Here is the basic shape of Section 122 as of June 1. The administration invoked it on February 20, the same day the Supreme Court struck down IEEPA, as a backup plan to keep a 10% across-the-board surcharge on most imports while a more permanent replacement was built. It took effect on February 24. It has a statutory ceiling of 15% and a statutory expiration of 150 days, putting the lights-out moment at 12:01 a.m. on July 24. That is roughly eight weeks from now.
The Court of International Trade has already ruled the tariff unlawful. The Federal Circuit has stayed that ruling. The administration has appealed. Congress has done effectively nothing. Section 301 investigations meant to replace Section 122 are in motion but not yet at the action phase. Everything that happens between now and late July depends on which of those moving pieces lands first.
What is Section 122
Section 122 of the Trade Act of 1974 was written in response to the collapse of Bretton Woods. It authorizes a temporary import surcharge of up to 15% for up to 150 days to address “large and serious United States balance-of-payments deficits.” Before this year, no president had ever used it. There is a reason for that: the statute was built for a 1970s monetary problem that mostly stopped existing once exchange rates began floating.
The administration used it anyway, citing the U.S. goods trade deficit and current account deficit as the qualifying conditions. The current surcharge is 10% on most imports, with USMCA-qualifying goods exempted, certain natural resources and fertilizers excluded under Annex II, and Section 232-covered goods generally not stacked on top. The HTSUS line is 9903.03.01.
What the court said
On May 7, a divided three-judge panel held in Oregon v. United States and Burlap and Barrel, Inc. v. United States that the Section 122 proclamation was invalid. The reasoning was technical but worth understanding. Section 122 requires “large and serious balance-of-payments deficits,” and the court read that phrase the way Congress used it in 1974, when “balance of payments” referred to specific concepts rooted in the basic balance, liquidity, and official settlements. None of those is the same as a goods trade deficit or a current account deficit. The court rejected the substitution.
The court also declined to issue a nationwide injunction. Relief went only to the three plaintiffs that asked for it: Burlap and Barrel, Basic Fun, and the State of Washington. Every other importer was, and still is, paying.
The stay
The Department of Justice filed notice of appeal on May 8 and an emergency motion for a stay on May 11. On May 12, the Federal Circuit issued an administrative stay, freezing the CIT’s order while it considers a longer-lasting stay pending appeal. On May 20, the CIT separately denied the government’s motion to stay its own enforcement, finding that the government had not shown irreparable harm or likelihood of success on the merits. The Federal Circuit’s stay, however, remains in place, and that is the one that matters for collection. Section 122 duties are still being assessed on every importer who is not a named plaintiff. The Federal Circuit could rule on the longer stay at any point now.
The July 24 cliff
This is the part that does not depend on the courts. The President cannot extend Section 122 by executive action. The only mechanisms that keep the 10% global tariff in place past July 24 are a congressional vote to extend, or a complete replacement under different statutory authority. Neither is on a confident timeline.
The replacement strategy is Section 301. On March 11 and 12, USTR initiated two investigations: one into structural excess manufacturing capacity across 16 economies including China, the EU, Mexico, Japan, India, Korea, Vietnam, and Taiwan, and a second into enforcement of forced labor import bans across roughly 60 economies covering close to 99% of U.S. imports. Comment closed April 15. Hearings ran through early May.
Section 301 is the durable instrument the administration actually wants. It has no rate cap, no time limit, and a long appellate track record of being upheld. The catch is that Section 301 is a statutory process, and even on an accelerated timetable it requires findings, public input, and formal action. USTR has signaled it intends to land Section 301 tariffs in time to take over from Section 122 at the July 24 expiration. Signaling is not the same as having the tariffs in place.
What the next eight weeks look like
The most likely outcome is that the Federal Circuit’s stay holds, Section 122 collections continue through July 24, and the administration rolls out Section 301 tariffs on or near that date, targeting most of the same imports at comparable or higher rates. From a landed-cost perspective the transition feels operationally seamless, but the legal authority underneath the tariff line on your entry summary changes. Plan for the 10% to continue in some form.
Less likely but possible: the Federal Circuit lifts the stay or rules on the merits before July 24, creating a refund-rights situation for non-plaintiff importers similar to the IEEPA refund process now running through CAPE. This is what most of the trade bar is watching for.
Least likely: Congress passes an extension, or the tariffs simply lapse with no Section 301 substitute ready, producing a brief tariff vacuum on categories not covered by Section 232.