Section 122 Tariff Expiry: What Happens July 24, 2026

What Is Section 122 — And Why It Matters Now

Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132) is an emergency tariff authority that allows the President to impose tariffs on foreign goods for up to 150 days without Congressional approval. The statutory ceiling is strict — Congress set this as a hard limit to prevent indefinite use of executive trade power without legislative authorization.

On February 24, 2026, the President invoked Section 122 authority, imposing a 10% flat tariff on most non-USMCA imports from all countries except those already subject to Section 232 steel and aluminum duties. The rate was initially set at 10% — below the 15% ceiling — as a first tranche with the possibility of escalation. The tariff was framed as a bridge measure following the termination of IEEPA (International Emergency Economic Powers Act) emergency authorities on February 20, 2026, after the Supreme Court's landmark ruling the same day.

Section 122 is explicitly exempt from:

• USMCA qualifying goods — Canadian and Mexican goods meeting rules of origin enter at zero additional surcharge
• Section 232 goods — Steel and aluminum products already subject to Section 232 duties (25% steel, 10% aluminum) are not double-assessed
• Select countries — Any nation with a separate bilateral waiver or treaty provision

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Section 122 At a Glance: Current Rates & Exemptions

The table below shows how Section 122 applies across the major trade corridors. Note that Section 122 stacks on top of existing MFN base rates and Section 301 additional tariffs — it does not replace them.

Trade Corridor	Section 122 Rate	Additional Notes
China → US (non-S232)	+10%	Stacks on top of Section 301 (7.5–100% additional). Total effective rate depends on HTS list coverage.
EU → US	+10%	Stacks on top of existing MFN rates. EU goods under active Section 301 investigation (initiated March 2026).
Vietnam → US	+10%	Vietnam under Section 301 investigation for excess capacity. May face higher sector-specific rates post-expiry.
Canada → US (USMCA)	0%	USMCA qualifying goods fully exempt from Section 122. Confirm rules of origin to claim exemption.
Mexico → US (USMCA)	0%	USMCA qualifying goods fully exempt. Mexico is not subject to Section 301 excess capacity investigation.
India → US	+10%	India under Section 301 investigation. Potential sector-specific tariffs post-July 24.
Japan → US	+10%	Japan under Section 301 investigation. Electronics and automotive sectors most exposed.

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Three Scenarios After July 24, 2026

Trade policy analysts broadly agree on three possible outcomes. Scenario B — Section 301 replacement — is considered most probable, but all three have meaningful probability.

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Section 301 Investigations: The Most Likely Replacement

In March 2026, the United States Trade Representative (USTR) initiated Section 301 investigations covering 60+ countries for two separate tracks:

• Excess capacity investigations — 16 countries including China, EU (Germany, France, Italy, Spain), Japan, South Korea, Vietnam, India, Mexico, Taiwan, Thailand, Indonesia, Brazil, Malaysia, Turkey, Bangladesh, Cambodia. Focused on manufacturing sectors where foreign government subsidies and state-directed capacity create unfair competitive conditions.
• Forced labor investigations — 60+ countries. Broader track examining labor practices in supply chains, with Uyghur Forced Labor Prevention Act (UFLPA) as the primary existing enforcement mechanism.

Public hearings were held on May 5, 2026. USTR determinations — the formal findings that authorize new tariffs — are expected before July 24, 2026, precisely timed to ensure continuity of tariff pressure as Section 122 expires.

Why Section 301 Is the Preferred Replacement

Section 301 is structurally superior to Section 122 as a long-term tariff authority:

• No rate cap — Section 122 is capped at 15%. Section 301 has no statutory ceiling; rates of 25%, 50%, 100% are all within authority
• No time limit — Section 122 expires automatically in 150 days. Section 301 remains in force until USTR modifies or withdraws the determination
• Country and product specificity — Section 122 applies uniformly (10% on all non-exempt imports). Section 301 can target specific countries, specific sectors, specific products
• Legally durable — Section 301 has survived multiple WTO challenges and is well-established in US trade law. Section 122 has never been tested at the WTO
• Litigation risk — Section 122's emergency declaration basis is legally contested. Section 301's intellectual property/unfair practices basis has survived every challenge

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Section 301 vs Section 122: Key Differences

Feature	Section 122	Section 301
Rate cap	15% maximum	No cap
Time limit	150 days (automatic expiry)	Permanent until modified
Coverage	Broad — most non-USMCA imports	Country + product specific
Requires investigation	No — presidential authority only	Yes — USTR must investigate and determine
WTO compatibility	Legally contested	Well-established, tested at WTO
Exemptions	USMCA goods, Section 232 goods	USMCA goods (if rules of origin met)
Can target specific countries	No — applies broadly	Yes — country-specific determinations
Stacking with other programs	Stacks on MFN + Section 301	Stacks on MFN (not on USMCA goods)

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Importer Action Checklist: Before July 24

With 62 days remaining, these are the highest-impact actions to take now:

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  Classify all your HTS codes — Confirm your 10-digit HTS codes and whether they fall under Section 301 additional tariffs. Use /classify for AI-powered HTS classification. Some HTS codes have partial coverage — check at the 10-digit level.
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  Audit country of origin for each SKU — Determine whether your goods qualify for USMCA exemption from Section 122. USMCA qualifying goods from Canada and Mexico have zero Section 122 surcharge — this is an immediate cost reduction available today, before the expiry.
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  Model rate scenarios using the /calculate tool — Run calculations for (a) with Section 122 active, (b) Section 122 expires with no replacement, (c) Section 301 replacement at varying rates. Budget for the highest realistic scenario to avoid margin surprises.
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  Review supplier compliance with Section 301 country-of-origin rules — For goods that will face Section 301 tariffs post-July 24, ensure your supply chain documentation is airtight. USTR scrutinizes country of origin claims for Section 301 products.
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  Monitor USTR Federal Register notices — Section 301 investigation determinations are published at federalregister.gov. Subscribe to alerts for USTR Section 301 notices — determinations before July 24 will be the key signal for your tariff exposure.
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  Screening your suppliers — Use /screen to check whether your suppliers or the country they operate in are on any active USTR watch lists, forced labor entities list (UFLPA), or Section 301 investigation lists.

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Frequently Asked Questions