The July 24 Tariff Cliff: What Happens When Section 122 Expires

In 39 days, the 15% Section 122 tariffs that replaced the struck-down IEEPA duties will hit their statutory expiration date. But "expiration" doesn't mean "relief" — the administration has already lined up replacement tariffs under Section 232 and Section 301 that could be higher, broader, and permanent. Here's your complete guide to the transition, the legal chaos, and the three scenarios every importer needs to model right now.

The last time U.S. trade policy moved this fast, nobody was ready for it.

On February 20, 2026, the Supreme Court struck down the Trump administration's IEEPA tariffs in Learning Resources, Inc. v. Trump — invalidating the legal basis for the reciprocal tariff regime that had defined trade policy since 2025. Within hours — literally hours — the President signed a proclamation imposing a new 10% surcharge under Section 122 of the Trade Act of 1974. By the next morning, it was 15%.

That move bought time. Exactly 150 days of it. And that clock runs out at 12:01 a.m. EDT on July 24, 2026.

If you're an importer who's been treating Section 122 as "just a temporary thing," you're about to learn that temporary tariffs rarely disappear — they transform. The administration has spent the last four months building the legal scaffolding for a permanent replacement regime. The transition won't be smooth, and the importers who haven't mapped their exposure will pay the difference.

The Section 122 Landscape Right Now

Section 122 of the Trade Act of 1974 authorizes the President to impose a temporary import surcharge of up to 15% ad valorem for a maximum of 150 days to address "fundamental international payments problems," including large and serious balance-of-payments deficits.

Here's where things stand today:

• Rate: 15% ad valorem on practically all imported merchandise
• Effective date: February 24, 2026
• Expiration: July 24, 2026, at 12:01 a.m. EDT
• Coverage: All countries, applied uniformly (unlike the old country-specific IEEPA rates)
• Non-stacking rule: Does not apply on top of Section 232 duties — products already subject to 25%–50% Section 232 tariffs are exempt from the additional 15%
• USMCA exemption: Goods qualifying under USMCA preferential treatment are exempt
• 13 product category exemptions: Largely mirroring previous IEEPA exemptions

Congress is considered unlikely to extend Section 122 beyond 150 days. There is no pending legislation with meaningful support for an extension.

The Court Battle: Oregon v. United States

On May 7, 2026, a divided three-judge panel at the U.S. Court of International Trade (CIT) struck down the Section 122 tariffs in Oregon v. United States and Burlap and Barrel, Inc. v. United States. The 2-1 decision found that the proclamation did not identify the type of "balance-of-payments deficits" Congress had in mind when it enacted Section 122 in 1974.

But here's the critical detail most importers miss: the remedy is party-specific, not universal.

The permanent injunction only protects three plaintiffs who demonstrated standing:

Everyone else still pays. Unless you file your own action, the administration withdraws the tariffs, the tariffs expire naturally, or a court orders broader relief — you remain subject to the full 15% Section 122 surcharge.

The timeline since the ruling tells you everything about the administration's posture:

• May 12: Federal Circuit issued an administrative stay of the CIT's ruling while considering the government's appeal
• May 20: CIT denied the government's separate motion for a stay of enforcement

The Federal Circuit stay means even the three winning plaintiffs may not get practical relief before the tariffs expire anyway on July 24. The administration is running out the clock.

Three Scenarios for July 25 and Beyond

The Section 122 tariffs expire in 39 days. Here's what could replace them — and the probability trade experts are assigning to each scenario:

Scenario 1: Section 232 Tariffs Step In (High Probability)

On April 2, 2026, the administration ordered new tariffs under Section 232 — the same authority used for steel, aluminum, and copper tariffs. Unlike Section 122, Section 232 tariffs have no time limit. They can be imposed indefinitely.

The Commerce Department has been conducting accelerated investigations into multiple product sectors. The April 2 proclamation laid the groundwork for extending Section 232 coverage to products that were previously only covered by Section 122.

What this means for you: Products not currently subject to Section 232 could be pulled into the Section 232 regime. If your goods are in sectors like electronics, critical minerals, or advanced manufacturing inputs, you need to check whether a Section 232 investigation covers your HTS codes.

Scenario 2: Section 301 Country Investigations Take Over (High Probability)

The U.S. Trade Representative is conducting two major Section 301 investigations involving 76 separate potential tariff determinations. These investigations are expected to conclude before July 24.

Section 301 tariffs are designed for permanent deployment. They target specific countries for unfair trade practices and can be imposed at rates the administration determines appropriate — with no statutory cap.

The forced labor investigation (covered in our recent post) is one of these 301 actions. But the scope extends far beyond labor practices — it includes overcapacity, subsidies, intellectual property, and market access barriers.

What this means for you: Your country-of-origin exposure matters enormously. Unlike Section 122's uniform 10%–15% rate, Section 301 tariffs will be country-specific and product-specific. Some countries may face rates above 15%; others may see lower rates as part of negotiated frameworks.

