Section 122 tariff explained: the new baseline

Most importers had never heard of Section 122 until early this year. It is a decades-old provision, dusted off and put to a new job: acting as a baseline surcharge that sits underneath the Section 301 and Section 232 tariffs you may already track. If your customs invoices have carried a new, unfamiliar Chapter 99 line since February 2026, there is a fair chance Section 122 is the reason. Here is what the provision actually says, how it is being used right now, and how it interacts with the tariffs you already know.

What is Section 122 of the Trade Act of 1974?

Section 122 of the Trade Act of 1974 gives the President a narrow, specific power: the authority to impose a temporary import surcharge, of up to 15%, for a period of up to 150 days, to deal with a large and serious balance-of-payments deficit or to prevent an imminent and significant depreciation of the dollar. It was written with a very particular precedent in mind — the 1971 'Nixon shock', when the US suspended dollar convertibility to gold and imposed a temporary 10% surcharge on imports to force a realignment of exchange rates. For roughly fifty years the provision sat unused. It came back into active use on 20 February 2026 — the same day the Supreme Court ruled, in Learning Resources, Inc. v. Trump, that a separate law (the International Emergency Economic Powers Act) never authorised the tariffs the administration had been relying on. Section 122 was invoked that same day, by Proclamation 11012, as the direct replacement for the tariffs the Court had just vacated.

Why is Section 122 being used as a baseline surcharge now?

Section 122 now functions as the baseline layer underneath the more familiar Section 301 and Section 232 measures: the long-running Section 301 China tariffs and Section 232 metal and derivative tariffs continue to apply on their own terms, and the Section 122 surcharge sits underneath all of it, largely country-neutral. In practice, that means a shipment can carry a Section 122 charge even when it is not from China and contains no steel or aluminum — because Section 122, as applied, is not tied to a single country or a single class of goods the way Section 301 and 232 are. The initial rate was 10%, with the administration signalling within a day of the February proclamation that it intended to move to the statutory 15% maximum.

This is a genuinely live, fast-moving measure, and its legal footing has already been tested once: the Court of International Trade ruled in May 2026 that the Section 122 surcharge also exceeds presidential authority, but the Federal Circuit stayed that ruling pending the government's appeal, so the surcharge has continued to apply. On top of that litigation, Section 122 carries its own statutory clock — the 150-day authorisation from the original proclamation is due to expire around 24 July 2026 unless renewed by a fresh proclamation. Treat any specific percentage or expiry date you read here as a snapshot, not a fixed fact — confirm the current figure against the Federal Register notice or CBP's Chapter 99 guidance before you file.

Who does the Section 122 surcharge apply to?

As implemented so far, the surcharge has been applied broadly across most trading partners rather than aimed at one country, which is the main practical difference from Section 301. A five-person homeware brand importing ceramic mugs from Portugal and a mid-sized electronics importer bringing in components from Vietnam can both find a Section 122 line on their entry summary, even though neither shipment is Chinese-origin and neither is steel or aluminum. Some countries and categories have been carved out by proclamation — free-trade partners and low-value shipments under de minimis treatment are the commonly cited examples — but the exclusion list has been amended more than once, so don't memorise it from an old article.

• It is applied via a Chapter 99 HTS modifier, the same mechanical approach used for Section 301 and Section 232 duties.
• It has, so far, been broad-based rather than limited to one country of origin.
• Certain trade-agreement partners and product categories have been proposed or granted exclusions — check the current proclamation for your specific origin.
• It stacks on top of, rather than replaces, your product's base HTS rate.

Does USMCA exempt goods from the Section 122 surcharge?

For qualifying originating goods from Canada and Mexico, the general pattern across the 2025-26 tariff actions has been to carve out USMCA-qualifying trade rather than apply the new baseline surcharge to it — but the exact treatment for Section 122 specifically has shifted as proclamations have been amended, and qualification still depends on your product meeting USMCA's own rules of origin, not simply being shipped from a USMCA country. That is a big enough topic on its own that it deserves its own detailed walk-through rather than a paragraph here.

How Section 122 stacks with Section 301 and Section 232

The three provisions were written for different problems, which is why they stack rather than replace one another. Section 301 targets specific countries found to engage in unfair trade practices — historically China. Section 232 targets specific materials found to threaten national security — steel and aluminum, and their derivatives. Section 122 targets the trade balance as a whole, so it can be applied broadly rather than to one country or material. A single shipment can, in principle, be caught by all three: a steel shelving unit from a country carrying a Section 122 baseline charge, made from Chinese-origin steel, is a plausible case where a base HTS rate, a Section 301 duty, a Section 232 duty and a Section 122 surcharge all land on the same customs value.

How Section 122 replaced the reciprocal tariffs and IEEPA actions

It is easy to lump every 2025-26 tariff headline into one pile, but the legal mechanisms genuinely differ, and that history explains why Section 122 exists at all. The original reciprocal tariff programme and related country-specific actions relied on the International Emergency Economic Powers Act (IEEPA) — and on 20 February 2026 the Supreme Court ruled, in Learning Resources, Inc. v. Trump, that IEEPA never authorised tariffs in the first place, vacating that entire programme. Section 122 is the replacement the administration reached for that same day: a tariff-specific power Congress actually wrote for this use, rather than a sanctions statute repurposed for it. That firmer legal starting point hasn't made it immune from challenge, though — a trial court has since ruled against Section 122 too, on different grounds; see the next section.

Clients ask us whether the Section 122 line is 'the same as' the old reciprocal tariff. It isn't the same charge — the reciprocal programme was vacated — but it's doing the same job: a broad baseline surcharge sitting under Section 301 and 232. Check the specific Chapter 99 subheading on your entry rather than assuming continuity from before February.

What to do if you think Section 122 applies to your shipment

1. Classify your product to its exact 10-digit HTS line — the Chapter 99 modifier is layered on top of that base classification.
2. Check CBP's current Chapter 99 guidance and the latest Federal Register proclamation for your country of origin and product category.
3. Confirm whether your specific origin or product falls under an active exclusion — these have changed more than once since February 2026.
4. Add the surcharge to your base duty and any Section 301 or 232 charge to get the true stacked rate on your customs value.
5. Set a watch on your HTS lines so you are alerted when the rate, scope or exclusion list changes again.

Where to verify the current rate

This is one of the fastest-moving corners of US trade policy right now, and nothing in this article should be read as a fixed number you can rely on without checking. Nothing here is legal, customs, or tax advice — it is a plain-language explanation of a live mechanism, and you should confirm any specific rate or exclusion against the primary sources before you file an entry or make a pricing decision. CBP's CSMS messages and Chapter 99 updates, USTR announcements, and the Federal Register are the three places worth bookmarking if Section 122 touches your supply chain.

Section 122 tariff FAQ