The Section 122 tariff that replaced the Supreme Court’s invalidated IEEPA tariffs is set to expire July 24, 2026, and the average effective U.S. tariff rate could fall from roughly 13 percent to roughly 7 percent almost overnight.
Key Takeaways
- The Section 122 tariff expires by statute at 12:01 a.m. EDT on July 24, 2026, 150 days after it took effect on February 24, the maximum duration Congress allows without an extension.
- Section 122 replaced the IEEPA tariffs the Supreme Court struck down in Learning Resources, Inc. v. Trump on February 20, 2026, a 6-3 ruling that the law does not authorize the president to impose tariffs.
- The average effective U.S. tariff rate could fall from roughly 13.0 percent to roughly 7.2 percent when Section 122 lapses, according to trade-weighted estimates and Capital Economics.
- A separate Court of International Trade ruling on May 7, 2026, found the administration exceeded its Section 122 authority, but relief applies only to three named plaintiffs; the tariff remains in effect nationwide pending appeal.
- Extending Section 122 requires an Act of Congress, and no extension legislation is pending.
- USTR’s Section 301 investigation, with a determination issued June 2 and a public hearing held July 7, proposes replacement duties of 10 to 12.5 percent that carry no statutory expiration, unlike Section 122’s built-in 150-day sunset.
Section 122 Tariff Set to Expire July 24, 2026
Mark July 24 on your procurement calendar. The Trump administration’s Section 122 tariff is a global import surcharge imposed under Section 122 of the Trade Act of 1974. It expires by operation of law at 12:01 a.m. EDT on July 24, 2026, exactly 150 days after it took effect on February 24. Notably, that 150-day window is a hard statutory ceiling. Section 122 authorizes the president to impose a temporary import surcharge to address “fundamental international payments problems.” Congress, however, capped it at 150 days unless lawmakers affirmatively extend it.
From IEEPA to Section 122: How We Got Here
The administration turned to Section 122 only after losing its primary tariff authority. On February 20, 2026, the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that IEEPA does not authorize the president to impose tariffs. Chief Justice Roberts wrote that reading IEEPA’s power to “regulate” imports as including a taxing power would render the statute partly unconstitutional. Consequently, the administration pivoted within days. On February 24, it invoked Section 122 instead. It publicly described the new surcharge as 10 to 15 percent, even though the underlying Federal Register notice specified a 10 percent base rate.
What Happens to the Effective Tariff Rate When Section 122 Expires
The numbers matter here more than the legal mechanics. With Section 122 collected at the higher end of its range, the trade-weighted average U.S. tariff rate currently sits at roughly 13.0 percent. Should the surcharge lapse on schedule with no replacement in place, however, Capital Economics estimates the average effective rate would fall to roughly 7.2 percent. That is a swing of nearly six percentage points overnight.
That is not a small adjustment. According to Yale Budget Lab’s tariff tracking, effective U.S. tariff rates in 2026 have run at levels not seen since 1946, even accounting for the drop Section 122’s expiration would bring. In other words, manufacturers have been absorbing historically elevated import costs for months, and the July 24 deadline is the first real inflection point since the tariff regime took its current shape.
| Metric | Detail |
|---|---|
| Section 122 effective date | February 24, 2026 |
| Statutory duration limit | 150 days |
| Expiration | 12:01 a.m. EDT, July 24, 2026 |
| Current trade-weighted average tariff rate | ~13.0% |
| Projected rate if Section 122 lapses unreplaced | ~7.2% |
| Projected rate swing | ~6 percentage points |
| Requirement to extend | Act of Congress |
The Legal Fight That Won’t Change the July 24 Deadline
Section 122 is also under direct legal challenge, separate from the IEEPA case that created it. On May 7, 2026, the Court of International Trade ruled in Oregon v. United States and Burlap and Barrel, Inc. v. United States. The court found that the administration exceeded its authority by citing general trade deficits rather than the specific “balance-of-payments deficits” Congress had in mind when it wrote Section 122 in 1974.
