Section 122 (Trade Act of 1974)

Section 122 of the Trade Act of 1974 (codified at 19 U.S.C. § 2132) is a U.S. trade statute that authorizes the President to impose a temporary import surcharge of up to 15% when the country faces large and serious balance-of-payments deficits. It became the centerpiece of U.S. tariff policy in February 2026 when President Trump invoked it to replace the IEEPA tariffs struck down by the Supreme Court.

Key Features of Section 122

Rate Ceiling

The statute sets a hard maximum of 15% on any import surcharge imposed under this authority. This is significantly lower than the 10–50%+ rates that were possible under the IEEPA tariffs it replaced. Trump set the rate at the full 15% maximum.

150-Day Time Limit

Section 122 tariffs expire automatically after 150 days unless Congress votes to extend them. This is the critical constraint — it means the current 15% global surcharge is temporary by law. The clock started on February 21, 2026, making the expiration date approximately July 21, 2026.

Balance-of-Payments Justification

The statute requires that the surcharge address a balance-of-payments deficit. The administration cited the U.S. trade deficit (which exceeded $1 trillion in 2025) as justification. Some trade lawyers have questioned whether this meets the statute's original intent, but no court has yet blocked the tariff on these grounds.

Exemptions

Goods qualifying under existing free trade agreements — particularly USMCA (United States-Mexico-Canada Agreement) — are generally exempt from the Section 122 surcharge. Certain agricultural products have also been excluded.

Historical Context

Section 122 has rarely been used. The most notable precedent was President Nixon's 10% import surcharge in 1971, imposed under similar balance-of-payments authority (though technically under a different provision). That surcharge lasted about four months before being lifted as part of the Smithsonian Agreement on currency realignment.

The current invocation is the first use of Section 122 in over five decades and by far the broadest application of the statute.

Current Status (February 2026)

Detail	Value
Rate	15% ad valorem surcharge
Effective date	February 21, 2026
Expiration	~July 21, 2026 (150 days)
Scope	Most imported goods; USMCA-qualifying goods exempt
Legal authority	19 U.S.C. § 2132
Replaces	IEEPA tariffs (struck down Feb 20, 2026)

Why It Matters for Importers

Section 122 changed the tariff calculus overnight. Countries that faced 30–50% IEEPA rates saw their burden drop to 15%. But the temporary nature of the authority means importers must plan for what comes after July 2026 — whether that's expiration, extension, or replacement with a different tariff program.

Related: Section 122 Tariffs Explained: The 150-Day Clock | IEEPA