Key takeaways
- Yes, the Section 122 tariff expires July 24, 2026 — but treating that as relief is the mistake. The surcharge under Proclamation 11012 runs "through 12:01 a.m. eastern daylight time on July 24, 2026," and it ends automatically because the statute (19 U.S.C. §2132) caps it at 150 days. What it does not do is guarantee your import costs come down.
- First correction: the rate is 10 percent, not 15. Proclamation 11012 imposed "a 10 percent ad valorem duty rate." The 15 percent figure circulating online is the statutory ceiling in 19 U.S.C. §2132(a) — a surcharge "not to exceed 15 percent." Raising it to that cap was floated but not enacted. If you're budgeting off 15 percent, you're budgeting off a threat, not a rate.
- Second correction: expiry is not the same as a cost drop. As the Section 122 surcharge sunsets, a proposed Section 301 forced-labor tariff is lined up behind it — and Section 301 carries no 150-day clock the way Section 122 does.
- The part that actually protects you is a document, not a rate. Both the expiring Section 122 surcharge and the proposed Section 301 action exempt USMCA/CUSMA-origin goods of Canada and Mexico. So the thing that shields you across both regimes isn't the tariff schedule — it's a properly made claim of origin. It never applies automatically. You have to claim it, and the entry channel has to allow it.
- There's a third moving part: the courts. A US trade court has already ruled Proclamation 11012 invalid, an appeals court paused that ruling, and collection continues. Sunset, succession, and litigation are three separate clocks — plan around all three, not one.
Yes, the Section 122 tariff expires July 24, 2026 — but your landed cost probably won't drop
If you've been paying the Section 122 import surcharge and circled July 24, 2026 as the day it disappears, the honest read for founders is this: the surcharge does expire on that date, but expecting your landed cost to fall with it is likely to disappoint. Two facts get scrambled in most of what's circulating, and both change how you should budget.
The rate is 10 percent — not 15. Proclamation 11012, signed February 20, 2026, imposed "a 10 percent ad valorem duty rate," effective 12:01 a.m. EST on February 24, 2026, running "through 12:01 a.m. eastern daylight time on July 24, 2026." The 15 percent number you may have seen is not the rate that was charged — it's the legal ceiling. The underlying authority, Section 122 of the Trade Act of 1974 (19 U.S.C. §2132(a)), permits "a temporary import surcharge, not to exceed 15 percent ad valorem," "for a period not exceeding 150 days (unless such period is extended by Act of Congress)." Lifting the surcharge to the 15 percent cap was raised as a possibility, but it was not enacted. Announced ceilings and implemented rates are different things — check a recent entry summary: where the surcharge applied, it applied at 10 percent.
And expiry doesn't mean the cost line goes away. The 150-day limit is why July 24 is a hard stop — Section 122 surcharges end by statute unless Congress extends them, and there's no extension. But policy in this area doesn't leave a vacuum. As the surcharge sunsets, a proposed Section 301 forced-labor tariff is waiting to occupy the same space. So the practical planning answer is uncomfortable: don't model a July 24 price cut. Model a handover.
What changes on July 24 — and what's lined up to replace it
To keep this straight, it helps to separate the measure that's ending from the measure that may take its place. They come from different sections of the Trade Act, carry different rates, and run on different clocks — merging them is exactly how the confusion started.
The measure ending is the Section 122 balance-of-payments surcharge. The government reached for it after the February 20, 2026 US Supreme Court decision that the International Emergency Economic Powers Act does not give the president authority to impose tariffs; Section 122 was the next available lever. It's worth knowing that the Section 122 surcharge did not stack on top of certain other duties — the proclamation states, "The surcharge imposed in this proclamation shall not apply in addition to tariffs imposed under section 232." So some goods never carried it in the first place.
The measure lined up behind it is a proposed Section 301 action. On June 2, 2026, the Office of the US Trade Representative announced affirmative determinations in forced-labor investigations covering 60 economies and proposed tariffs in response; the proposal was published in the Federal Register on June 5, 2026 (document 2026-11296). The proposed rates are 10 percent for economies that maintain forced-labor import bans, have committed under a reciprocal trade agreement, or run a partial regime — a group that includes Canada, Mexico, and the European Union, among others — and 12.5 percent for the remaining economies. (Which bucket any given jurisdiction falls into is specified in USTR's notice; confirm yours there rather than assuming.) The comment period closed July 6, 2026 and a public hearing was held July 7, 2026. Critically, there is no effective date — this is a proposal, and USTR can revise it, finalize it, or drop it.
