Section 122 Is Dead, Section 301 Took Its Place Overnight: 10-12.5% Tariffs on 60 Countries Effective July 24

## Section 122 Is Dead, Section 301 Took Its Place Overnight: 10-12.5% Tariffs on 60 Countries Effective July 24

At 12:01 a.m. Eastern this morning, two things happened at the same instant. The 10% Section 122 universal surcharge - in force since February 24 - expired by operation of law, exactly 150 days after it took effect, because Congress never passed the extension the statute requires. And a new tariff layer took effect in its place: additional Section 301 duties of 10% or 12.5% on imports from roughly 60 countries that together account for about 99% of US imports, imposed on USTR's finding that those trading partners have failed to adequately enforce prohibitions on goods produced with forced labor.

There was no gap. Importers who hoped to slip entries into a brief tariff-free window between the old layer and the new one never had that window: USTR announced the final action on Thursday afternoon, July 23, with the effective time set to the precise minute Section 122 died. The average effective US tariff rate barely moved overnight - but the legal foundation under it changed completely, and for individual importers the math moved by as much as 12.5 points in either direction depending on origin country and product.

This is the follow-through on the proposed action we covered after the July 7 hearing. Here is what the final action says, what changed from the proposal, and what to do about it this week.

What the Final Action Says

The action lands almost exactly where the June 2 proposal pointed: a two-tier rate structure applied at the country level. The 10% tier covers economies that maintain their own forced-labor import prohibition, have committed to one through an Agreement on Reciprocal Trade with the United States, or maintain a partial regime; the 12.5% tier covers economies in scope with no qualifying prohibition. Announcing the action, US Trade Representative Jamieson Greer said "it's well past time for our trading partners to do the same," referring to the century-old US forced-labor import ban.

The most important change from the proposal: tier assignments moved, and they moved because countries acted. India was proposed at 12.5% in June - the final action puts it at 10%, after India amended its foreign trade policy to include a forced-labor import ban. A senior administration official confirmed other countries tightened enforcement and qualified for the lower rate between June and this week. The tier structure is a live policy lever, exactly as designed.

Confirmed carve-outs in the announcement: certain products including oil and gas and fertilizer are exempt, and - critically for North American supply chains - goods that qualify for duty-free treatment under USMCA are spared. That makes USMCA qualification worth 10 to 12.5 points of entered value on Canadian and Mexican cargo, on top of the MFN preference it already carries.

One discipline note before you re-price anything: press tier lists shifted repeatedly between the proposal and the final action, and India proves assignments moved late. Verify your supplier countries' tiers against the Federal Register annex with your broker - not against a June news story, and not against this article's summary of one.

How This Is Different From Section 122

The new layer is not a renamed version of the old one. Four differences matter.

No expiration date. Section 122 carried a hard 150-day statutory limit - that is why it died this morning. Section 301 actions have no sunset; they remain in force until modified or terminated. The countdown-clock dynamic that defined the last five months is over.

Litigation-tested authority. The IEEPA tariffs died at the Supreme Court in February. Section 122 spent its final weeks under a CIT ruling and a Federal Circuit stay. Section 301, by contrast, is the authority behind the China tariffs that have survived years of court challenges. Importers should not plan around this layer disappearing in court.

Tiered by country, not flat. Section 122 was a single 10% on nearly everyone. The new action distinguishes 10% and 12.5% tiers by each country's own enforcement posture - and countries can legislate their way down.

A different exemption map. Section 122 exempted USMCA-qualifying goods and Section 232 products. The new action keeps the USMCA exemption and adds product-level carve-outs (oil and gas, fertilizer). Whether your specific Section 232-covered lines interact differently under the new action is an annex question - check it entry line by entry line.

The Entry Math Changed at Midnight

For a given SKU, this morning's change nets out very differently by origin:

12.5%-tier origins: the special-duty layer went from 10% to 12.5% - a net increase of 2.5 points versus Wednesday.

