On February 24, 2026, U.S. importers woke up to a new line item on nearly every customs entry — a 10% global tariff surcharge applied under Section 122 of the Trade Act of 1974. For many small and mid-size importers, this was the first time they had heard the term. For compliance professionals, it was the latest addition to an already complex tariff stack that includes Section 301 China tariffs, Section 232 steel and aluminum duties, and IEEPA-based measures.
This guide explains what Section 122 is, which goods are affected, what is exempt, and how to calculate your full duty exposure so there are no surprises at the border.
Effective date: February 24, 2026 — Section 122 took effect. All entries filed on or after this date are subject to the surcharge unless exempt.
Expiry date: The current Section 122 surcharge is scheduled to expire around July 24, 2026 — approximately 150 days after it took effect, consistent with the statutory limit on such surcharges. Importers should monitor Federal Register notices closely as this date approaches. Post-expiry, non-USMCA goods may revert to standard MFN rates.
What is Section 122?
Section 122 of the Trade Act of 1974 grants the President authority to impose temporary import surcharges of up to 15% when the U.S. is experiencing a significant balance of payments deficit. The current administration invoked this authority in early 2026, imposing a 10% across-the-board surcharge on imports from all countries.
Unlike Section 301 tariffs, which target specific countries (primarily China) and specific HTS codes, Section 122 applies universally — every country, nearly every product, regardless of whether existing trade agreements are in place.
The legal authority is broad. Section 122 surcharges can be imposed quickly by Presidential Proclamation and do not require Congressional approval or a lengthy investigation period like Section 201 safeguard actions. This makes them one of the fastest-moving trade policy tools available.
Who Does Section 122 Affect?
If you import goods into the United States, Section 122 almost certainly affects you. The surcharge applies at the time of entry, assessed on the dutiable value of the imported merchandise — the same basis used to calculate regular customs duties.
The practical impact varies significantly by product and supply chain:
- Consumer goods importers — apparel, electronics, housewares — face direct margin compression unless costs can be passed to buyers
- Industrial manufacturers importing components, raw materials, or subassemblies face higher input costs
- E-commerce and Amazon FBA sellers sourcing internationally see landed cost increases that directly affect profitability
- Pharmaceutical and food importers have some relief — see exemptions below
What Goods Are Exempt from Section 122?
This is where it gets important. Not everything is subject to the surcharge. The following categories are currently exempt:
| Category | Status | Notes |
|---|---|---|
| USMCA-qualifying goods (Canada & Mexico) | EXEMPT | Must have valid USMCA claim and documentation |
| Section 232 steel & aluminum | EXEMPT | Already subject to separate 25% tariff |
| Goods subject to Section 201 safeguards | EXEMPT | Solar cells, washing machines, certain steel |
| Informational materials | EXEMPT | Books, publications, recordings |
| Goods from China (Section 301) | STACKING | Section 122 stacks ON TOP of existing 301 tariffs |
| All other countries | SUBJECT | 10% surcharge applies |
If your goods originate from Canada or Mexico and qualify under USMCA rules of origin, they are fully exempt from the Section 122 surcharge. For importers currently sourcing from Asia, this makes North American sourcing significantly more attractive than it was before February 2026. Use our USMCA Origin Checker to verify eligibility.
How Does Section 122 Stack With Other Tariffs?
This is the most important — and most misunderstood — aspect of Section 122. It does not replace other tariffs. It stacks on top of them.
For a product imported from China, your full duty calculation in 2026 looks like this:
| Tariff Layer | Rate | Example (Electronics) |
|---|---|---|
| MFN (Most Favored Nation) Base Rate | Varies by HTS | 0% (smartphones are duty-free at MFN) |
| Section 301 (China) | 7.5% – 25% | +25% (List 3) |
| Section 122 Surcharge | 10% | +10% |
| Total Effective Rate | ~35% on dutiable value (Penn Wharton estimates 31.6% blended effective rate for all Chinese goods) |
The impact on North American trade has been dramatic. USMCA compliance rates jumped from under 50% in late 2024 to over 76% by mid-2025 as importers rushed to qualify goods from Canada and Mexico for the exemption. The financial incentive is clear: a qualifying USMCA shipment avoids the 10% surcharge entirely.
For goods from non-China countries that previously had no Section 301 exposure, Section 122 represents a new 10% cost that did not exist before February 2026. For goods from countries with existing FTAs other than USMCA — such as Korea, Australia, or the EU — the exemption status depends on the specific agreement and how Section 122 interacts with it.
How to Calculate Your Section 122 Exposure
The surcharge is calculated on the transaction value of the merchandise — essentially the price you paid for the goods, adjusted for certain additions and deductions under CBP valuation rules. It is assessed in addition to, not instead of, your regular duties.
A simplified calculation for a non-exempt, non-China product:
Product: Plastic housewares from Vietnam
FOB value: $10,000
MFN duty rate: 3.4% (HTS 3924.10.4000)
Section 301: Not applicable (Vietnam)
Section 122: 10%
Regular duty: $10,000 × 3.4% = $340
Section 122: $10,000 × 10% = $1,000
Total duties: $1,340 vs. $340 before Section 122
That is a 294% increase in duty burden on this product.
What Should Importers Do Now?
A new Section 232 duty on semiconductors and semiconductor-containing products took effect January 15, 2026, imposing an additional 25% on certain high-performance semiconductor articles. This stacks on top of Section 122 for affected products. If you import electronics, EV components, or industrial equipment containing semiconductors, verify your HTS code classification carefully.
Section 122 is scheduled to expire around July 24, 2026 — but trade policy can change quickly. Here is a practical action plan regardless of whether the surcharge continues:
- Audit your top imported products — identify which HTS codes are most affected and calculate the new landed cost for each
- Check USMCA eligibility — if you source from Canada or Mexico, verify qualification and make sure your documentation is in order
- Model sourcing alternatives — use scenario analysis to evaluate whether shifting production to USMCA countries makes financial sense
- Review your commercial invoice values — ensure dutiable value calculations are accurate, as errors create Section 122 exposure on top of regular underpayment penalties
- Consult your customs broker — for high-volume entries, the Section 122 classification and exemption analysis is worth a professional review
Do not assume your USMCA exemption is automatic. CBP requires that you have documentation supporting your USMCA claim at the time of entry. An unsubstantiated USMCA claim that is later challenged by CBP will result in retroactive assessment of the Section 122 surcharge plus interest and potential penalties. Verify eligibility before claiming the exemption.
How CustomsValidator Can Help
CustomsValidator includes several tools specifically designed for the 2026 tariff environment:
- Import Duty Calculator — calculates your full duty stack including Section 301, Section 122, Section 232, MPF, and HMF
- USMCA Origin Checker — verifies USMCA eligibility and generates certification language for your commercial invoice
- Tariff Impact Simulator — models the financial impact of sourcing shifts with rules of origin analysis and 3-year savings forecast
- AI Trade Compliance Agent — ask any Section 122 question in plain English and get answers backed by live government data