Why the Ruling Has Not Actually Lowered Anyone’s Bill Yet
However, the court limited its permanent injunction to the three named plaintiffs: the State of Washington, Burlap and Barrel, Inc., and Basic Fun, Inc. Every other importer remains obligated to pay Section 122 duties unless they file their own case or a higher court grants broader relief. Indeed, the government appealed to the Federal Circuit on May 8, and an appeals court granted a temporary stay on May 12. That litigation could still take months to resolve. Meanwhile, the 150-day statutory sunset runs on its own timeline regardless of how the appeal turns out. That independence is exactly why July 24 remains the date that matters most for near-term planning.
What Comes Next: Section 301 and the End of the 150-Day Sunset
The administration has signaled it does not intend to let tariff pressure simply disappear on July 24. The U.S. Trade Representative issued a Section 301 determination on June 2, 2026. That determination proposes additional duties of 10 to 12.5 percent on dozens of trading partners, and USTR held a public hearing on the proposal on July 7.
This decision reinforces that 301 is the tool they are most likely to rely upon and have the best chance at a durable tariff regime.
Blake Harden, trade policy expert
The distinction matters enormously for planning purposes. In contrast to Section 122, Section 301 carries no statutory rate ceiling and no fixed expiration date. If the administration formalizes Section 301 duties before or shortly after July 24, the rate relief many manufacturers are anticipating may prove partial or temporary rather than a clean reset.
What the July 24 Deadline Means for Manufacturers
The period between now and July 24 is a genuine decision point, not a formality. If your company has capital equipment orders, raw material purchases, or component sourcing decisions pending, the tariff rate belongs in that math today. Do not wait until the deadline passes. Section 301 duties could arrive with no expiration date attached. Given that risk, manufacturers should model two scenarios: a clean rate drop to roughly 7 percent, and a partial replacement under Section 301. Do not assume the lower number holds.
Track every major investment reshaping U.S. manufacturing with our U.S. Manufacturing Investment Tracker. If your company is still pursuing refunds on invalidated IEEPA duties, see our coverage of the CBP’s CAPE refund portal. Browse all manufacturing news coverage on IndustrialSage, and catch the full rundown of this week’s stories on IndustrialSage Headlines.
Frequently Asked Questions: Section 122 Tariff Expiration
What is the Section 122 tariff and when does it expire?
The Section 122 tariff is a global import surcharge the Trump administration imposed on February 24, 2026, under Section 122 of the Trade Act of 1974. It expires by statute at 12:01 a.m. EDT on July 24, 2026, 150 days after it took effect, the maximum duration allowed without congressional extension.
Why did the administration use Section 122 instead of IEEPA?
The Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump on February 20, 2026, that the International Emergency Economic Powers Act does not authorize the president to impose tariffs. The administration invoked Section 122 of the Trade Act of 1974 four days later as its replacement authority.
Did a court also strike down the Section 122 tariff?
The Court of International Trade ruled on May 7, 2026, that the administration exceeded its Section 122 authority by citing general trade deficits rather than the specific balance-of-payments deficits the statute requires. However, the permanent injunction applies only to three named plaintiffs. The tariff remains in effect nationwide while the government’s appeal to the Federal Circuit proceeds.
How much could the average effective tariff rate drop when Section 122 expires?
Trade-weighted estimates put the current average effective U.S. tariff rate at roughly 13.0 percent. Capital Economics projects that rate could fall to roughly 7.2 percent if Section 122 lapses without a replacement, a swing of nearly six percentage points.
Can Congress extend the Section 122 tariff past July 24?
Yes, but only through an Act of Congress. As of this writing, no extension legislation is pending, and the political math makes an extension unlikely before the deadline.
What tariff authority is likely to replace Section 122 after July 24?
The U.S. Trade Representative issued a Section 301 determination on June 2, 2026, proposing additional duties of 10 to 12.5 percent on dozens of trading partners, with a public hearing held July 7. Unlike Section 122, Section 301 carries no statutory rate cap and no fixed expiration date.
What should manufacturers do before the July 24 deadline?
Manufacturers with capital equipment orders, raw material purchases, or component sourcing decisions pending should factor the current tariff rate into near-term math now. They should also model a second scenario in which Section 301 duties replace some or all of the relief from Section 122’s expiration.
Author: Wes Garrett
Content and Growth Marketing Producer | From Strategy to Execution, Delivering Impactful Media Solutions and Client Success
