Section 122 Lapsed July 24 — Forced-Labor Section 301 Backfilled ~60 Economies

Two tariff changes took effect at the same instant — 12:01 a.m. eastern time on July 24, 2026. First, the 10% Section 122 global surcharge lapsed by operation of law: Section 122 of the Trade Act of 1974 (19 U.S.C. §2132) caps a surcharge at 150 days absent an act of Congress, and no extension passed (S.4049 was a repeal, not an extension). Second, a new forced-labor Section 301 duty took effect the same moment on 60 investigated economies (USTR Dockets USTR-2026-0265 / USTR-2026-0266; CBP entry-filing guidance in CSMS #69326983). The forced-labor duty is 10% on 17 economies and 12.5% on 38 others, with five economies (the EU and Taiwan capped at 10%, Japan, South Korea and Switzerland capped at 12.5%) charged a conditional net-of-MFN top-up. For most affected importers, the forced-labor duty backfilled the lapsed surcharge rather than leaving a 0% gap — landed costs did not simply drop to the pre-surcharge level.

US importers sourcing from the 60 covered economies — which the USTR notes represent roughly 99.4% of US imports. The 17 economies at 10% include Canada, India, Mexico, and the United Kingdom; the residual 38 (including China, Brazil, and Vietnam) are at 12.5%. Goods excluded from the S122 surcharge stay excluded from the forced-labor duty: USMCA-qualifying Canadian/Mexican goods (headings 9903.05.93/.94) and Section 232-covered products (heading 9903.05.90). A goods-in-transit carve-out (heading 9903.05.85) spares shipments loaded and in transit before the cliff and entered before 12:01 a.m. July 28, 2026. Note the press "80+ countries" figure counts the EU's 27 member states individually; the legal action names 60 economies with the EU as one.

Section 122 Lapsed July 24 — Forced-Labor Section 301 Backfilled ~60 Economies (effective 2026-07-24). Two tariff changes took effect at the same instant — 12:01 a. 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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