The 10% Section 122 import surcharge that has applied to nearly all US imports since February expires July 24, but a proposed replacement is on track to take effect the same week. Importers who scheduled shipments to clear customs after the deadline in expectation of lower costs may face a new duty instead.
What changes on July 24: Section 122 of the Trade Act of 1974 allows the President to impose an import surcharge of up to 15% for a maximum of 150 days. It cannot be extended without Congress. The current rate is 10%. A 15% increase was floated publicly but never formally adopted. The Court of International Trade struck down the surcharge, but the Federal Circuit stayed that ruling, so it remains in force while the appeal proceeds.
The replacement is a USTR proposal for Section 301 “forced-labor” duties covering about 60 economies, or roughly 99% of US import value, in two tiers:
10% on 14 economies including Canada, Mexico, the EU, the UK and Taiwan
12.5% on 46 others including China, Vietnam, India, Thailand, Japan and South Korea
Goods that qualify under the USMCA, duty free textiles and apparel under DR-CAFTA, products already covered by Section 232, pharmaceuticals, and critical minerals are exempt. Comments are due July 6, a hearing is set for July 7, and USTR aims to finalize the duties before Section 122 lapses.
Why importers may not get a break: The new duties would not replace the existing surcharge. They would be added to the tariffs already in place. Gibson Dunn notes the Section 301 duties would apply “in addition to” most favored nation rates, earlier China Section 301 duties, antidumping and countervailing duties, and Section 232 tariffs.
That means an importer who delayed a shipment to clear after July 24 to avoid the 10% Section 122 charge could instead face a 10% to 12.5% Section 301 charge, and, in many cases, pay more overall.
What to watch: The July 6 comment deadline is the last chance for importers to argue for changes or exemptions before the rates are finalized. Trade lawyers, including Gibson Dunn, say Section 301 stands on stronger legal ground than the IEEPA tariffs the courts have rejected.
Troutman Pepper, however, expects the proposal to face legal challenges, especially around the argument that another country's lack of a forced labor import ban qualifies as an unreasonable trade practice.
If the duties survive, the current 10% floor on most US imports would become permanent rather than temporary.
