Section 122 Expires Tomorrow: The July 24 Tariff Playbook for Importers

Where Things Stood Going Into July 24 (Now Resolved — See Update Above)

Section 122 of the Trade Act of 1974 allows an emergency import surcharge of up to 15% for a maximum of 150 days — extension beyond that requires an act of Congress. The current 10% tariff was signed February 20, 2026, took effect February 24, and hit day 150 on July 24, 2026, when it expired as described above.

As of July 23, one day out, this is how it looked:

• Congress had not moved to extend it. Momentum runs the other way — Sen. Wyden introduced the Congressional Trade Powers Reform Act on July 22, which would repeal Section 122 outright and require congressional approval for future Section 301/201/232 tariffs.
• USTR missed its July 20 completion deadline. The two Section 301 investigations opened March 11 (excess manufacturing capacity; forced-labor enforcement across 60 economies) have not been finalized. The proposal on the table remains 12.5% duties on 46 countries, including China, Vietnam, India, Thailand, Japan, and South Korea, with USTR's trade representative signaling the announcement is coming soon — most likely timed to the July 24 handoff or shortly after.
• The Federal Circuit appeal is live. A stay granted June 11 keeps CBP collecting Section 122 duties while the courts weigh whether the tariff was lawful in the first place — the same sequence that preceded the IEEPA refunds. That litigation is separate from the 150-day statutory sunset itself, which expires by operation of law tomorrow regardless of how the appeal goes.

Scenario 1: Section 301 Landed On Time — This Is What Happened

This is the scenario that played out: USTR finalized its Section 301 action at the July 24 handoff, with no gap. The final scope came in wider than the 46-country proposal below — roughly 60 economies on a two-tier 10%/12.5% structure (see the update at the top of this guide) — so read the 46-country, single-rate figures in this section as the mid-July proposal, not the final outcome. The practical result for most previously-10%-Section-122 countries is still a rate increase: 10% or 12.5% depending on tier, on top of MFN and any existing surcharges.

Two structural differences matter more than the rate itself. Section 301 has no statutory rate cap and no time limit — it does not sunset in 150 days, it does not need Congress, and rates can be raised by product list later. Importers who treated the 10% as temporary pain should plan for the replacement as the durable baseline. Countries not on the 46-country list would simply revert to MFN plus any existing Section 232/301 exposure.

Scenario 2: The Gap — Days or Weeks of MFN-Only Rates

If the Section 301 decision slips past July 24 — litigation, comment-period challenges, or simple delay — Section 122 lapses with nothing behind it, and imports revert to pre-IEEPA baseline rates: MFN, plus existing Section 232 on steel/aluminum/copper/autos, plus the existing (pre-2026) China Section 301 lists.

For a typical Vietnamese or Indian shipment, that's a swing from 10% down to low-single-digit MFN — briefly the cheapest import window since March 2025. Entry timing is everything here: duty rates are set by the date of entry, not the ship date. Goods already on the water can land in the gap if entries are timed after the lapse; goods rushed to enter before July 24 lock in the 10%. If your broker can legally manage entry dates around the deadline week, this is the week to talk to them.

Scenario 3: Congress Extends (Unlikely but Not Zero)

Congress could pass legislation extending Section 122 or authorizing a successor surcharge. Nothing on the floor suggests it: no extension bill has advanced, and the visible legislative energy is on *restraining* tariff authority. Treat an extension as a tail scenario — but one that resolves within days either way, which is another reason not to make irreversible sourcing decisions before July 24.

Who Is Insulated From July 24

A large share of US import value doesn't actually turn on this deadline:

• EU goods moved to the trade deal's 15% all-inclusive ceiling on July 1, 2026. The ceiling replaced Section 122 for EU origin, so the sunset changes nothing for German machinery or Italian apparel.
• USMCA-qualifying goods from Mexico and Canada enter at 0% and never carried the Section 122 layer.
• Section 232 articles — steel, aluminum, copper articles at 50%, autos at 25% — are unaffected. Section 122 never stacked on the metal content of 232 articles, and 232 has no sunset.
• China's existing Section 301 lists (7.5-100%) predate 2026 and survive July 24 regardless of what happens to the new investigations.

The deadline is primarily a story about non-EU, non-USMCA general merchandise — apparel from South Asia, electronics from Southeast Asia, machinery from Japan and Korea.

The Refund Wildcard: Section 122 Is Running the IEEPA Script

The IEEPA tariffs were collected under a stay while appeals ran — then the Supreme Court struck them down, and $166 billion became refundable. Section 122 is now in the same posture: challenged in court, upheld nowhere, collected under a Federal Circuit stay.

If the courts ultimately rule the Section 122 tariff unlawful, every dollar of the 10% paid between February 24 and July 24 becomes a refund candidate — a five-month, economy-wide pool. Nobody can promise that outcome. What importers can do now is cheap: keep clean records of every entry that paid Section 122 (ACE entry summaries, 7501s, liquidation dates), the same documentation discipline that separated fast IEEPA refunds from rejected ones. If the ruling comes, the importers with organized entry data will be first in line — again.

The Checklist for the Next 9 Days

1. Model both rate outcomes. Run your top SKUs through the scenario simulator at 12.5% (Section 301 replacement) and at MFN-only (the gap). Know which outcome you're rooting for and what it's worth.

2. Talk entry timing with your broker this week. If the gap scenario materializes, entry dates after July 24 capture it; if you'd rather lock the known 10% than risk 12.5%, entries before July 24 do that.

3. Pull your Section 122 payment records. ACE ES-003 activity report, entry numbers, duty amounts since February 24. Twenty minutes of documentation now positions you for a second refund wave if the Federal Circuit rules against the tariff.

4. Watch for USTR's final rule. It missed its July 20 deadline; the announcement — whenever it lands — tells you which scenario you're in.

5. Don't forget the first refund. The IEEPA pool is still paying out — $86 billion of $166 billion repaid as of July 10 — and CAPE Phase 1 and 2 windows keep running. If you haven't filed, that's still the largest sum of money on this page.