US Toy Tariffs in 2026: What the Section 122 Shift Means for Plush Sourcing

For anyone sourcing plush from China for the US market, 2026 has rewritten the tariff math twice in a single year — and the story still isn't finished. After eighteen months of headline rates that swung from single digits to over 100 percent, the structure that governs what a Chinese-made plush toy costs to land in the United States looks completely different than it did last summer, and it is still moving.

The short version: on February 20, 2026, the US Supreme Court struck down the sweeping "reciprocal" tariffs the administration had imposed under emergency powers. The same day, the government replaced them with a flat 10 percent surcharge under a different law — one that is set to expire in late July and has already been challenged in court. For Chinese plush, that 10 percent stacks on top of a duty that never went away.

What Changed in 2026

The pivot point was the Supreme Court's February 20 decision in Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc. In an opinion by Chief Justice Roberts, the Court held that the International Emergency Economic Powers Act (IEEPA) does not give the president authority to impose tariffs. That ruling pulled the legal floor out from under the country-by-country "reciprocal" rates that had whipsawed importers throughout 2025.

Within hours, the administration replaced them. Proclamation 11012 invoked Section 122 of the Trade Act of 1974 to impose a temporary 10 percent surcharge on nearly all imports, effective February 24, 2026. Section 122 is a narrow balance-of-payments authority: it caps the surcharge at 15 percent and limits it to 150 days unless Congress extends it, which puts the current measure's expiry in late July 2026. The administration has signaled it could raise the rate toward the 15 percent ceiling, but as it stands the operative surcharge is 10 percent.

Where Chinese Plush Now Sits on Duty

Toys, including plush, fall under HS heading 9503 and have historically entered the US at a zero percent base rate. That base rate is unchanged. What sits on top of it is what matters now.

Two layers apply to Chinese-made plush. The first is the Section 301 List 4A tariff of 7.5 percent on Chinese-origin toys, which is a separate trade authority and was not touched by the IEEPA ruling — it remains fully in effect. The second is the new 10 percent Section 122 surcharge. Together they put roughly 17.5 percent of duty on a category that used to cross the border duty-free. That is a real line item to model into landed cost, though it is a long way from the triple-digit figures that dominated 2025 coverage.

The China–Vietnam Cost Equation Has Flipped

The bigger shift for sourcing decisions is comparative. Under the old IEEPA regime, Vietnam — the main alternative for plush and soft-toy production — had briefly been hit with a punitive reciprocal rate near 46 percent, which made it more expensive than China at the margin. The Section 122 reset wiped that out. Vietnam now faces only the flat 10 percent surcharge, with no Section 301 surcharge layered on top.

The practical effect is a reversal. On tariff terms alone, a Vietnamese plush toy now carries 10 percent versus roughly 17.5 percent for the same toy from China — and on a $20 toy that gap is several dollars per unit. Mexico, under USMCA, remains duty-free. For the first time in a while, the duty math tilts away from China, and buyers comparing quotes are seeing it.

Why None of This Is Settled

The figures above are accurate today, but they rest on an unusually shaky foundation. On May 7, 2026, the US Court of International Trade ruled in Oregon v. United States and Burlap and Barrel, Inc. v. United States that the 10 percent Section 122 surcharge was itself invalid, because the proclamation did not identify the kind of balance-of-payments deficit the statute requires. Crucially, that remedy is party-specific rather than universal — collections continue for importers who were not plaintiffs, and the decision is under appeal.

On top of that, the Section 122 surcharge is scheduled to lapse in late July 2026 regardless of the appeal, unless Congress extends it. And in early March, the US Trade Representative opened two fresh Section 301 investigations — into forced labor and manufacturing overcapacity — that are expected to conclude in time to impose new, potentially China-specific, tariffs before the Section 122 window closes. In other words, the 17.5 percent number is built on a contested, time-limited measure, with a possible China-targeted replacement waiting behind it.

What It Means for Plush Brands and Importers

The first move is unglamorous: recompute landed cost on today's actual rate, not last year's headlines. A 17.5 percent duty changes margin math, but it is a manageable number, and pricing decisions made during the 100-percent panic of 2025 are almost certainly wrong now.

The Vietnam tariff gap is real and worth taking seriously, but tariffs are one line in a landed-cost calculation, not the whole of it. Plush is design- and labor-intensive, and China's depth in plush-specific pattern-making, fabric sourcing, and skilled hand-sewing — concentrated in established hubs like Yangzhou — still drives the sample quality, revision speed, and bulk consistency that decide whether a program succeeds. A newer or thinner supply base can quote a lower duty and still cost more once rejects, delays, and re-sampling are counted. Our breakdown of US vs China plush sourcing covers how those factors weigh against unit price.

The harder discipline is not restructuring a supply chain around a measure that may vanish in July or be swapped for another. The sensible response is flexibility: confirm Incoterms and who absorbs the duty, keep HS classification and country-of-origin documentation tight, and model two or three tariff scenarios rather than betting the year on one. For children's plush in particular, the cost of safety testing and the risk of a quality failure usually dwarf a tariff delta over a product's life — which is why getting the custom plush right remains the first-order decision, with duty a variable to manage around it.

The Bottom Line

2026 reset US import tariffs from chaos into a single 10 percent surcharge — but for Chinese plush that still stacks to about 17.5 percent, the China–Vietnam cost gap has flipped, and the whole structure is under appeal and due to expire in July. The right response is neither to panic nor to chase the lowest duty line. It is to price on today's real numbers, keep sourcing flexible while the legal picture settles, and weigh tariff against the quality and reliability that actually determine whether a plush program ships on time and sells.

Sources

Congressional Research Service (Congress.gov) — "Supreme Court Rules Against Tariffs Imposed Under the International Emergency Economic Powers Act (IEEPA)"
https://www.congress.gov/crs-product/LSB11398

Holland & Knight — "U.S. Court of International Trade Invalidates the Administration's Section 122 Tariffs" (May 8, 2026)
https://www.hklaw.com/en/insights/publications/2026/05/us-court-of-international-trade-invalidates-the-administrations

Skadden, Arps — "US Trade Court Strikes Down Section 122 Tariffs, but Ruling's Fate Is Uncertain and Practical Impact Is Limited" (May 2026)
https://www.skadden.com/insights/publications/2026/05/us-trade-court-strikes-down-section-122-tariffs

Tax Policy Center — "How the Supreme Court's IEEPA Ruling and New Section 122 Tariffs Reshape Costs Across Industries" (Mar 10, 2026)
https://taxpolicycenter.org/taxvox/how-supreme-courts-ieepa-ruling-and-new-section-122-tariffs-reshape-costs-across-industries

Tariffs Tool — "Toys & Games Import Tariffs — Rates (2026)"
https://www.tariffstool.com/tariffs-on-toys-games