What Happened When Section 122 Lapsed in July 2026

Section 122 of the Trade Act of 1974 (19 USC 2132) caps any surcharge imposed under its authority at 150 days. The surcharge took effect February 24, 2026, so its 150-day clock ran out on July 24, 2026. No act of Congress extended it (S.4049 was a repeal, not an extension), so at 12:01 a.m. eastern time on July 24, 2026 the 10% Section 122 global surcharge lapsed by operation of law. But landed costs did not simply fall for most importers. At the very same moment, a new forced-labor Section 301 duty took effect on 60 investigated economies — which together account for roughly 99.4% of US imports (USTR Dockets USTR-2026-0265 / USTR-2026-0266; CBP entry-filing guidance in CSMS #69326983). The duty is 10% on 17 economies, 12.5% on 38 others, and a conditional net-of-MFN top-up on five (the EU and Taiwan capped at 10%; Japan, South Korea, and Switzerland capped at 12.5%). For the large majority of trade, this forced-labor duty backfilled the lapsed surcharge rather than leaving a 0% gap. So the practical question is no longer "when will Section 122 expire?" — it already has. The question is: for your specific origin country, did the forced-labor duty replace, exceed, or fall short of the old surcharge? The answer varies by country, and this guide walks through each case with the real numbers.

Before July 24 the formula was: MFN + max(S122, S232, Bilateral) + S301. Because Section 122 has lapsed to 0%, it now reads: MFN + max(0, S232, Bilateral) + China-S301 + forced-labor S301 + Section 338 (Canada only, on annexed non-S232 goods, from August 19, 2026). The forced-labor duty is a separate, additive layer (a distinct Section 301 investigation), so for covered economies it stacks on top of whatever else applies. For goods subject to Section 232 (steel, aluminum, copper, lumber, autos, semiconductors): no change. S232 products were excluded from Section 122 and are likewise excluded from the forced-labor duty (Chapter 99 heading 9903.05.90). Steel remains at 50%, aluminum at 50%, autos at 25% — before and after July 24. For goods from China: China's existing punitive Section 301 tariff continues in full, and the forced-labor duty adds 12.5% on top (China is in the 12.5% tier). Because the lapsed Section 122 rate was 10%, the net move on the surcharge/forced-labor axis is +2.5 points — China's landed cost did not fall; it rose slightly. A Chinese List 4A electronics accessory that was MFN 3.4% + S122 10% + S301 7.5% = 20.9% became MFN 3.4% + S301 7.5% + forced-labor 12.5% = 23.4%. For the EU, Japan, South Korea, Taiwan, India and Vietnam: nothing was left in the middle tier for the lapse to interact with. Their country-specific reciprocal rates had already been terminated by Executive Order 14389 on February 20, 2026, five months before the Section 122 cliff. What these origins face after July 24 is MFN plus the forced-labor duty, on the tier that applies to them. Vietnam, for example, pays MFN plus 12.5%. For economies NOT on the 60-economy list (the majority of the world's countries, though a smaller share of total US trade): there was no backfill. The 10% surcharge genuinely fell away, and those goods now face MFN plus any S232/S301 that applied independently. These importers are the ones who actually saw a reduction.

The single biggest misconception about July 24 is that it was a broad tariff cut. For the ~60 covered economies — nearly all US import value — it was not. Here is the realized picture by group: Forced-labor 10% economies (17, including Canada, India, Mexico, the United Kingdom, Indonesia, Pakistan): the 10% forced-labor duty landed almost exactly where the 10% surcharge had been. Net change on this axis: roughly zero. No meaningful savings. Forced-labor 12.5% economies (38, including China, Brazil, and most others): the 12.5% forced-labor duty exceeded the 10% surcharge it replaced — a net increase of about 2.5 percentage points. Landed costs rose. Conditional economies (EU, Taiwan at a 10% cap; Japan, South Korea, Switzerland at a 12.5% cap): the forced-labor duty is computed net of the MFN rate, so the combined MFN + forced-labor tops up to the cap. Where a bilateral deal also applies (EU, Japan, South Korea, Taiwan), that rate persists and the forced-labor layer stacks on top. Economies not on the list: these are the only importers who unambiguously benefited. For a non-covered source at MFN 5% + S122 10% = 15%, the rate fell to 5% MFN — a genuine 10-point reduction. USMCA-qualifying Canadian and Mexican goods: unaffected. They were exempt from Section 122 and are exempt from the forced-labor duty (headings 9903.05.93/.94), so they remained at 0% throughout.

