# U.S. Reciprocal Tariffs Held Unlawful, Section 122 Global Surcharge

# U.S. Reciprocal Tariffs Held Unlawful, Section 122 Global Surcharge, and Implications for Korean Exporters

## Executive Summary

On February 20, 2026, the entity["organization","Supreme Court of the United States","us highest court"] held that the International Emergency Economic Powers Act (IEEPA) does **not** authorize the President to impose tariffs. The Court also clarified that challenges “arising out of” tariff law and administration sit in the exclusive jurisdiction of the entity["organization","U.S. Court of International Trade","federal court, new york"] (CIT), directing dismissal of the D.C. district-court track for lack of jurisdiction while affirming the Federal Circuit track. citeturn9view0turn10view0

Within hours, entity["politician","Donald J. Trump","us president"] pivoted from IEEPA-based “reciprocal” tariffs to a **temporary 10% across-the-board import surcharge** for **150 days**, invoking **Section 122** (19 U.S.C. § 2132) as the domestic statutory basis. The proclamation states the surcharge becomes effective **February 24, 2026 (12:01 a.m. ET)**, and sets out extensive exceptions (including, notably, an interaction rule with Section 232 duties and specified product categories). citeturn7view1turn12search0turn0news40turn0search1

Korean authorities publicly framed the Supreme Court decision as rendering the **15% “reciprocal tariff” rate on Korea invalid**, while emphasizing continuous monitoring of U.S. follow-on measures—especially the Section 122 global surcharge—and coordination to avoid erosion of Korea’s negotiated export conditions. Korean media also reported an interagency meeting on February 21 chaired by the national security and policy chiefs at the presidential office. citeturn26search12turn27search1

A central near-term issue is **refund recovery** for duties previously collected under the now-invalid IEEPA tariff program. Reuters, citing the entity["organization","Penn Wharton Budget Model","upenn policy model"] at the entity["organization","University of Pennsylvania","philadelphia university"], estimates **>$175 billion** in tariff receipts could be exposed to refund claims, foreshadowing heavy administrative and litigation load; the Supreme Court dissents explicitly warn the refund process could become a “mess.” citeturn26news42turn9view0

For Korean exporters, the key operational reality is that **refund rights and procedures are largely driven by U.S. customs mechanics** (importer-of-record control, liquidation timing, protests, and CIT litigation). Korean customs authorities stated that refund claims are typically made by the U.S. importer, but exporters who shipped under **Delivered Duty Paid (DDP)**—i.e., where the exporter paid duties—may be able to pursue refunds directly, and Korea estimates roughly **6,000** such exporters out of **~24,000** affected exporters. citeturn27search3turn13search0turn13search1turn13search3

On the WTO plane, a U.S. import surcharge justified as a balance-of-payments measure is conceptually aligned with the WTO’s “price-based” balance-of-payments toolkit (and can—under specified conditions—exceed bound tariff rates). But it also triggers structured transparency/consultation disciplines and invites scrutiny over necessity, temporariness, and nondiscrimination. citeturn27search0turn27search12

## Translation of the Provided Korean News Text

Below is an idiomatic English translation of the Korean text provided in the prompt (proper names are transliterated; institutional titles are rendered in standard English usage):

The presidential office at entity["point_of_interest","Cheong Wa Dae","seoul, south korea"] said it will closely monitor additional U.S. measures and international developments after the U.S. Supreme Court ruled that the so-called “reciprocal tariffs” imposed by the entity["organization","United States government","federal government"] on Korea and other countries were unlawful.

The presidential office said that an interagency meeting was held this afternoon (the 21st) co-chaired by entity["people","Wi Sung-lac","rok national security adviser"], head of the National Security Office, and entity["people","Kim Yong-beom","rok presidential policy chief"], head of the Policy Office, and that the participants agreed on this approach.

In a written briefing, presidential spokesperson entity["people","Kang Yoo-jung","rok presidential spokesperson"] said the administration would keep a close watch on developments, noting that the U.S. executive branch subsequently announced a global 10% tariff under Section 122 of the U.S. trade law.

She said that, under the Supreme Court’s opinion, the 15% reciprocal tariff currently being imposed by the United States is invalid.

