On February 20, 2026, hours after the Supreme Court struck down IEEPA tariffs, the White House invoked a different legal authority it had waiting: Section 122 of the Trade Act of 1974. Effective February 24, 2026, a 15% ad valorem surcharge began applying to virtually all goods imported into the United States from every country in the world. It is the largest across-the-board import surcharge in modern U.S. trade history.
And it expires automatically on July 24, 2026 — by statute, with no ability for the President to extend it unilaterally.
That date is 51 days away. For importers, it triggers three distinct action items: understanding what replaces it, filing protests to preserve potential refund rights, and remodeling your landed cost structure for August 2026 and beyond.
What Section 122 Actually Is
Section 122 of the Trade Act of 1974 authorizes the President to impose a temporary tariff surcharge of up to 15% ad valorem on all imports for a maximum of 150 days when "fundamental international payments problems require special import measures," specifically including "large and serious United States balance-of-payments deficits." The Section 122 tariffs became effective on February 24, 2026, and will expire on July 24, 2026, unless Congress enacts legislation extending them past the 150-day statutory limitation.
The administration justified invoking Section 122 based on a $1.2 trillion annual goods trade deficit, a negative balance on primary income, and a net international-investment position of negative 90% of GDP. The tariff started at 10% and was raised to 15% — the statutory maximum — on February 22, two days before it took effect.
By statute, Section 122 is capped at 150 days. The President cannot extend Section 122 unilaterally — that is the central feature of the statute. This makes July 24 a hard deadline unlike any other tariff action in recent memory.
A $100,000 shipment not subject to any other tariff surcharge pays $15,346.40 in duties and fees just from Section 122 plus MPF. For importers running $5M or $10M in annual import volume, Section 122 represents $750K to $1.5M in annual additional cost that disappears on July 24 — unless something replaces it.
What Is Exempt From Section 122
Not everything is subject to the 15% surcharge. Understanding the exemptions is critical for accurate duty calculation through July 24.
| Category | Treatment | Notes |
|---|---|---|
| USMCA-qualifying goods (Canada/Mexico) | Fully Exempt | Must have valid USMCA certification. Verify qualification — the cost-benefit math shifted significantly under 15% Section 122. |
| Annex II goods | Excluded | Certain natural resources, fertilizers, vehicles and parts. Check HTSUS Chapter 99 subheadings for specific codes. |
| Section 232-covered steel and aluminum | Generally Not Stacked | Section 232 goods typically not subject to additional Section 122 surcharge on top of existing 232 rates. |
| Section 301 China goods | Stacked | A Chinese-origin product that faced 145% under IEEPA now faces a combined rate of roughly 33.9% (Section 301 + Section 122). |
| All other goods, all other countries | Subject to 15% | The dominant tariff burden for non-China, non-232 shipments in 2026. |
The Court Ruling — And Why It Does Not Change Your July 24 Planning
In late May 2026, the U.S. Court of International Trade struck down the Section 122 tariffs as exceeding the President's statutory authority in Oregon v. United States. The ruling granted summary judgment for the importer plaintiffs and issued a permanent injunction blocking tariff collection from those specific plaintiffs.
However, for all other importers — businesses not party to the litigation — the 15% Section 122 tariff remains in effect and must continue to be paid as filed. The administration is expected to challenge the ruling through an appeal and request a temporary stay while the case undergoes further judicial review. The July 24, 2026 statutory expiry is unchanged.
In practical terms: unless you were a plaintiff in Oregon v. United States, you are still paying 15% and you should continue to pay it. The appeal will almost certainly not be resolved before July 24. In late July, while the appeal is pending, the tariffs will expire.
Importers should review Section 122 duties that they have paid and are currently paying, to preserve their refund rights. If the CIT ruling is upheld on appeal, importers who filed protests within 180 days of liquidation will be in a position to claim refunds. The protest window is 180 days from the date of liquidation of each entry — not from today. Consult a licensed customs broker or attorney about which entries are still within the protest window and whether filing makes sense given the litigation uncertainty.
The Three Scenarios for August 2026
July 24 is not just an expiry date — it is a decision point. What happens on July 25 depends on which of three scenarios plays out. Every importer should be modeling all three right now.
Scenario B is the working assumption of most trade attorneys and consultants. The USTR has been running Section 301 investigations specifically timed to provide a legal successor to Section 122 before July 24. However, Section 301 rates are product and country-specific rather than universal — your rate after July 24 may be higher or lower than 15% depending entirely on your HTS code and origin country.
What USMCA Holders Should Do Right Now
If you are importing from Canada or Mexico and have not verified your USMCA qualification status since 2024, do it now. Verify USMCA qualification status — USMCA-qualifying goods are exempt. If you have not run the USMCA qualification analysis since 2024, run it now — the cost-benefit math has shifted.
At a 15% Section 122 rate, the value of USMCA qualification is substantial. A product that barely passes USMCA's regional value content threshold may be worth re-engineering to solidify qualification through July 24. After expiry, the calculus changes again depending on what replaces it.
Action Items Before July 24
- Calculate your total Section 122 exposure since February 24, 2026. Your customs broker can pull this from your entry data. Know the number — it tells you whether the refund opportunity is worth pursuing.
- Review which entries are still within the 180-day protest window. Work backward from today to identify entries where the protest deadline has not yet passed.
- Consult a licensed customs broker or attorney about filing protests on open entries to preserve refund rights, if the CIT ruling is upheld on appeal.
- Verify USMCA qualification for all Canada and Mexico-origin goods. Run the analysis fresh — do not rely on 2024 certificates.
- Model your import costs under all three August 2026 scenarios. Build the spreadsheet now so you can respond quickly when the picture becomes clearer in July.
- Review your sourcing strategy for non-China goods. If Section 301 replaces Section 122 with product-specific rates, some origin countries may become significantly more or less favorable after July 24.
- Check HTS codes against Chapter 99 subheadings for Annex II exclusions. Some product categories are excluded that importers have been incorrectly paying Section 122 on.
Importers who take no action before July 24 risk two things simultaneously: missing the protest window on liquidated entries that could generate refunds, and failing to model the successor tariff scenario that will define their cost structure for the rest of 2026. The companies that get ahead of this transition will have a real landed cost advantage over competitors who wait for July 25 to figure out what happened.
How to Calculate Your Current Section 122 Exposure
Your Section 122 exposure is your total dutiable value of imports subject to Section 122 multiplied by 15%, from February 24 through July 24. For most non-China, non-232, non-USMCA importers, this is straightforward. For importers with mixed origin portfolios, the calculation is more complex because Section 301 stacking, USMCA exemptions, and Annex II exclusions all affect which entries carry the 15% rate.
Use our Import Duty Calculator to model your full duty stack for any shipment — it includes Section 122 in the calculation alongside MFN, Section 301, Section 232, MPF, and HMF. The Tariff Impact Simulator lets you model what your cost structure looks like under different rate scenarios, including what happens if Section 122 expires and is replaced by a new Section 301 rate.