Scenario 3: The Gap (Moderate Probability)

There's a real possibility of a brief period — days to weeks — between July 24 and the formal implementation of replacement tariffs where certain products face lower total duty rates. This gap would exist for products that:

• Were subject to Section 122 (15%)
• Are NOT subject to existing Section 232 tariffs
• Have not yet been formally covered by new Section 301 determinations

What this means for you: If you have the ability to time shipments, understanding the exact dates of new tariff proclamations versus the July 24 expiration could save significant money. But don't bet on it — the administration has every incentive to ensure seamless coverage.

The IEEPA Refund Factor

While you're planning for what comes after Section 122, don't forget what came before: the IEEPA tariffs collected from April 2025 through February 2026.

The CIT directed CBP to liquidate unliquidated entries without IEEPA tariffs and to reliquidate entries where IEEPA tariffs were already collected. Refund claims are available to both domestic and foreign companies — the controlling factor is who is listed as the Importer of Record (IOR) on the customs entry.

Key facts about IEEPA refunds:

• The CIT is the proper venue for seeking refunds
• Entries already fully liquidated and past the protest deadline represent the most complex category — still unresolved
• You do NOT need to have been a plaintiff in the original case to seek a refund
• The refund mechanism is still being finalized, but claims should be preserved now

If you paid IEEPA tariffs and haven't filed for a refund — or at minimum preserved your right to one — you're leaving money on the table.

What Products Are Most Exposed in the Transition

Not all importers face equal risk. Here's how to assess your exposure:

Five Things to Do Before July 24

1. Audit your Section 122 exposure — Pull your entry data from the last 150 days. Identify every HTS code where you've paid the 15% surcharge. Calculate your total Section 122 duty spend. This is your baseline for modeling the transition.

2. Map your HTS codes to pending investigations — Cross-reference your product classifications against the active Section 232 and Section 301 investigations. The Commerce Department and USTR have published notice of these investigations in the Federal Register. If your products appear in a pending investigation, assume they'll be covered by replacement tariffs.

3. Preserve your IEEPA refund rights — If you paid IEEPA tariffs between April 2025 and February 2026, ensure you've taken the steps necessary to preserve refund claims. Consult with trade counsel on the specific mechanism available for your entry status (unliquidated vs. liquidated vs. past protest deadline).

4. Stress-test your USMCA qualifications — The USMCA exemption from Section 122 has been valuable. But new tariff authorities may not carry the same exemption structure. Review whether your USMCA-qualifying goods will retain preferential treatment under Section 232 or 301.

5. Build three pricing models — Don't plan for one outcome. Build models for: (a) seamless transition to higher Section 232/301 rates, (b) a brief duty gap for certain products, and (c) extended uncertainty if court challenges delay implementation. Your CFO should see all three scenarios by July 1.

The Bigger Picture: A Permanent Tariff Regime Is Taking Shape

Step back from the July 24 deadline for a moment and look at what's happening structurally.

The administration's trade policy has been through three phases in 18 months:

1. Phase 1 (2025): IEEPA tariffs — broad, aggressive, legally vulnerable
2. Phase 2 (Feb–Jul 2026): Section 122 bridge — temporary by design, buys time for permanent authorities
3. Phase 3 (post-July 2026): Section 232 + Section 301 regime — permanent, legally tested, sector- and country-specific

Phase 3 is being designed to survive judicial review. Unlike IEEPA (struck down by SCOTUS) and Section 122 (struck down by CIT), Sections 232 and 301 have decades of judicial precedent supporting presidential authority. The courts have consistently upheld tariffs imposed under these statutes.

The TD Economics team expects U.S. trade policy to stabilize later in 2026, but notes that "the possibility for structurally higher trade policy uncertainty moving forward" remains. Even if average tariff rates don't rise materially from current levels, persistent policy uncertainty is likely to keep businesses cautious.

The next major date after July 24? November 2026, when the one-year U.S.-China tariff truce expires. And July 1, when the mandatory USMCA six-year review must be completed — a process that will determine whether the agreement extends for 16 years or begins a sunset countdown.

Preparing for the New Normal

The importers who thrive through tariff transitions aren't the ones who predict the future perfectly. They're the ones who build systems flexible enough to handle multiple outcomes.

The July 24 expiration is not an event — it's a phase transition. The administration has telegraphed clearly that replacement tariffs are coming. The only questions are timing, rate levels, and product scope. Those are the variables you should be modeling right now.

TariffLens tracks all active Section 232 and 301 investigations, maps HTS codes to pending tariff actions, and flags products in your portfolio that face transition risk. If you're still manually checking the Federal Register for updates, you're already behind.

This article is for informational purposes only and does not constitute legal, tax, or customs advice. Consult a licensed customs broker or trade attorney for guidance specific to your situation.