Section 122 Tariffs Explained: What Every US Importer Needs to Know

What is Section 122?

Section 122 of the Trade Act of 1974 is a statute that grants the President authority to impose temporary import surcharges and quotas when the United States faces large and serious balance-of-payments deficits. Unlike Section 301 (which targets unfair trade practices by specific countries) or Section 232 (which addresses national security threats), Section 122 is a broad economic tool focused on the overall trade balance.

The key constraints of Section 122 are significant: tariff surcharges are capped at 15% and can only be imposed for a maximum of 150 days without Congressional approval. This built-in expiration is what makes the July 24, 2026 deadline so critical for importers.

Why Did the Government Switch to Section 122?

The original tariff program was built on IEEPA — the International Emergency Economic Powers Act — which grants the president broad authority to regulate commerce during national emergencies. The administration declared a trade emergency and used IEEPA to justify tariff rates well above what other statutes allowed.

In National Foreign Trade Council v. United States, the Supreme Court ruled 6-3 that a persistent trade deficit does not constitute the type of "unusual and extraordinary threat" that IEEPA requires. The Court held that IEEPA was designed for acute foreign policy crises — sanctions against hostile nations, asset freezes during conflicts — not for restructuring routine trade relationships.

Facing the sudden loss of its legal authority, the administration turned to Section 122 as the fastest available alternative. While the 15% cap prevented the highest tariff rates from being maintained, it provided a legal basis for continuing the core tariff program on a temporary basis.

How Section 122 Rates Compare to the Old IEEPA Tariffs

The July 2026 Deadline: What Happens Next?

Section 122 authority expires after 150 days — which places the deadline at July 24, 2026. After this date, the President cannot maintain the tariff surcharges without explicit Congressional authorization.

There are three possible outcomes:

Scenario 1: Congress extends the tariffs. The most likely outcome. Bipartisan support exists for maintaining at least some tariff protection, particularly against China. Congress could pass legislation establishing a permanent tariff framework with modified rates.

Scenario 2: Tariffs expire and are not renewed. If Congress fails to act, tariff surcharges would revert to pre-2025 levels (averaging roughly 2.5% for most goods). This would be a major windfall for importers but is considered politically unlikely given the current climate.

Scenario 3: The administration finds another legal authority. Additional tariff statutes exist (Section 338, Section 201), though each has different requirements and limitations. Expect legal challenges to any new approach.

What Importers Should Do Before July

The uncertainty around the July deadline creates planning challenges, but there are concrete steps you can take now. Model multiple scenarios using our free tariff calculator— what does your landed cost look like at current rates versus pre-2025 rates? Build contingency plans for both outcomes.

If you have flexibility in order timing, consider whether it makes sense to accelerate or delay shipments based on your tariff exposure. Goods that clear customs before any rate change takes effect will be assessed at the rate in force at the time of entry.

Most importantly, stay informed. Trade policy moves fast in 2026, and a week's notice can mean the difference between locking in favorable rates and getting caught by a sudden change.