Australia and New Zealand Face Standard 10% Section 122 Rate — No Bilateral Deal

UPDATE (July 24, 2026 outcome, extended August 2026): Section 122 lapsed sitewide on that date. Australia and New Zealand are both on the forced-labor Section 301 covered list, so the 10% surcharge described below was replaced by a 12.5% forced-labor Section 301 duty rather than falling to zero. Separately, the comparison drawn below against countries with preferential frameworks no longer holds: the six country-specific reciprocal rates were terminated by Executive Order 14389 on February 20, 2026, so no origin now carries one. Original pre-cliff analysis: Australia and New Zealand, long-standing US allies without formal bilateral trade deals, were subject to the standard 10% Section 122 operational surcharge rate (per Federal Register 2026-03824) effective February 24, 2026. Unlike the EU, Japan, South Korea and Taiwan — which then held country-specific reciprocal rates of 15%, since terminated by Executive Order 14389 on February 20, 2026 — Australia and New Zealand had no special framework. The US-Australia Free Trade Agreement does not provide tariff preferences equivalent to those offered under USMCA, leaving Australian importers at the standard S122 rate while it was in force.

US importers of Australian goods including beef, wine, wool, aluminum, and LNG, and New Zealand goods including dairy, lamb, and timber. The 10% surcharge adds noticeable cost to these commodity imports. Australian and New Zealand exporters had no preferential framework of the kind other US partners then held, which at the time made their goods comparatively more expensive in the US market than goods from the EU, Japan, Korea and Taiwan on most non-S232 product categories.

Australia and New Zealand Face Standard 10% Section 122 Rate — No Bilateral Deal (effective 2026-02-24). UPDATE (July 24, 2026 outcome, extended August 2026): Section 122 lapsed sitewide on that date. Section 122 of the Trade Act of 1974 grants the President limited authority to impose import surcharges for up to 150 days when the US balance of payments is in serious deficit. The authority has rarely been used in modern trade policy — its invocation in February 2026 came directly in response to the Supreme Court striking down IEEPA tariff authority on February 20, 2026, leaving the administration without a legal mechanism to maintain its tariff program. The proclamation imposed a uniform global surcharge on most US imports, with explicit exemptions for USMCA-qualifying goods from Canada and Mexico and for products already covered by Section 232 national security tariffs. The 150-day limit was statutory and could not be extended without Congressional action; with no extension passed (S.4049 was a repeal, not an extension), the surcharge lapsed by operation of law at 12:01 a.m. eastern time on July 24, 2026. The same moment, a forced-labor Section 301 duty (10% or 12.5% on roughly 60 economies) took effect and backfilled the lapse for most affected importers, so landed costs did not simply drop to the pre-surcharge level. Importers are advised to review their supply chains for USMCA qualification opportunities, which remain the most straightforward path to avoiding both the former Section 122 surcharge and the forced-labor Section 301 duty on Canadian and Mexican sourcing. The combination of the forced-labor Section 301 duty, Section 232 rates on steel and aluminum, and the China-specific Section 301 tariffs means the effective tariff rate for many importers remains substantially higher than at any point since 1947.

With Section 122 lapsed and a forced-labor Section 301 duty now the operative layer for ~60 economies, importers can minimize exposure by: (1) verifying USMCA qualification for Canadian and Mexican sourcing, as USMCA-qualifying goods are excluded from both the former surcharge and the forced-labor duty; (2) confirming whether your product categories fall under Section 232 coverage, which is likewise excluded from the forced-labor duty; (3) treating the forced-labor Section 301 duty (10% or 12.5% by economy) — not the lapsed Section 122 surcharge — as the operative layer when modeling landed cost, and checking whether your economy is on the 60-economy list at all. Customs brokers recommend reviewing Bills of Lading and entry documentation carefully to ensure applicable exclusions (headings 9903.05.90/.93/.94) are claimed.

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