products – Critical aviation industry components and materials
- Information and personal items – Information materials, donations, and accompanied baggage
Trade Agreement Protections:
- USMCA benefits maintained – All Canadian and Mexican goods under the United States-Mexico-Canada Agreement continue receiving preferential treatment
- Central American partnerships preserved – Dominican Republic-Central America Free Trade Agreement benefits remain intact for textile and apparel from Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua
Legal and Economic Rationale:
- Domestic supply limitations – Exemptions reflect unavailability of domestic alternatives at reasonable prices
- Supply chain stability – Prevents serious disruptions to established import flows
- Existing restrictions consideration – Products already subject to Section 232 trade restrictions receive additional protection
- Goods in transit protection – Items loaded onto vessels before February 24, 2026, and entered before February 28, 2026, receive exemption
Implementation Framework % Alignment with Section 122:
- Independent determinations – Each exemption category stands alone and doesn’t depend on others
- Economic focus – Decisions prioritize overall economic needs rather than protecting individual domestic industries
- Comprehensive coverage – Detailed specifications provided in official Annexes I and II
- Legal compliance – All exemptions align with Section 122 limitations and purposes
Presidential Proclamation: Point by Point Summary
(1) Except as otherwise provided in this proclamation, as set forth in Annexes I and II to this proclamation, all articles imported into the United States shall be subject to a 10 percent ad valorem duty rate.
(2) The surcharge imposed in this proclamation shall not apply to imports of articles listed in paragraph 2 of Annex I to this proclamation and as enumerated in Annex II to this proclamation.
(3) Except as otherwise provided in this proclamation, the surcharge imposed in this proclamation is in addition to any other duties, taxes, fees, exactions, and charges applicable to such products.
(4) The surcharge imposed in this proclamation shall not apply in addition to tariffs imposed under section 232. To the extent a tariff imposed under section 232 applies to part of an import, the surcharge imposed in this proclamation shall apply to the part of the import to which section 232 tariffs do not apply but shall not apply to the part of the import to which section 232 tariffs do apply.
(5) The surcharge imposed in this proclamation shall be treated as a regular customs duty.
(6) Any article subject to the surcharge imposed in this proclamation, except those articles eligible for admission under โdomestic statusโ as described in 19 CFR 146.43, that is subject to the surcharge imposed in this proclamation and that is admitted into a United States foreign trade zone on or after the effective date of this proclamation must be admitted as โprivileged foreign status,โ as described in 19 CFR 146.41, and will be subject upon entry for consumption to any ad valorem rate of duty related to the classification under the applicable HTSUS subheading.
(7) The HTSUS shall be modified as provided in Annex I to this proclamation. The modifications shall be effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on February 24, 2026, and shall continue in effect through 12:01 a.m. eastern daylight time on July 24, 2026, unless the surcharge imposed in this proclamation is expressly suspended, modified, or terminated on an earlier date, or unless the effective period of such surcharge is extended by an Act of the Congress.
(8) The head of each executive department and agency (agency) is authorized to and shall take all appropriate measures within the agencyโs authority to implement this proclamation. The head of each agency may, consistent with applicable law, including section 301 of title 3, United States Code, redelegate the authority to take such appropriate measures within the agency.
(9) The United States Trade Representative…
- Trade Representative monitors U.S. international payment problems and reviews surcharge effects in consultation with senior officials
- Continuous assessment of relevant factors and conditions related to fundamental payment issues
- Presidential reporting duty – informs President when circumstances indicate need for further action under section 122
- Recommendation authority – advises President when surcharge should be suspended, modified, or terminated based on changing conditions
- Collaborative approach ensures comprehensive evaluation of trade measures and their economic impact
(10) The Trade Representative, in consultation with the Chair of the United States International Trade Commission and the Commissioner of U.S. Customs and Border Protection (CBP), shall determine whether any additional modifications to the HTSUS are necessary to effectuate this proclamation and shall make such modifications to the HTSUS through notice in the Federal Register, including any technical correction to Annexes I and II to this proclamation.
(11) The Commissioner of CBP may take any necessary or appropriate measures to administer the surcharge imposed by this proclamation.
(12) (a) Any provision of previous proclamations and Executive Orders that is inconsistent with this proclamation is superseded to the extent of such inconsistency. If any provision of this proclamation or the application of any provision to any individual or circumstance is held to be invalid, the remainder of this proclamation and the application of its provisions to any other individuals or circumstances shall not be affected.
(b) If any exception to the surcharge imposed in this proclamation…
- Severability Protection: If any surcharge exception is ruled invalid, only that specific exception becomes void – other exceptions remain unaffected
- Prospective Application: Surcharges apply to imports previously covered by invalidated exceptions, but collection occurs only from the invalidation date forward
- Individual Validity: Each exception stands independently and is supported by U.S. economic needs and national interest factors under section 122
- Flexible Implementation: Exceptions can be adopted wholly, partially, or in various combinations based on economic requirements
- Legal Continuity: The surcharge framework continues operating even if some exceptions require retroactive application to certain imports
(c) This severability provision reflects my determination that the surcharge imposed in this proclamation should remain operative until July 24, 2026, in a way that is consistent with law, including the limitations of section 122, to deal with the large and serious United States balance-of-payments deficits found in this proclamation, regardless of whether any exception or exceptions, in whole or in part, are invalidated. The surcharge imposed in this proclamation โ with any combination of the exceptions in paragraph 14 of this proclamation, or even without any of the exceptions in paragraph 14 of this proclamation โ is required to deal with the large and serious United States balance-of-payments deficits found in this proclamation.
Links to Annex Documentation
Should you or your organization have any questions with respect to this proclamation, or its impact to your shipments, please do not hesitate to contact your Dominion Customs Consultants representative, or feel free to reach us here.
