The Supreme Court of the United States held that the President's use of the International Emergency Economic Powers Act to impose the 2025 reciprocal tariff regime exceeded the statutory authority granted by IEEPA, vacating the IEEPA tariffs on the merchandise covered by the consolidated cases before the Court. Four days after the February 20, 2026 decision, the Administration invoked Section 122 of the Trade Act of 1974 and imposed a 15 percent ad valorem balance of payments surcharge across a broad set of imported goods, effective February 24, 2026, for the statutory maximum 150 day period expiring July 24, 2026. The proclamation excludes goods already subject to Section 232, which means wooden cabinets and vanities are not in scope of the Section 122 surcharge regardless of origin. The cabinet supply environment between today and the surcharge's scheduled expiry remains the most procedurally compressed window the multifamily category has navigated since the 2020 AD CVD order took effect, because the Section 232 layer at 25 percent on cabinets from all origins (including USMCA qualifying merchandise) is the live exposure. The cabinet supply environment between today and the surcharge's scheduled expiry is the most procedurally compressed window the multifamily category has navigated since the 2020 AD CVD order took effect.
Wirko Building Solutions writes this field guide for developers and general contractors with active 2026 cabinet packages. The Supreme Court holding in plain English, the Section 122 mechanism explained, the practical actions for the next 150 days and beyond, the Wirko read on what a permanent post IEEPA regime might look like, and the contract language and supply structure decisions that protect a pro forma through the transition.
What the Supreme Court actually held
The case. Learning Resources, Inc. v. Trump, consolidated with Trump v. V.O.S. Selections, docket number 24-1287. Decided February 20, 2026 by a 6-3 vote. Chief Justice Roberts wrote the majority opinion, joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson. The Court held that IEEPA does not authorize the President to impose tariffs. The opinion is on the Court's site at supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf.
The narrow holding. IEEPA, codified at 50 USC 1701 and following, grants the President broad authority to regulate international economic transactions in response to declared national emergencies originating outside the United States. The statute lists specific powers including investigation, regulation, prevention, and prohibition of transactions. The question before the Court was whether the words "regulate" and "prohibit" in the IEEPA grant include the authority to impose tariffs on imported goods. The Court held they do not. Tariffs are the constitutional prerogative of Congress under Article I, Section 8, and the IEEPA grant does not contain the clear statement required to delegate that authority to the executive in the unconditioned form the 2025 proclamation invoked.
The practical effect. The IEEPA tariffs imposed under the 2025 reciprocal tariff regime are vacated as to the merchandise covered by the consolidated cases. The federal government is required to refund duties collected under the vacated authority for the affected entries, with the procedural mechanics of the refund process now in administration by Customs and Border Protection. Importers with covered entries can file refund claims through the established CBP procedures. The refund timeline historically runs months to years for matters of this scale, with statutory interest accruing on the refund amount.
What the holding did not do. It did not strike Section 232 tariffs, which derive from a different statute and a different procedural process and are unaffected. It did not strike Section 301 tariffs, which derive from the Trade Act of 1974 and are similarly unaffected. It did not strike anti dumping and countervailing duty orders, which derive from the Tariff Act of 1930 and operate through Commerce and ITC findings. And it did not strike the President's authority to act under other tariff statutes the Constitution and Congress have made available to the executive, which is precisely what the Administration's pivot to Section 122 demonstrates.
Section 122. The replacement mechanism
Statutory basis. Section 122 of the Trade Act of 1974, codified at 19 USC 2132. The statute authorizes the President to proclaim, for a period not to exceed 150 days, a temporary import surcharge in the form of duties on articles imported into the customs territory of the United States, in an amount not to exceed 15 percent ad valorem.
The triggering finding. Section 122 authorizes the surcharge "to deal with large and serious United States balance of payments deficits" or "to prevent an imminent and significant depreciation of the dollar in foreign exchange markets" or to cooperate with international efforts to correct an exchange rate misalignment. The President makes the finding by proclamation. The statute does not require a Commerce investigation, a USTR determination, or any specific evidentiary record beyond the proclamation itself.