10%-tier origins: a wash on rate - though the legal character changed from a temporary surcharge to an indefinite duty.

Exempt products and USMCA-qualifying goods: a clean 10-point drop, since the Section 122 layer disappeared and nothing replaced it.

Already-stacked origins: the new line is additional. China-origin goods on Section 301 Lists 1-3 keep the existing 25% and add the new forced-labor line on top. Brazilian goods keep the 25% Brazil-specific Section 301 duty that took effect July 22 and add the forced-labor line per Brazil's final tier assignment - stack the lines, do not average them.

Run your actual numbers both ways in the Tariff Stacking Calculator and translate the result into per-unit cost with the Landed Cost Calculator. Importers reconstructing duty stacks by HTS line across many SKUs often use landed-cost software such as Zonos to automate the classification-and-rate work before modeling. (Disclosure: this is an affiliate link - FreightFigures may earn a commission if you sign up, at no additional cost to you. See our full affiliate disclosure.)

Three Things Still Moving

Tier assignments remain negotiable. India legislated its way from 12.5% to 10% in seven weeks. Expect more of the 60 to follow, and expect USTR to adjust assignments as they do. If a major supplier country of yours is at 12.5% and moving a forced-labor import ban through its legislature, the timing of your entries - and withdrawals from bond - has real money attached.

A second, bigger Section 301 wave is in the pipeline. USTR has an open investigation into whether 16 countries accounting for roughly 70% of US imports have overproduced goods and distorted global prices. That probe is not complete, but it is the same playbook: investigation, proposal, final action. The forced-labor tariffs are unlikely to be the last new layer of 2026.

Section 122 refunds are still live. The CIT ruled the Section 122 tariff unlawful in May; the Federal Circuit stayed that ruling in June; the appeal continues even though the tariff itself has now expired. If you paid the 10% surcharge between February 24 and this morning, file protests on liquidated entries within the 180-day deadline to preserve refund rights in case the appeal succeeds. Our Tariff Refund Calculator sizes what is at stake.

Importer Checklist for the First Week

1. Confirm your broker has the new 9903-series lines programmed before your next entry. The importers who lost money in April's Section 232 restructure were the ones whose brokers learned the new lines from rejected entries. Same risk, new lines, this week.

2. Pull the annex and verify every supplier country's tier. Not the proposal list. Not press reporting. The final annex, per country, with your broker initialing it.

3. Re-document USMCA qualification on North American cargo. Duty-free USMCA treatment now shields goods from a 10-12.5% layer. Rules-of-origin documentation that was worth a few MFN points last month is worth double digits today - and non-qualifying goods from Canada and Mexico pay the new line.

4. Re-run landed costs with the new stack, per SKU. The Duty & Tariff Calculator reflects the Section 122 expiration as of this morning; model the new 301 line on top for your tier.

5. Use bonded storage while the map settles. Duties are assessed at the rate in effect on the withdrawal date, not the arrival date. Goods received into a customs bonded warehouse now can sit while your supplier country legislates toward the 10% tier, while the overproduction investigation resolves, and while tier assignments move - and pay whatever the stack is on the day you choose to withdraw. In a regime with no sunset but visibly mobile tiers, that optionality is the cheapest insurance available.

The Bottom Line

The tariff-free gap importers gamed out for months never happened: Section 122 died at 12:01 a.m. and the forced-labor 301 layer was standing in its place before the first entry of the morning was filed. What replaced a temporary flat surcharge is an indefinite, tiered, litigation-hardened structure - one where the rate your cargo pays depends on your supplier country's legislative posture, and where a second wave covering 70% of imports is already under investigation.

The strategic shift is from countdown math to tier management: knowing which of your origins can move to 10% or exit scope, timing entries and withdrawals around those moves, and keeping goods under bond while the map redraws itself. For cargo moving through the Southeast, Charleston's bonded warehouse market sits minutes from the terminals - close enough to receive cargo under bond straight off the vessel and stage withdrawals to the day the math favors you.

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