Section 122 tariffs are temporary import surcharges of up to 15%, or import quotas, that the President can impose for up to 150 days to address a large and serious U.S. balance-of-payments deficit. The authority comes from Section 122 of the Trade Act of 1974 (19 U.S.C. 2132), a rarely used statute that sat dormant for more than five decades before being invoked for the first time in February 2026.
For importers, customs brokers, and supply chain managers, Section 122 tariffs matter because they can be imposed quickly, apply broadly across most trading partners, and expire automatically on a fixed statutory clock unless Congress acts. Understanding how this authority works, and how it differs from Section 301, Section 232, and IEEPA-based tariffs, is essential for forecasting duty exposure and knowing when relief may be available.
What Are Section 122 Tariffs?
Section 122 tariffs are a specific type of presidential trade action authorized by Title I of the Trade Act of 1974. Unlike most tariff authorities, which target unfair trade practices or national security risks tied to specific products or countries, Section 122 is designed as a balance-of-payments tool: it lets the President respond quickly to a serious imbalance in the flow of money into and out of the United States by temporarily raising the cost of imports across the board.
The statute caps any surcharge at 15% ad valorem and limits the action to 150 days unless Congress passes a joint resolution extending it. This built-in expiration distinguishes Section 122 from Section 301 and Section 232 tariffs, which have no automatic sunset date.
Legal Authority Under the Trade Act of 1974
Section 122, codified at 19 U.S.C. 2132, gives the President authority to proclaim a temporary import surcharge or quota “to deal with large and serious United States balance-of-payments deficits.” The provision does not require a lengthy investigation process like Section 301, nor does it require the Commerce Department findings that Section 232 relies on, which is part of what makes it attractive as a fast-acting tool.
Balance-of-Payments Requirements
Critically, the statute does not simply refer to the modern “trade deficit” or “current account deficit.” It was written in 1974 against a backdrop of specific technical balance-of-payments concepts used at the time, including the liquidity deficit, the official settlements deficit, and the basic balance. Courts reviewing the 2026 use of Section 122 focused heavily on this distinction, since the proclamation invoking the authority cited trade and current account deficits rather than those narrower historical measures.
The 2026 Section 122 Tariffs: Timeline and Court Ruling
Section 122 sat unused for more than fifty years until early 2026, when it became the centerpiece of a rapid shift in U.S. tariff policy.
From IEEPA to Section 122
In early 2026, the Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize the President to impose tariffs, invalidating the prior IEEPA-based “reciprocal” tariff program. Within days, the administration issued a new proclamation relying on Section 122 instead, imposing a 10% ad valorem tariff on most imports effective February 24, 2026. This was the first time any President had invoked Section 122 since the statute was enacted in 1974.
The Court of International Trade Ruling
Twenty-four state attorneys general and several importers, including Burlap & Barrel, Inc. and Basic Fun, Inc., challenged the tariffs at the Court of International Trade. On May 7, 2026, a 2-1 panel ruled the tariffs unlawful, holding that the administration had misapplied the statute’s “balance-of-payments deficit” standard by relying on trade and current account deficits rather than the specific historical measures Congress intended. The court’s reasoning echoed the separation-of-powers concerns from the earlier IEEPA ruling. Importantly, the court’s injunction applied only to the three named plaintiffs, not to importers generally.
Appeal and Expiration
The government appealed to the Federal Circuit on May 8, 2026, and the appellate court stayed the lower court’s injunctions on May 12, 2026, allowing CBP to keep collecting the tariffs while the appeal proceeded. Regardless of how the appeal was ultimately resolved, the tariffs were set to expire on their statutory 150-day clock on July 24, 2026, unless Congress voted to extend them. Following that expiration, the administration moved to fill the resulting gap primarily through an expanded layer of Section 301 duties.
Section 122 vs. Section 301, Section 232, and IEEPA Tariffs
Importers are often confused about which legal authority underlies a given round of tariffs, since several distinct statutes can produce similar-looking duties on an entry summary.
| Tariff Program | Legal Basis and Limit | Status as of 2026 |
| Section 122 | Trade Act of 1974; balance-of-payments deficit | Capped at 15%, 150 days; ruled unlawful, expired July 24, 2026 |
| Section 301 | Trade Act of 1974; unfair trade practices | No statutory cap or time limit; in effect |
| Section 232 | Trade Expansion Act of 1962; national security | No statutory cap or time limit; in effect |
| IEEPA tariffs | International Emergency Economic Powers Act | Held unconstitutional for tariffs by the Supreme Court in 2026 |
Because the Supreme Court had struck down the prior IEEPA-based tariffs only weeks earlier, the February 2026 proclamation invoking Section 122, formally titled “Imposing a Temporary Import Surcharge To Address Fundamental International Payments Problems,” was closely watched for whether it would introduce new exemptions or simply mirror the prior program. The proclamation characterized the 10% surcharge as a regular customs duty applied on top of existing duties, taxes, and fees, with one notable exception: it did not stack on top of Section 232 tariffs where the two overlapped.
