What is Section 122 of the Trade Act of 1974?
Section 122 of the Trade Act of 1974 authorizes the President to impose temporary import surcharges of up to 15% ad valorem for a maximum of 150 days to address large and serious balance-of-payments deficits. This provision was designed as an emergency economic tool, distinct from traditional tariff mechanisms under Sections 201, 301, or 232.
The authority under Section 122 has rarely been invoked in modern trade policy. Its use in February 2026 came as a direct response to the Supreme Court's ruling striking down IEEPA tariffs. Within four days of the ruling, the administration invoked Section 122 to impose a new 10% ad valorem surcharge on virtually all imports entering the United States.
Unlike IEEPA, Section 122 has a clear statutory basis for trade-related import surcharges. The Trade Act of 1974 explicitly grants this authority, and the 150-day time limit provides a built-in expiration. This makes it more legally defensible than the IEEPA approach, though legal challenges to the balance-of-payments justification are already underway.
Key details: rate, effective date, and duration
The Section 122 surcharge is set at 10% ad valorem, matching the rate of the now-invalidated IEEPA tariff. It applies to the customs value of imported goods, calculated the same way as other ad valorem duties. The effective date is February 24, 2026, four days after the Supreme Court ruling.
The maximum statutory duration under Section 122 is 150 days. Counting from February 24, the surcharge expires on July 24, 2026, unless Congress acts to extend it through separate legislation. After July 24, the surcharge automatically terminates and cannot be renewed under Section 122 authority.
The 10% rate is below the statutory maximum of 15%, which may provide room for the rate to be increased during the 150-day window. However, any rate increase would likely face immediate legal challenge and would further disrupt import cost planning.
How Section 122 differs from IEEPA tariffs
The most significant difference is legal authority. IEEPA tariffs relied on emergency economic powers not designed for trade regulation. The Supreme Court found this exceeded the statute's scope. Section 122 explicitly authorizes import surcharges, placing it on firmer legal ground.
Section 122 has a hard 150-day time limit, whereas IEEPA tariffs had no defined expiration and could remain in effect indefinitely as long as the national emergency declaration persisted. This sunset provision means importers have a defined planning horizon.
Both measures apply a 10% rate on a broad range of imports. However, IEEPA tariffs were in effect for approximately one year (February 2025 to February 2026), while Section 122 is capped at 5 months. The net fiscal impact of Section 122 will be significantly smaller than the IEEPA tariff period.
Which goods are affected by Section 122?
The Section 122 surcharge applies to virtually all goods imported into the United States, mirroring the scope of the prior IEEPA tariff. Consumer electronics, apparel, machinery, automotive parts, agricultural products, raw materials, and manufactured goods are all subject to the 10% surcharge.
Exemptions are limited. Goods entering under existing free trade agreements (USMCA, KORUS, etc.) may qualify for preferential treatment if they meet the applicable rules of origin. Goods already subject to Section 232 tariffs (steel and aluminum) and Section 301 tariffs (Chinese goods) also pay the Section 122 surcharge on top of those existing duties.
The stacking effect is significant. A product from China already subject to a 25% Section 301 tariff now pays an additional 10% under Section 122, on top of the MFN base rate. For example, laptop computers (HTS 8471.30.01) from China face MFN Free + 25% Section 301 + 10% Section 122 = 35% total duty.
Expiration on July 24 and what happens next
Section 122 authority is limited to 150 days by statute. The surcharge expires automatically on July 24, 2026. The President cannot extend it using Section 122 alone. Congress would need to pass separate legislation to continue a broad-based import surcharge beyond that date.
Several scenarios are possible after expiration. Congress could pass new tariff legislation establishing a permanent or longer-term import surcharge under explicit Congressional authority. The administration could invoke other trade authorities (Section 201 safeguard investigation, for example) to impose duties on specific product categories. Or the surcharge could simply expire, leaving only the existing MFN, Section 301, Section 232, and Section 122 auto tariff layers in place.
Importers should plan for all scenarios. Build cost models with and without the 10% surcharge after July 24. Review supply chain timing to determine whether delaying shipments past the expiration date would reduce landed costs. Use TariffCalc at tariff.normsuite.com to model different tariff scenarios for your specific products.
How TariffCalc handles Section 122 rates
TariffCalc has been updated to reflect the Section 122 surcharge effective February 24, 2026. When you look up any HTS code, the calculator now shows the Section 122 rate as a separate tariff layer alongside MFN, Section 301, Section 232, and Section 122 auto tariffs.
The calculator automatically applies the correct rate based on the effective date and will remove the Section 122 surcharge layer when it expires on July 24, 2026. This ensures your landed cost calculations are always current without manual adjustments.
For importers comparing pre-ruling and post-ruling duty rates, TariffCalc shows the net change in total duty for any product. In most cases, the total rate is the same (10% IEEPA replaced by 10% Section 122), but the refund eligibility for past IEEPA payments makes the transition significant for financial planning.