She added that, while the ruling increases uncertainty in the global trade environment, the Korean government plans to continue friendly consultations on the basis of the “special alliance relationship” between Korea and the United States so that the benefit balance secured through the bilateral tariff agreement, and conditions for exports to the U.S., are not harmed.

Regarding refunds of reciprocal tariffs already paid by Korean companies, she said the government will work closely with business federations and industry associations so that accurate information can be delivered to companies in a timely manner.

The meeting also reviewed the status of legislation for a “special act on investment in the United States,” and participants agreed to proceed without delays through the remaining legislative steps, including a public hearing.

Participants included entity["people","Koo Yun-cheol","rok deputy prime minister"], deputy prime minister and finance-economy minister; entity["people","Cho Hyun","rok foreign minister"]; entity["people","Kim Jung-kwan","rok industry minister"]; and entity["people","Yeo Han-koo","rok trade minister"].

Earlier, on the 20th local time, the U.S. Supreme Court ruled that IEEPA does not give the president authority to impose tariffs, and therefore President Trump’s reciprocal tariffs were unlawful.

President Trump signed an executive order terminating the IEEPA-based tariffs, but announced that he would impose an additional 10% tariff worldwide under Section 122 of the trade law.

## Source-Verified Timeline

The sequence below distinguishes (a) primary, official U.S. legal texts from (b) reported Korean government actions, and (c) implementation dates that matter for customs entries.

```mermaid
timeline
    title Key events affecting U.S. tariff legality and implementation
    2026-02-20 : Supreme Court holds IEEPA does not authorize tariffs; clarifies CIT-exclusive jurisdiction track
    2026-02-20 : White House issues Proclamation imposing Section 122 temporary import surcharge (10%) for 150 days
    2026-02-21 : Korean presidential office reportedly convenes interagency meeting to assess U.S. measures and refunds
    2026-02-24 : Section 122 surcharge effective (12:01 a.m. ET per Proclamation)
```

The Supreme Court ruling date and core holdings are stated in the opinion’s syllabus and jurisdiction footnote. citeturn9view0turn10view0 The Proclamation’s issuance date (Feb 20), duration (150 days), and effective date (Feb 24, 12:01 a.m. ET) appear on the White House text. citeturn7view1turn12search0 The Feb 21 Korean interagency meeting is described in Korean media reporting. citeturn26search12

image_group{"layout":"carousel","aspect_ratio":"16:9","query":["Learning Resources v. Trump 24-1287 Supreme Court opinion PDF page screenshot","White House proclamation imposing a temporary import surcharge to address fundamental international payments problems screenshot"],"num_per_query":1}

## Legal Analysis of the Supreme Court Decision

The Court’s controlling bottom line is straightforward: **IEEPA does not authorize tariffs**. citeturn9view0 But the decision is analytically “layered” in ways that matter for downstream litigation and for how quickly refunds can realistically be processed.

First, **jurisdiction and forum**. The Court treated the CIT as the proper forum for tariff challenges “arising out of” laws providing for tariffs and their administration/enforcement, explaining that the CIT’s residual jurisdiction channel (28 U.S.C. § 1581(i)(1)) captured the claims because the challenged actions were implemented through modifications to the Harmonized Tariff Schedule with legal force. The consequence was procedural bifurcation: one docket was vacated and ordered dismissed for lack of jurisdiction, while the Federal Circuit-origin docket was affirmed. citeturn10view0turn9view0

Second, **the statutory holding against tariff authority under IEEPA**. The opinion emphasizes that IEEPA lists many transactional controls (investigate, block, regulate, prohibit certain dealings), but **does not mention tariffs or duties**, and that the ordinary meaning of “regulate … importation” is not naturally read as granting a revenue-raising power (especially given constitutional and structural concerns, such as the export-tax prohibition). citeturn9view0