It also built in a substantial list of exemptions at the Harmonized Tariff Schedule line level, including critical minerals and metals used in currency and bullion, energy products, select natural resources and fertilizers not sufficiently produced domestically, specified agricultural products, certain pharmaceuticals, select electronics, specified passenger vehicles and auto parts, certain aerospace products, and goods qualifying for preferential treatment under USMCA or the textile and apparel provisions of DR-CAFTA. Goods already in transit to the United States prior to the February 24, 2026 effective date were generally grandfathered and exempt from the surcharge. Because the remaining exemptions applied line by line rather than by broad category, importers had to confirm exemption status for each HTS code rather than assuming an entire product family was excluded.
How Technology Helps: KlearNow.AI’s Section 122 Tariff Tracking
KlearNow.AI’s customs and trade compliance platform helps importers stay ahead of fast-moving special import measures like Section 122 by continuously monitoring presidential proclamations, Federal Register filings, and court rulings that affect duty rates and broader U.S. trade policy. Instead of manually tracking which legal authority applies to each shipment, importers can see in real time whether an entry is subject to Section 122, Section 301, Section 232, or another tariff regime, and how pending litigation or a new exemption might change that status.
Because Section 122 tariffs can be imposed or withdrawn on short notice and expire automatically on a statutory clock, manual tracking creates real financial risk. KlearNow.AI’s platform flags affected HTS codes, calculates landed cost impacts as rates change, and maintains an audit trail of the legal basis for each duty, so compliance teams and brokers are not caught off guard by a sudden proclamation or a court decision.
Frequently Asked Questions
What is the legal basis for Section 122 tariffs?
Section 122 tariffs are authorized under Section 122 of the Trade Act of 1974, codified at 19 U.S.C. 2132. The statute lets the President impose a temporary import surcharge of up to 15% ad valorem, or import quotas, for up to 150 days to address a large and serious U.S. balance-of-payments deficit. Courts have distinguished this historical standard from the modern current account deficit, which includes components like primary income, or investment earnings, that the 1974 Congress did not have in mind.
Are Section 122 tariffs still in effect?
No. The 10% Section 122 surcharge imposed in February 2026 expired on its statutory 150-day clock on July 24, 2026. A Court of International Trade panel had already ruled the tariffs unlawful for the three named plaintiffs in May 2026, though that ruling was stayed on appeal and did not affect most importers before the statutory expiration.
How is Section 122 different from other tariff authorities like Section 301?
Section 122 is a balance-of-payments tool capped at 15% and 150 days, designed for fast, broad action across nearly all trading partners. Section 301 targets specific unfair trade practices identified through a United States Trade Representative investigation, carries no statutory cap or expiration date, and applies to specific products from specific countries rather than imports generally.
What happened to the Section 122 tariffs in court?
Twenty-four state attorneys general and several importers challenged the tariffs at the Court of International Trade. A 2-1 panel ruled on May 7, 2026, that the administration had misapplied the balance-of-payments standard by citing the modern current account deficit and net international investment position rather than the narrower historical measures Congress intended, but the court limited relief to the named plaintiffs. The government’s appeal led the Federal Circuit to stay the injunctions on May 12, 2026, and U.S. Customs and Border Protection continued collecting the surcharge until its statutory expiration in July 2026.
Can Section 122 be used again?
Yes. Expiration and the adverse Court of International Trade ruling do not repeal the statute itself. A future administration could invoke Section 122 again, though a new proclamation would likely need to tie its balance-of-payments justification more closely to the specific historical measures the courts found lacking in the 2026 action to withstand a similar legal challenge.
Who pays Section 122 tariffs?
As with other U.S. tariffs, the importer of record pays the Section 122 surcharge to U.S. Customs and Border Protection at the time of entry, in addition to any regular customs duty already owed. The cost is typically passed along the supply chain to distributors, retailers, and ultimately consumers, though the degree of pass-through varies by product and market.
Did Section 122 tariffs apply to all countries equally?
Largely yes. Unlike Section 301, which targets specific countries, or Section 232, which can apply to specific products regardless of origin, the February 2026 Section 122 surcharge applied broadly across nearly all trading partners, subject only to the product-based exemptions described above and existing free trade agreement carve-outs such as USMCA.
What replaced Section 122 tariffs after they expired?
Following the July 24, 2026 statutory expiration, the administration did not attempt to reinstate a Section 122 surcharge. Instead, it expanded Section 301 duties to cover many of the same imports, since Section 301 has no statutory cap or built-in expiration date.