In February 2026, a 15% tariff was imposed on imports from nearly every country in the world. Known as the Section 122 tariff, it represents one of the most sweeping trade actions in decades. Here's everything importers need to know.
Section 122 of the Trade Act of 1974 gives the President authority to impose temporary import surcharges of up to 15% for a maximum of 150 days. The provision was designed as an emergency tool to address large and serious balance-of-payments deficits.
Unlike other tariff authorities such as Section 301 (targeting unfair trade practices) or Section 232 (national security), Section 122 is purely about trade deficits. It's a blunt instrument — it applies broadly rather than targeting specific countries or products.
February 2026 — Supreme Court Decision
The Supreme Court ruled that IEEPA (International Emergency Economic Powers Act) tariffs — which had been used to impose country-specific tariff rates of 10% to 145% — exceeded presidential authority. The ruling effectively struck down the existing tariff structure overnight.
February 24, 2026 — Section 122 Activated
Within hours of the ruling, the administration invoked Section 122 to impose a 15% global surcharge on nearly all imports. This was the maximum rate and duration allowed under the statute.
July 24, 2026 — Expiration Date
Section 122 tariffs are set to expire after 150 days. The administration has signaled plans to transition to expanded Section 301 and Section 232 coverage before this date.
While Section 122 applies broadly, there are important exemptions.
USMCA-qualifying goods: Products from Canada and Mexico that meet the rules of origin under the United States-Mexico-Canada Agreement are exempt from the 15% surcharge. However, goods that don't qualify under USMCA are subject to the full 15%.
Section 232 products: Goods already covered by Section 232 tariffs — steel, aluminum, automobiles, auto parts, semiconductors, and copper — are exempt from Section 122. These products face their own sector-specific rates instead.
Section 122 is additive. It stacks on top of MFN base duties and Section 301 tariffs (for Chinese goods). The only exception is Section 232 products, which are exempt.
Example: German Auto Parts (Non-Section 232)
A $20,000 shipment of general auto accessories from Germany:
3% MFN + 15% Section 122 = 18% effective rate = $3,600 in duties
Example: German Steel (Section 232 Product)
A $20,000 shipment of steel from Germany:
3% MFN + 0% Section 122* + 50% Section 232 = 53% effective rate = $10,600 in duties
*Exempt because steel is covered by Section 232
The 15% across-the-board surcharge hits small importers particularly hard. Unlike large corporations with dedicated customs teams and the ability to absorb cost increases, small businesses often operate on thin margins. A sudden 15% increase in input costs can wipe out profitability on imported goods.
Many small e-commerce sellers who source products from Asia, Europe, or other regions have had to raise prices, reduce margins, or seek domestic alternatives since the surcharge took effect.
The Section 122 authority has a hard 150-day limit that Congress would need to extend through legislation. The administration has already begun preparing alternative tariff structures to replace Section 122 before it expires.
New Section 301 investigations were launched in March 2026 targeting 16 economies for excess manufacturing capacity. Section 232 investigations have been expanded to cover pharmaceuticals, with rates potentially taking effect in mid-2026. The net result may be higher targeted rates replacing the broad 15% surcharge.
Importers should plan for volatility around the July 24 expiration date and monitor USTR and Commerce Department announcements closely.
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