| Section 122 surcharge (expiring) | Section 301 forced-labor tariff (proposed) | |
|---|---|---|
| Legal authority | Section 122, Trade Act of 1974 — 19 U.S.C. §2132 | Section 301, Trade Act of 1974 |
| Rate | 10% ad valorem (statutory cap is 15%) | Proposed 10% or 12.5%, depending on the economy |
| Time limit | Hard 150-day limit — ends 12:01 a.m. EDT, July 24, 2026 | No 150-day clock |
| USMCA / CUSMA goods | Exempt — goods "entered free of duty as a good of Canada or Mexico under the terms of general note 11" to the HTSUS | Would not cover USMCA-compliant goods of Canada or Mexico |
| Current status | In force; expires July 24, 2026 (a trade court ruled the proclamation invalid; an appeals court stayed that, so collection continues) | Proposed only — no effective date; USTR may revise, finalize, or withdraw |
The single most useful line in that table is the third row. Section 122 was self-limiting; a proposed Section 301 action is not built the same way, so "the tariff expires" and "the tariffs are over" are not the same sentence.
Who this affects
The policy story is national. The question that matters to a founder is narrower: whose actual costs and paperwork move.
- Anyone who has been paying the Section 122 surcharge and treating July 24 as a savings date. That's the core group. The surcharge ends; whether your cost ends depends on the successor and on your origin position.
- Cross-border sellers moving physical goods into the US — direct-to-consumer, marketplace, and dropshipping operators. The surcharge sat in your landed cost per shipment unless your goods cleared as Canada- or Mexico-origin, and the proposed successor is structured the same way around origin.
- US founders sourcing from abroad. The Section 122 surcharge applied broadly across imports; the proposed Section 301 measure is aimed at forced-labor-linked sourcing, with its own exemptions. Your exposure depends on where your inputs actually come from.
- Cross-border operators specifically — a Canadian who owns a US company importing goods, or a US company sourcing from Canada. In either direction, the duty question turns on origin, not on which country your business is headquartered in. Whether CUSMA still stands behind that claim is a common worry; it does, and we cover the "is CUSMA still in effect" question in CUSMA not renewed in 2026.
- Less affected: if you sell services across the border rather than goods, none of this clears customs, and the mechanics here largely pass you by.
What to do now
The unhelpful advice is "wait for July 24." Here's what you can actually act on, in order.
1. Don't budget for a July 24 price cut. Model the surcharge as replaced, not removed. If a Section 301 action finalizes, your landed cost may shift sideways rather than down; if it doesn't, you may get relief on non-origin goods. Plan for the sideways case and treat any drop as upside.
2. Confirm the rate you're actually paying. Pull a recent entry summary. If your paperwork or your broker's estimate assumed 15 percent, you've been over-provisioning — the surcharge was 10 percent.
3. Find out whether your goods qualify as USMCA/CUSMA origin — because that's the real shield. Here is the pivot that outlasts every rate change: both the expiring Section 122 surcharge and the proposed Section 301 action exempt origin-qualifying goods of Canada and Mexico. So what protects you across both regimes is not the tariff number — it's a correct claim of origin. And a claim is a document, not a fact: it doesn't apply because your business is Canadian; it applies because you certified origin correctly and can back it up. Determine origin product by product, not company-wide.
4. Make sure your origin claim is actually claimable through your channel. An FTA duty-free claim has to be filed in a channel that permits it — the new postal informal entry (effective July 24, 2026) is not one of them, which pushes an origin claim to formal entry. We keep the postal-versus-formal entry mechanics in the US de minimis change for cross-border sellers rather than re-covering them here; the point for this brief is that the exemption you're counting on only exists if the channel lets you claim it.
5. Watch three clocks, not one. The July 24 sunset, the courts (below), and the proposed Section 301 action are independent. Reincorporating, re-sourcing, or restructuring on the strength of any single one is expensive and slow to undo. Tighten your origin documentation now — it helps no matter which clock moves — and hold structural decisions until specifics are confirmed against primary trade sources.
This is general information about a trade and customs change for founders, not legal, tax, or customs advice — confirm the specifics for your goods and situation with US Customs and Border Protection, the CBSA, or a licensed customs broker before you rely on it.
The other track: the courts
Sunset and succession aren't the only things in motion — Proclamation 11012 is also being litigated, and that changes what "expiring" means in the meantime.
On May 7, 2026, the US Court of International Trade ruled the proclamation invalid in a 2–1 decision, on the ground that it did not identify the "balance-of-payments deficits" that Section 122 requires as its trigger. Two features of that ruling matter for planning. First, the injunction reached only the named plaintiffs — every other importer kept paying. Second, on May 12, 2026, the Court of Appeals for the Federal Circuit issued an administrative stay, so Customs and Border Protection has continued to collect the surcharge while the appeal proceeds. There is no guarantee of a refund if the ruling ultimately stands.
