When the Supreme Court struck down IEEPA tariffs in February 2026, the administration pivoted to Section 122 of the Trade Act of 1974 โ a Cold War-era provision allowing the President to impose temporary tariffs of up to 15% for 150 days. That clock is ticking. The tariffs expire in late July 2026 unless Congress votes to extend them.
What Is Section 122?
Section 122 was designed for genuine balance-of-payments crises. It was last used in 1971 when President Nixon imposed a 10% import surcharge during the collapse of Bretton Woods. Key constraints: maximum 15% rate, 150-day duration without Congressional approval.
The Five Scenarios
1. Congress Extends (30% probability)
Requires 60 Senate votes. Bipartisan support exists in principle but specific rates and scope are contentious.
2. Section 301 Replacement (25%)
USTR is conducting accelerated Section 301 investigations. These have no time limit but require targeting specific unfair trade practices.
3. New Section 232 Declarations (20%)
Commerce has initiated Section 232 investigations on semiconductors, pharmaceuticals, and critical minerals.
4. Tariffs Simply Expire (15%)
The effective rate would drop from 8.9% to ~5-6%. This would be the largest de facto tariff cut since 2026 began.
5. Negotiated Trade Deals (10%)
The Japan deal (September 2025) is the template. Similar agreements could selectively reduce tariffs.
What Expiry Means for Prices
If Section 122 expires, households could save $500-$800/year. Non-China electronics drop 10-15pp, EU food and wine drop 15-20pp, Canadian energy returns to USMCA duty-free treatment.
Key Takeaways
- โ Section 122 tariffs (10-15%) expire in late July 2026 without Congressional action
- โ Five possible scenarios range from Congressional extension to full expiry
- โ If tariffs expire, households could save $500-$800/year
- โ The administration is pursuing Section 301 and Section 232 alternatives as backup
- โ Congressional math is uncertain โ 60 votes in the Senate is a high bar