Third, **the “major questions” analysis is a plurality add-on, not the sole ratio**. A three-Justice set (Roberts, Gorsuch, Barrett) applied a major-questions lens, stressing the extraordinary economic and political significance of claiming unlimited tariff power through ambiguous text, and rejecting an “emergency” carve-out to major-questions analysis. But three other Justices (Sotomayor, Kagan, Jackson) concurred in the judgment without endorsing that path, arguing that ordinary statutory interpretation sufficed. The result matters because future litigants will cite the major-questions discussion aggressively, but its formal precedential force is more limited than the unanimous statutory holding that IEEPA itself does not authorize tariffs. citeturn9view0

Fourth, **refund anxiety is already embedded in the case record and dissents**. The Kavanaugh dissent explicitly anticipates “billions” in refunds and labels the process a likely “mess,” echoing the operational difficulty of unwinding a large-scale, multi-entry duty program after judicial invalidation. citeturn9view0 Reuters, relying on Penn-Wharton modeling, places the potential refund exposure far higher (>$175 billion), and reports expectations of a wave of refund claims and treasury cash-management considerations. citeturn26news42

## Section 122 Authority and Constraints

The administration’s replacement measure is framed as a **balance-of-payments import surcharge** under **Section 122** (19 U.S.C. § 2132). The Proclamation asserts findings of “fundamental international payments problems” and imposes a **10% ad valorem** duty on “all articles imported into the United States,” **for 150 days**, effective Feb 24, 2026. citeturn7view1turn12search0

Two elements define the legal and practical “shape” of Section 122 as used here.

The first is **built-in severity caps and temporal limits**: Section 122 authorizes a temporary import surcharge **up to 15%** for a period **not exceeding 150 days** unless extended by an Act of Congress, and it is historically unusual in modern practice. citeturn0search6turn12search0turn6search10 This “hard stop” is why many analyses treat Section 122 as a bridging tool rather than a long-horizon tariff architecture.

The second is **implementation detail and exceptions**, because real-world incidence depends on what is carved out and how overlap is handled. The Proclamation lists broad exception categories (for example, certain energy products, pharmaceuticals and inputs, and certain electronics), and includes a specific interaction rule: the surcharge “shall not apply in addition to” Section 232 tariffs, and where a Section 232 tariff applies to part of an import, the surcharge applies only to the non-232 portion. citeturn7view1turn12search1

From a risk perspective, domestic litigation over Section 122 is most plausibly directed at (a) whether the factual predicates for “fundamental international payments problems” are satisfied by the cited trade and current-account metrics, and (b) whether the structure of exceptions is consistent with Section 122’s “balance-of-payments” purpose rather than functioning as product-policy or industrial-policy differentiation. The Proclamation itself anticipates this line of attack by asserting that exceptions are based on “the needs of the United States economy” and not intended to protect individual domestic industries. citeturn7view1turn12search1

## WTO Implications and Dispute Scenarios

A Section 122 surcharge is functionally a **price-based import restriction**. Under WTO law, “price-based measures” (including **import surcharges**) are explicitly part of the balance-of-payments toolbox and are characterized as having the least disruptive effect on trade, relative to quantitative restrictions. citeturn27search0

That framing, however, does not eliminate litigation or dispute risk; it relocates it into the WTO’s balance-of-payments disciplines:

The WTO’s balance-of-payments regime, operating through GATT Articles XII and XVIII:B and the Understanding on Balance-of-Payments Provisions, emphasizes that measures must be **temporary**, progressively relaxed as conditions improve, transparently administered, and designed to control the **general level of imports** rather than target sectors. It also lays out notification and consultation expectations, including IMF involvement in the consultative process. citeturn27search0turn27search2

A particularly relevant element for a “10% surcharge” structure is that the Understanding clarifies that **import surcharges** are a recognized price-based instrument and that—**notwithstanding GATT Article II**—price-based balance-of-payments measures may be applied **in excess of bound duties**, provided the balance-of-payments framework is satisfied. citeturn27search0turn27search12

Likely dispute pathways, therefore, look less like “simple bound-rate breach” cases and more like “BOP-justification and necessity” contests. A complainant could argue that the United States is not facing the type of balance-of-payments or reserve-pressure scenario envisioned by GATT XII disciplines, or that the measure exceeds what is necessary, or that carve-outs produce disguised selectivity inconsistent with operating on the general import level. The WTO’s own technical materials emphasize that measures should avoid protective intent, avoid multiple overlapping measures on the same products, and be time-limited and scheduled where practicable. citeturn27search0turn27search12