The 15 percent cap. Section 122 expressly limits the surcharge to 15 percent ad valorem. This is a statutory ceiling, not a procedural target. A surcharge exceeding 15 percent under Section 122 alone would itself be unauthorized. The 2025 reciprocal tariff regime under IEEPA imposed rates well above 15 percent on many countries. Section 122 cannot replicate those rates within its own authority. The Section 122 surcharge therefore stands as the floor of the post IEEPA regime, not a full replacement.
The 150 day cap. The surcharge expires by operation of statute on the 150th day after imposition unless renewed under separate authority. Renewal under Section 122 itself would require either a fresh Presidential proclamation citing a new balance of payments determination, which the statute does not clearly authorize as a continuous practice, or Congressional action under Section 122(d) and the related procedural provisions. As a practical matter, the 150 day clock is hard.
The current Section 122 proclamation. Effective February 24, 2026 at 12:01 a.m. EST. The surcharge began at 10 percent and was raised to 15 percent on February 22, 2026, applied as 15 percent ad valorem from the February 24 imposition. The 150 day clock runs to expiry on July 24, 2026 unless Congress extends. Implementation guidance is in CBP bulletin 40b3b7b and the White House fact sheet of February 2026.
The cabinet specific application. The Section 122 surcharge excludes goods already subject to Section 232. Wooden cabinets and vanities are covered by the October 14, 2025 Section 232 wood furniture proclamation. As a result, wooden cabinets and vanities are NOT in scope of the Section 122 surcharge regardless of country of origin. Steel, aluminium, copper, lumber, and other wood products are similarly excluded. The de-minimis suspension continues for the goods that remain in scope. A multifamily developer's cabinet supply does not pay the Section 122 surcharge on top of the Section 232 rate. The cabinet sits in the Section 232 layer alone.
What this means for cabinet importers in the next 150 days
Three operational windows.
Window one. Containers in transit at the date of the Supreme Court decision and the Section 122 imposition. The legal analysis depends on the date of importation under CBP rules and the entry summary disposition. Refund claims for IEEPA duties paid on entries that occurred before the Section 122 imposition are filed under the standard CBP refund procedures. Containers entered after the Section 122 imposition pay the Section 122 surcharge in lieu of the IEEPA rate, with the differential between the prior IEEPA rate and the current Section 122 rate effectively flowing through to the importer's working capital position.
Window two. Containers planned for entry before the July 24, 2026 Section 122 expiry. Wooden cabinets and vanities are excluded from the surcharge because they are already subject to Section 232, but the wider import program (appliances, fixtures, fittings, furniture not classified as wood furniture, finish materials) may be in scope. A developer or general contractor whose project schedule calls for delivery in this window should pull the bill of materials line by line against the surcharge schedule and confirm with each supplier that the contracted price either includes the surcharge or passes it through under a tariff change clause. A contract that is silent on Section 122 because Section 122 was not a live issue at the time of signing is a contract that needs an amendment.
Window three. Containers planned for entry after the Section 122 expiry. These present the strategic question of the post 150 day regime. The Administration's options after the surcharge expires include a new Section 122 proclamation citing a renewed balance of payments determination (legally contested), a request to Congress for new tariff authority (politically contested), reliance on Section 232 and Section 301 alone (mathematically narrower than the IEEPA regime), or some combination. A multifamily program planning entries past the Section 122 expiry should model multiple scenarios because the regime is not yet settled.
Practical actions for the next 90 days
Action one. Read the active contracts. Pull every cabinet and finish supply contract with deliveries scheduled in the next 12 months. For cabinets specifically, the Section 122 surcharge does not apply because the proclamation excludes goods already subject to Section 232. For other categories in scope, identify which contracts contain a tariff pass through clause that names Section 122 specifically or names a generic "change in governmental regulation" mechanism that would capture Section 122. Identify which contracts are silent on the issue. The silent contracts are the priority for amendment. The Wirko Building Solutions supply contracts have included a Section 122 specific reference since the proclamation was issued. Suppliers who refuse to accept a Section 122 amendment on existing contracts are signaling either inexperience with trade policy mechanics or an intention to absorb the risk into their margin until the surcharge expires. Either signal is useful procurement intelligence.
