The Section 122 Tariff Nobody Understood Is Now the Most Important Trade Number in the World

After the IEEPA ruling, Trump invoked Section 122 of the 1974 Trade Act to impose a 10% tariff on all imports. Here is what this obscure law does and why it expires in July.

Section 122 of the Trade Act of 1974 was designed as a temporary trade-adjustment tool: it allows the president to impose tariffs of up to 15 percent on all imports for a period of up to 150 days to address balance-of-payments deficits. It was written for a specific kind of crisis — the early post-Bretton Woods currency instability era — and has been rarely invoked in the 50 years since.

Trump's invocation of Section 122 immediately after the Supreme Court struck down IEEPA tariffs was legally prepared in advance — administration lawyers clearly anticipated the IEEPA ruling and had the alternative legal authority ready to deploy. The 10 percent Section 122 tariff on all imports went into effect the day the IEEPA ruling was announced, maintaining the tariff revenue stream without the gap that would have otherwise occurred.

The specific limitation that makes Section 122 tactically important and strategically constrained is the 150-day expiration requirement. After 150 days — which falls in late July 2026 — Section 122 tariffs expire unless Congress authorises their extension. This creates a specific political deadline: the Trump administration needs either Congressional action or a new legal authority to maintain any form of across-the-board tariff beyond the Section 122 window.

For the EU-US trade framework agreement, the Section 122 tariff creates complications. The framework deal was structured around specific tariff rates and legal authorities. The switch from IEEPA to Section 122 changes the legal basis without changing the stated rates, but the 150-day expiration creates uncertainty about whether the framework's tariff commitments will survive into the autumn.

For Europe, the practical impact: the 10 percent Section 122 tariff is below the 15 percent ceiling set in the framework agreement, meaning EU exporters are currently paying less than the agreed ceiling. The July expiration either produces a Congressional extension (maintaining the tariff at some level), a lapse back to pre-tariff rates, or a transition to a new legal authority — three very different outcomes whose uncertainty is itself economically disruptive.