For Korean stakeholders, the practical WTO takeaway is that the Section 122 surcharge is *not automatically illegitimate under WTO rules* merely because it is an across-the-board tariff-like surcharge; rather, it will stand or fall on the credibility of the “fundamental international payments problems” narrative, the proportionality of the measure, and compliance with transparency/consultation disciplines. citeturn27search0turn27search12

## Practical Impacts and Action Checklist for Korean Exporters

The operational problem for firms is that **“tariff invalid” does not instantly translate into “cash refunded.”** Refunds must run through U.S. customs and trade-remedy process machinery, and the party with standing and documentation is often the U.S. importer-of-record.

Korean authorities stated that refund claims are typically filed with entity["organization","U.S. Customs and Border Protection","dhs customs agency"] by the U.S.-based importer, but that exporters using **DDP** (where the exporter pays duties/taxes) may file directly. Korea also stated it would identify DDP exporters and provide guidance while awaiting CBP’s detailed procedural announcements. citeturn27search3turn26search10

Under CBP’s own guidance, once an entry is liquidated, “the only option available for relief is to file a Protest,” and protests generally must be filed within **180 days of liquidation** (or, depending on posture, within 180 days of the protested decision). citeturn13search0turn13search1turn13search11 If a protest is denied, a civil action at the CIT must be commenced within **180 days** of the denial (or deemed denial). citeturn13search3 A recent CRS product aimed specifically at IEEPA-tariff refund pathways highlights the protest route, CBP’s review window, and the “accelerated disposition” mechanism that can force a quicker deemed denial to tee up CIT litigation. citeturn13search9

Korea’s estimate that ~6,000 exporters used DDP versus ~24,000 total affected exporters is useful for triage: firms in the DDP subset should assume greater internal responsibility for refund pursuit because they may not be able to rely on a U.S. importer’s incentive alignment. citeturn27search3turn27search1

```mermaid
pie title Approximate Korean exporter groups by refund-filing posture (DDP vs non-DDP)
    "DDP exporters (~6,000)" : 6000
    "Non-DDP exporters (~18,000)" : 18000
```

The underlying counts (about 24,000 affected exporters, about 6,000 DDP) are described in Korean reporting citing Korea Customs Service statements. citeturn27search3

Action checklist (structured for immediate execution):

Maintain an “entry-level exposure register” before arguing about law. Collect, for each U.S.-bound shipment, the entry number, port, entry date, importer-of-record, broker, Incoterms (especially DDP vs non-DDP), and the duty lines actually paid (including any IEEPA-coded duties). This is the minimum data needed to align with a U.S. importer or broker.

Treat liquidation dates as the clock that governs legal options. CBP emphasizes that after liquidation, protests become the only administrative relief path, with a 180-day window. citeturn13search0turn13search11 This means Korean exporters should contractually require importers/brokers to share liquidation notices and entry status, and should build internal reminders keyed to liquidation.

Coordinate with the importer-of-record on protest strategy, but do not assume alignment. Under the statute, protests can be filed not only by importers/consignees but also by “any person paying any charge or exaction”—a clause that may become practically relevant where a Korean exporter bore the duty cost under DDP or contractual reimbursement clauses. citeturn13search1turn27search3

Preserve the evidentiary chain that links duty payment to economic incidence. Refund disputes often turn on who “really” bore the duty and whether reimbursements occurred. Preserve commercial invoices, duty reimbursement arrangements, credit notes, and any DDP settlement records; this is especially important if multiple parties (exporter, distributor, U.S. affiliate) shared the burden.

Assume that refund processing volume will be high and timelines uncertain. Reuters reports refund exposure estimates above $175 billion and expects a wave of claims. citeturn26news42 Even if your claim is valid, queue effects and litigation gating (protest → denial → CIT) can create long tails.