Action two. File the IEEPA refund claims. For entries that paid IEEPA duties before the Supreme Court decision, the refund mechanism through CBP's standard protest and refund procedures is now active. The procedure has filing windows. A developer or general contractor whose project paid IEEPA duty as a pass through cost in 2025 has a refund claim of measurable value, provided the documentation chain to the entries is intact. Coordinate with the customs broker and importer of record on the claim package.
Action three. Reposition supply for the post 150 day window. The Section 232 wood furniture proclamation contains no USMCA exemption, so a USMCA qualifying production stack pays the same 25 percent Section 232 rate as cabinets from any other origin. The case for USMCA qualifying production in 2026 is therefore not Section 232 avoidance. It is the absence of any AD CVD order on Mexican wooden cabinets, the absence of Section 301 exposure, the absence of certification chain risk on the 2024 Vietnam scope finding, and the integrated North American logistics. Whatever replaces Section 122 at expiry on July 24, 2026 may well preserve a USMCA carve out on the categories the surcharge currently covers. A multifamily program that completes a partial supply chain shift to USMCA qualifying production over the next two quarters is positioned for stability on the trade remedy and 301 layers, even with the Section 232 layer in force on all origins.
Action four. Inventory and timing. For finish goods and other items in scope of the Section 122 surcharge (cabinets are excluded), accelerating containers into the current Section 122 window may be cheaper than holding inventory plans against an uncertain post expiry rate. For cabinets, the timing math is driven instead by the Section 232 rate at 25 percent, the originally scheduled January 1, 2026 step up to 50 percent that has been delayed indefinitely, and the floor that the 25 percent rate holds at minimum until January 1, 2027. The math is project specific. Carry cost on additional inventory at current commercial financing rates against the difference between current rate exposure and a hypothetical higher post expiry rate. The Wirko read is that the math favors acceleration on most realistic project sizing for entries planned in the second half of 2026.
The Wirko read on the next 90 days
The Section 122 surcharge will expire on the calendar. What replaces it is a function of three independent variables.
Variable one. Whether the Administration attempts a renewed Section 122 proclamation. Legally contested but politically expedient. Wirko's expectation is that the Administration will at least test the renewal authority, generating a fresh round of litigation that will not resolve before the second 150 day window also expires.
Variable two. Whether Congress acts. The political coalition for granting the executive branch new across the board tariff authority is narrow. The political coalition for ratifying a status quo of Section 232 plus Section 301 plus AD CVD is broader. Wirko's expectation is that Congress will not grant new authority but will not roll back existing authority either, leaving the post Section 122 regime as the existing three layer stack.
Variable three. Whether the Section 232 wood furniture proclamation is modified. The originally scheduled January 1, 2026 step up from 25 percent to 50 percent on cabinets and vanities (and 30 percent on upholstered wooden furniture) was delayed indefinitely. The 25 percent rate holds at minimum until January 1, 2027 and could be re-imposed, repealed, or increased at any time after. Wirko's expectation is that the political constituency that backed the wood furniture investigation in the first place will press for the step up to land in 2027.
Net read. By Q1 2027, the multifamily cabinet duty environment is likely to consist of Section 232 at 25 percent or 50 percent on cabinets from all origins (no USMCA exemption), Section 301 at 7.5 percent on Chinese origin, AD CVD orders continuing on Chinese cabinets and on Vietnamese cabinets covered by the 2024 final scope determination, and either a renewed or replaced Section 122 surcharge on the wider import program (cabinets remain excluded under the Section 232 carve out). USMCA qualifying production will continue to pay the Section 232 rate, but will continue to carry no AD CVD scope risk and no Section 301 exposure. The duty differential between USMCA qualifying and certified Asian supply on duty alone narrows; the differential on certification chain risk and trade remedy exposure widens. A multifamily program built on the assumption that the IEEPA decision opens a window for cheaper imports is reading the decision wrong. The decision narrows the executive's tariff toolkit and forces a shift toward statutory mechanisms with more durable carve outs. USMCA qualifying supply gets cheaper on a relative basis under the post IEEPA regime, not more expensive.
This is why the Wirko Building Solutions supply structure through the Cabo Cabinet Group distribution arm was set up the way it was. Not to capture an arbitrage on the current rate environment. To absorb the rate environment changes that were always going to come and present a stable duty profile to the developer pro forma across the next three to five years of project starts. The Supreme Court decision did not change the strategic posture. It validated it.
