USMCA Exemption from Section 122 Confirmed

The Section 122 proclamation effective February 24, 2026 explicitly confirmed that USMCA-qualifying goods from Canada and Mexico are exempt from the Section 122 surcharge. The Federal Register notice (2026-03824) listed USMCA compliance among the enumerated exemptions. This means goods that qualify under USMCA rules of origin — including automotive goods with 75%+ North American content — continue to enter the US duty-free under USMCA.

US importers sourcing from Canada and Mexico who have established USMCA-qualifying supply chains. This is highly favorable for nearshoring and reshoring strategies — companies that moved production to Mexico or Canada to qualify for USMCA treatment continue to benefit from 0% tariffs even under the new Section 122 regime.

USMCA Exemption from Section 122 Confirmed (effective 2026-02-24). The Section 122 proclamation effective February 24, 2026 explicitly confirmed that USMCA-qualifying goods from Canada and Mexico are exempt from the Section 122 surcharge. 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.

• Section 122 Status Hub
• USMCA Explainer
• How to Qualify for USMCA
• China vs Mexico Guide