In parallel, reprice forward shipments for the Section 122 surcharge effective Feb 24. The Proclamation’s exceptions are extensive and technically structured (including interaction rules with Section 232 tariffs), so classification and product mapping matter: firms need to determine whether their goods fall into exempt categories, overlap with Section 232, or remain fully subject to the 10% surcharge. citeturn7view1turn12search1

## Comparative Tables

| Feature | IEEPA-based “reciprocal” tariff program (invalidated) | Section 122 temporary import surcharge (replacement) |
|---|---|---|
| Core legal basis asserted | IEEPA (as interpreted by the administration) | 19 U.S.C. § 2132 (Trade Act “Section 122”) and HTSUS implementation authorities cited in the Proclamation citeturn7view1turn0search6 |
| Supreme Court status | Held unlawful: IEEPA “does not authorize the President to impose tariffs” citeturn9view0 | Not adjudicated in this ruling; implemented immediately by Proclamation citeturn7view1turn0news40 |
| Stated policy objective | Address drug trafficking and/or trade deficits via emergency powers (described in the opinion) citeturn9view0 | Address “fundamental international payments problems” / balance-of-payments deficits (as found in the Proclamation) citeturn7view1turn12search0 |
| Scope | Country- and rate-variable; included “reciprocal” country-specific rates (e.g., Korea referenced in reporting) citeturn27search10turn26news42 | “All articles imported into the United States” subject to 10% ad valorem, with enumerated exceptions and overlap rules citeturn7view1turn12search1 |
| Duration | Potentially open-ended while emergency orders maintained (contested as “unbounded” in scope) citeturn9view0 | Limited to **150 days** unless extended by Congress; Proclamation specifies the 150-day period citeturn12search0turn0search6 |
| Rate ceiling | Not treated as capped in the asserted IEEPA theory; challenged as “unbounded” citeturn9view0 | Statutory ceiling: surcharge “not to exceed 15 percent ad valorem”; Proclamation sets 10% citeturn0search6turn7view1 |
| Exemptions / carve-outs | Program-specific; not uniform across statutes (varied by orders and deals) citeturn26news42turn9view0 | Broad exception lists (critical minerals, energy, pharmaceuticals, certain electronics, Section 232 interaction, etc.) and transit rules citeturn7view1turn12search1 |
| Refund prospects (practical) | High likelihood of refund claims; Court and Reuters both anticipate large-scale refund complexity citeturn9view0turn26news42 | Refund risk depends on future adjudication; treated as a “regular customs duty” in the Proclamation and therefore collected/managed through ordinary customs channels unless invalidated citeturn7view1 |

| Stakeholder | What they control in practice | What they should do now |
|---|---|---|
| Exporter in Korea (non-DDP) | Product details; contract pricing; limited U.S. entry control | Demand entry-level data from importer/broker; adjust forward pricing for the Section 122 surcharge effective Feb 24; preserve documents showing whether duties were contractually reimbursed citeturn7view1turn13search0 |
| Exporter in Korea (DDP) | Often bears duty cost; may have refund filing posture per Korean guidance | Build a CBP-facing refund packet (entries, duty lines, payment evidence); coordinate with Korea Customs guidance channels; treat liquidation/protest windows as hard deadlines citeturn27search3turn13search0turn13search1 |
| U.S. importer-of-record | Entry filing, broker instruction, protest standing | Track liquidations; file protests within 180 days where appropriate; consider accelerated disposition strategy where litigation is likely citeturn13search0turn13search9 |
| U.S. customs broker | Operational filing in ACE; document capture; protest submission as agent | Implement consistent coding and documentation; support protest filings; ensure audit-ready retention given expected claim volume citeturn13search0turn26news42 |
| Korean government support bodies | Information relay and exporter triage | Focus messaging on entry-level mechanics (liquidation/protest), DDP identification, and harmonized guidance to reduce duplicative errors under volume pressure citeturn27search3turn26search12 |

**Note on requested Newsis sourcing:** This report cites Reuters, Yonhap, Kyunghyang, and multiple Korean outlets for the same factual spine; a directly accessible Newsis article URL could not be reliably retrieved in the available source set, so Newsis is reflected indirectly where other Korean reporting uses Newsis-provided materials (e.g., photo crediting) rather than as a primary text-byline source. citeturn27search1turn26news42turn26search8turn27search10