§122 awaits the CAFC — the two paths CFOs need to model

Yesterday's digest captured the core facts of the §122 judicial risk — the CIT's 2-1 invalidation of Proclamation 11012 on May 7, and the May 12 CAFC administrative stay that preserves §122 cash collections in the meantime. The next gate is the CAFC's substantive appeal ruling — typical §122 appeals run 60 to 90 days, which lands squarely inside the window before the July 24 §301 16-economy action target.

That single judicial date forces CFO H2 2026 cash-flow models from a single baseline into two parallel paths. Today's piece isn't another news roundup. It's a working-through of what the two paths mean for sourcing decisions, with DutyTrade's tariff calculator wired into the modeling.

Path A: CAFC reverses the CIT, §122 runs to natural retirement

CAFC's 60-to-75 day window holds §122 in place through July 24, when the §301 16-economy affirmative determination lands and §122 retires by design.

Under this path, on Chinese-origin flat-rolled steel — HS 7208 / 7210 — the US aggregate stack runs:

• MFN HTSUS: 25%
• §301 List 3: 25%
• §232 full customs value: 50%
• §122 global surcharge: 15%

Stacking these four layers on customs value (the April 6 full-customs-value methodology), the aggregate ad-valorem equivalent on Chinese flat-rolled steel works out near 115% under current layering — runnable directly in our Tariff Stack Calculator by loading the "CN → US steel derivative" preset to inspect the layer structure.

After §301 lands July 24: §122 retires (−15 pp); §301 product likely matches existing rates (Bessent's May 19 Reuters ceiling signal). Aggregate equivalent lands near 100%.

Path B: CAFC affirms the CIT, §122 invalidated early

If CAFC affirms by early July, §122 is invalidated nationwide. Same flat-rolled steel:

• MFN HTSUS: 25%
• §301 List 3: 25%
• §232 full customs value: 50%
• §122: 0% (vacated)

Aggregate equivalent drops to 100% — a 15 pp short-term reduction vs Path A's current 115%.

But the reduction is windowed. When §301 lands July 24, USTR will almost certainly re-write the §122 15% global surcharge into the new §301 action document. That's the standard administrative move to defend tariff revenue — they didn't run three months of §301 hearings to watch aggregate China rates fall 15 pp short-term.

The model needs to be built around: where you sit in late May / late June / early July, and a 6-to-12 week cash-flow span — not a single annual curve.

What the two paths actually look like for procurement decisions

For the same importer under both paths, unit tariff cost across May-November:

Short-term net difference: Path B is 15 pp lower than Path A for roughly six weeks, June through mid-July.

For mid-size importers in the $50M–$200M annual import range, six weeks of 15 pp differential translates to $2M–$8M in cash. That number isn't enough to change a sourcing decision, but it's enough to change a clearance-timing decision — pushing late-May not-yet-liquidated entries into early June is the consistent move under cash-flow logic.

The specifics by HS chapter live in our /route lookup — enter a specific HS code to see the layered rates.

Industry sensitivity ranking

Not every importer is on the same 15 pp curve. §122's coverage breadth determines who feels it most:

Most sensitive: HS 61/62/63 apparel (no §232, has §301 + §122), HS 95 toys, HS 39 plastics — for these categories §122's relative weight is 25-40% of the aggregate.

Moderately sensitive: HS 84 machinery, HS 85 electronics, HS 87 autos — §232 derivative 25% dominates; §122's relative weight is 10-15%.

Least sensitive: HS 72/76 primary metals — §232 50% dominates; §122 is the marginal layer.

For the first two tiers, the recommended action is to use the Tariff Stack Calculator to run your specific HS configuration outside the five presets, toggling the §122 layer on/off to see the net impact.

What legal teams should do now

If you're an importer who has paid §122 but isn't one of the three plaintiffs (Burlap & Barrel, Basic Fun, State of Washington):

The CIT decision binds only the plaintiffs, but its precedential weight is on the record. If CAFC affirms, every other paid §122 entry has theoretical retroactive refund standing. The action item now — archive every §122-paid entry since April 6 (the §232 full-value effective date), with protest deadlines (180 days post-liquidation) preserved.

CAPE today processes IEEPA refunds only. Any future §122 refund mechanism will likely be a similar batched system. Pre-staging entry summary lists in CAPE-Declaration-compatible schema now saves at least three weeks vs collecting it later.

July 24's political weight has climbed substantially

When we wrote the §301 16-economy 135-day accelerated calendar piece in late April, July 24 was "USTR's self-shortened action target." Today, May 29, July 24 is the convergence of three events: §122 bridge retirement, §301 substantive replacement, and likely CAFC appeal ruling.

Add to that day July 31 §232 pharma for the 17 Annex III companies, September 29 §232 pharma extension, November 10 Busan-truce expiry — and H2 2026's actual tariff environment is the strung-together readout of these five dates.

Our /updates policy feed syncs these five lines' every official posting in real time — adding it to RSS or to the standing reading list for Monday morning meetings buys 24-48 hours of reaction-window over second-hand social media.

Today's action checklist — three things, in order:

One. Run your primary HS codes through both paths on the Tariff Stack Calculator, save screenshots of both configurations.

Two. Review your May entries that are issued but not yet liquidated — decide whether to push liquidation timing into early June (positioning for Path B's relief window).

Three. If you're a mid-size or larger importer, archive the last 12 months of §122 paid entries — build the data foundation for protest filings should CAFC affirm.