Schema FAQ block
Q. What does the Supreme Court IEEPA ruling mean for cabinet tariffs?
A. The Supreme Court in Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections), docket 24-1287, decided February 20, 2026 by a 6-3 vote with Chief Justice Roberts writing for the majority, vacated the 2025 reciprocal tariff regime that had been imposed under the International Emergency Economic Powers Act, holding that IEEPA does not authorize the President to impose tariffs. The decision did not affect Section 232, Section 301, or AD CVD authorities, which remain in force. The Administration responded by invoking Section 122 of the Trade Act of 1974 and imposing a 15 percent balance of payments surcharge effective February 24, 2026, expiring July 24, 2026. The proclamation excludes goods already subject to Section 232, which means wooden cabinets and vanities are not in scope of the surcharge regardless of origin.
Q. How does the 150-day Section 122 surcharge work?
A. Section 122 authorizes a Presidential proclamation imposing a temporary import surcharge of up to 15 percent ad valorem for up to 150 days, in response to a balance of payments determination by the President. The current proclamation took effect February 24, 2026 at 15 percent ad valorem and expires July 24, 2026. It excludes goods already subject to Section 232, including wooden cabinets and vanities, steel, aluminium, copper, lumber, and other wood products. The de-minimis suspension continues for in scope goods. The surcharge expires by operation of statute on the 150th day. Renewal would require either a fresh proclamation, which the statute's authorization for continuous use is unsettled, or Congressional action.
Q. What should developers do about cabinet tariff exposure right now?
A. Four actions in the next 90 days. Read every active cabinet and finish supply contract for Section 122 pass through language and amend the silent ones, recognizing that cabinets themselves are not in scope of the surcharge but adjacent finish materials may be. File refund claims for IEEPA duties paid on entries before the Supreme Court decision. Reposition supply structure toward USMCA qualifying production, which pays the same Section 232 rate as other origins but carries no AD CVD scope risk and no Section 301 exposure. Model inventory acceleration for entries planned in the second half of 2026, weighing carry cost against the risk of a Section 232 step up after the indefinite delay of the originally scheduled January 1, 2026 increase.
Q. Will the IEEPA refunds actually happen?
A. Yes for entries clearly within the scope of the vacated authority, through the standard CBP protest and refund procedures. The procedure has filing windows that need to be observed. The timeline historically runs months to years for matters of this scale, with statutory interest accruing. A multifamily project that paid IEEPA duty as a pass through cost in 2025 has a recoverable refund claim provided the documentation chain to the specific entries is intact and the importer of record cooperates on the claim package.
Q. Does the IEEPA decision affect USMCA qualifying Mexican cabinet supply?
A. The IEEPA decision and the Section 122 successor do not affect USMCA qualifying Mexican wooden cabinets directly because cabinets sit in the Section 232 layer, which is unaffected by either. The Section 232 wood furniture proclamation contains no USMCA exemption, so Mexican wooden cabinets pay the 25 percent Section 232 rate alongside cabinets from any other origin. There is no AD CVD order on Mexican wooden cabinets. The USMCA qualifying position is the most stable cabinet supply posture available in the 2026 environment because of the absence of AD CVD scope risk, the absence of Section 301 exposure, and the absence of certification chain administrative burden, even though the Section 232 rate applies to all origins. The Wirko Building Solutions supply chain through Cabo Cabinet Group is structured around that position specifically.
Related reading on the post IEEPA tariff environment.
The 2026 Cabinet Tariff Map. What Multifamily Developers Need Before Spec Lock
Anti Dumping Investigations On Cabinets. The Developer Guide To Factory Risk
Section 232 vs 301 vs 122 vs AD CVD. A Cabinet Tariff Decoder
The Multifamily Cabinet Supply Chain. A Developer Reference Guide
If your 2026 multifamily project has a cabinet package exposed to Section 122 or in line for an IEEPA refund claim, add Wirko Building Solutions to your bidder list for a written read on the contract language, the refund mechanics, and the supply structure decisions through the next two quarters.
Last reviewed. 2026-05-02. Wirko Building Solutions reviews this article weekly during the Section 122 window against new Federal Register notices, Presidential proclamations, CBP guidance on refund procedures, and any Congressional action on tariff authority.