The practical takeaway: a courtroom win is not a rebate, and a courtroom loss is not the last word. This is the third clock — and it's the least predictable of the three.
The setup layer: origin claims run on a documented business
Here's the part that survives every rate, every sunset, and every appeal. When your protection stops being "the tariff is low" and becomes "I can prove where my goods are from," the weakest link is usually not the certificate — it's the business identity underneath it.
An origin claim, once you move it to formal entry, pulls in a customs broker, an importer-of-record decision, and — for Canadian exporters — a Business Number, the CRA's import-export program account, and the CBSA's CARM portal. Every one of those records carries an address, and the customs and tax systems cross-check them. When they all point at the same commercial street address, a verification letter or a release decision reaches you predictably. When they diverge — a home address on one, an old address on another, a box number somewhere — a query about a held shipment can land where nobody's watching while the goods sit at the port. We lay out which address goes on each of those records in the import-export business address guide.
That's the layer Auteur is built to cover, on a North American footing. To be clear about what a business address does and doesn't do: it is not a customs address and it does not make you an importer of record — it's the stable business identity your customs, CRA, and platform records all agree on. In Canada, that's a Toronto or Vancouver address of Auteur's own (mail-first, and in pre-launch — you can reserve early). In the US, it's an address through our partner SaveOffice, which runs that side. If your cross-border flow also touches marketplace platforms — where the customs identity and the shop identity have to match — the platform-specific side is in Etsy's DDP rule for Canadian sellers.
FAQ
Will Section 122 tariffs be overturned? Possibly, but don't count on it as your plan. The US Court of International Trade ruled Proclamation 11012 invalid on May 7, 2026, but the injunction applied only to the named plaintiffs, and the Court of Appeals for the Federal Circuit issued an administrative stay on May 12, 2026 — so Customs and Border Protection has kept collecting the surcharge during the appeal, with no guaranteed refund. Separately, the surcharge is scheduled to expire by statute on July 24, 2026 regardless of the litigation.
What is the current Section 122 tariff rate? It is 10 percent ad valorem, under Proclamation 11012, which imposed "a 10 percent ad valorem duty rate." The 15 percent figure often quoted is the statutory maximum in 19 U.S.C. §2132(a) — "not to exceed 15 percent" — not the rate that was actually charged. Raising it to the cap was raised as a possibility but not enacted.
When do Section 122 tariffs expire? The surcharge runs "through 12:01 a.m. eastern daylight time on July 24, 2026." It ends automatically on that date because Section 122 (19 U.S.C. §2132) limits such a surcharge to 150 days unless Congress extends it, and there is no extension.
What are the Section 122 tariff exemptions? The surcharge exempts goods "entered free of duty as a good of Canada or Mexico under the terms of general note 11" to the HTSUS — that is, properly claimed USMCA/CUSMA-origin goods. The proclamation also states the surcharge "shall not apply in addition to tariffs imposed under section 232," so goods already carrying Section 232 duties didn't stack the surcharge on top. The important nuance: the CUSMA exemption is a claim you make, not an automatic status — it depends on certifying origin correctly.
Does the expiration mean my import costs go down? Not necessarily. Section 122 ends by its own 150-day clock, but a proposed Section 301 forced-labor tariff — published in the Federal Register on June 5, 2026, at proposed rates of 10 percent or 12.5 percent depending on the economy — is lined up to occupy the same space, and it carries no comparable 150-day limit. That proposed action would not cover USMCA-compliant goods of Canada or Mexico, so for origin-qualifying goods the more durable answer is your claim of origin, not the tariff calendar. Treat July 24 as a handover to watch, not a savings date to bank.
Bottom line
The Section 122 tariff expires July 24, 2026 — that part is real, and it happens automatically because the statute caps the surcharge at 150 days. But two things keep it from being the relief it looks like: the rate you've been paying is 10 percent, not the 15 percent ceiling, and a proposed Section 301 forced-labor tariff — with no 150-day clock — is lined up to replace it, on top of a court fight that's still live. Sunset, succession, and litigation are three separate clocks, and only one of them stops on July 24.
In less than six months, the authority setting your duty rate has moved from an emergency power the Supreme Court rejected, to one section of the Trade Act of 1974, to a proposed action under another — while a court is still deciding whether the middle one was lawful. None of those levers is yours to pull. The one that is: whether, on the day someone asks, you can show where a good was made and stand behind the answer. That gets assembled long before a shipment moves — in origin records, in the entity that certifies them, and in the address every one of those records agrees on. Whichever side of the border you file on, set up the business address your customs and tax records point at — a Toronto or Vancouver address from Auteur, or a US address through our partner SaveOffice — so the paperwork sits on a stable business, not a moving target.
