What Changed
Effective February 24, 2026Australia and New Zealand, long-standing US allies without formal bilateral trade deals, are subject to the standard 15% Section 122 surcharge rate effective February 24, 2026. Unlike the EU, Japan, South Korea, and Taiwan — which have bilateral agreements maintaining 15% rates — Australia and New Zealand have 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.
Rate Changes
| Item | Before | After |
|---|---|---|
| Australian imports (S122) | 0% (pre-S122) | 15% S122 standard rate |
| New Zealand imports (S122) | 0% (pre-S122) | 15% S122 standard rate |
Who's Affected
US importers of Australian goods including beef, wine, wool, aluminum, and LNG, and New Zealand goods including dairy, lamb, and timber. The 15% surcharge adds significant cost to these commodity imports. Australian and New Zealand exporters lack the preferential bilateral frameworks that other US partners negotiated, making their goods comparatively more expensive in the US market.
Analysis
Australia and New Zealand Face Standard 15% Section 122 Rate — No Bilateral Deal (effective 2026-02-24). Australia and New Zealand, long-standing US allies without formal bilateral trade deals, are subject to the standard 15% Section 122 surcharge rate effective February 24, 2026. 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 imposes 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 is statutory and cannot be extended without Congressional action, meaning the surcharge is scheduled to expire on July 24, 2026. The economic impact is significant: the US imported approximately $3.1 trillion in goods in 2024, and a 15% surcharge on even a portion of that trade represents tens of billions of dollars in additional duties. Importers are advised to review their supply chains for USMCA qualification opportunities, which provide the most straightforward path to avoiding the Section 122 surcharge on Canadian and Mexican sourcing. The combination of Section 122, Section 232 rates on steel and aluminum, and Section 301 tariffs on Chinese goods means the effective tariff rate for many importers is now substantially higher than at any point since 1947.
Impact & Next Steps
Importers can minimize Section 122 exposure by: (1) verifying USMCA qualification for Canadian and Mexican sourcing, as USMCA-qualifying goods are fully exempt; (2) confirming whether your product categories fall under Section 232 coverage, which also provides S122 exemption; (3) modeling the cost impact of the Section 122 expiration on July 24, 2026 — if the surcharge is not renewed, landed costs will decrease significantly. Customs brokers recommend reviewing Bills of Lading and entry documentation carefully to ensure S122 exemptions are claimed where applicable.