These examples use representative rates; run your exact HTS code and origin through the CalcMyTariff.com calculator for precise figures. Example 1 — $50,000/month of furniture from Vietnam (12.5% forced-labor tier). Before July 24: 5% MFN + 10% Section 122 = 15% → $7,500/month. Vietnam's reciprocal country rate had already been terminated in February, so the uniform 10% surcharge was all that sat above MFN. After: 5% MFN + 12.5% forced-labor = 17.5% → $8,750/month. This importer's cost rose by roughly $1,250/month, because the duty that backfilled the surcharge is 2.5 points larger than the surcharge it replaced. Example 2 — $100,000/month in furniture from China (List 3, 25% S301). Before: ~0% MFN + 10% S122 + 25% S301 = 35% → $35,000/month. After: ~0% MFN + 25% S301 + 12.5% forced-labor = 37.5% → $37,500/month. Cost rose by ~$2,500/month — the forced-labor 12.5% more than replaced the lapsed 10% surcharge. Example 3 — $80,000/month from a country NOT on the 60-economy list (MFN 4%). Before: 4% + 10% S122 = 14% → $11,200/month. After: 4% MFN only → $3,200/month. A genuine saving of ~$8,000/month — but only because this origin was not covered by the forced-labor action. Example 4 — $75,000/month in steel from any origin (50% S232). Before and after: 50% S232, unchanged. S232 was never subject to Section 122 and is excluded from the forced-labor duty. The lesson: whether July 24 helped or hurt you depends almost entirely on whether your origin country is on the 60-economy forced-labor list — not on the Section 122 lapse alone.

Before the cliff, a common piece of advice was to delay shipments so they would clear customs after July 24 and dodge the 10% surcharge. For the ~60 covered economies, that advice is now backwards: goods entered on or after July 24 are subject to the forced-labor duty, which for the 12.5% tier is higher than the surcharge it replaced. Delaying a covered-origin shipment past the cliff generally increased its duty, it did not reduce it. There was one narrow, one-time exception: a goods-in-transit carve-out. Articles loaded onto a vessel and in transit before 12:01 a.m. eastern time on July 24, 2026, and entered for consumption before 12:01 a.m. eastern time on July 28, 2026 (Chapter 99 heading 9903.05.85), were spared the forced-labor duty. That window has closed. Going forward, timing no longer offers a Section 122 arbitrage. The operative variables are your origin's forced-labor tier (0%, 10%, or 12.5%), whether your product is excluded (S232, USMCA-qualifying, or another Chapter 99 carve-out), and any bilateral rate that persists. For importers of covered-origin goods, sourcing strategy — not shipment timing — is now the lever that moves landed cost.

Several categories were excluded from Section 122 and remain excluded from the forced-labor Section 301 duty, so nothing changed for them on July 24: USMCA-qualifying goods from Canada and Mexico (Chapter 99 headings 9903.05.93/.94) — duty-free on every layer except Section 338 where the preferential claim is properly made and supported; eligibility alone is not enough, and Section 338 (Canada only, from Aug 19, 2026) is not among the exclusions this heading describes. Section 232-covered products (heading 9903.05.90) — steel, aluminum, copper, lumber, autos, semiconductors, and, from July 31, 2026, patented pharmaceutical articles added to that heading. CAFTA-DR textiles entered free under CAFTA-DR (heading 9903.05.95), civil aircraft (9903.05.88), a narrow pharmaceutical-application exception (9903.05.89), donations and informational materials (9903.05.91/.92), and goods-in-transit under the July 28 window (9903.05.85). Note that a Section 122 exemption does not automatically carry over — importers should confirm each product's status against the new Chapter 99 provisions rather than assume the prior carve-out still applies.

The Section 122 surcharge itself faced litigation: the Court of International Trade held that the administration exceeded its Section 122 authority, and the Federal Circuit stayed that judgment pending appeal. That appeal remained unresolved as of this writing — but it is now largely moot for day-to-day landed cost, because the surcharge lapsed on its own statutory 150-day clock regardless of the appeal's outcome. The forced-labor Section 301 action is a separate legal instrument (a distinct Section 301 investigation under Dockets USTR-2026-0265 / USTR-2026-0266), and it carries detailed severability provisions intended to preserve the remaining country actions if a court invalidates any single country's determination. Litigation over the forced-labor action is possible, but actions under this authority have historically been upheld. For importers, the practical takeaway is that the July 24 structure — Section 122 at 0%, forced-labor Section 301 as the operative layer for ~60 economies — is the reality to plan around today. Monitor USTR notices and the court calendar, but base your landed-cost modeling on the rates now in effect, not on a hoped-for reversal.