Tariff Watch: Section 122 Expires, Section 301 Takes Over, and Novel Canadian Tariffs

Welcome to the latest edition of Tariff Watch, the weekly series from J.M. Rodgers that delivers quick hits on the latest in US trade policy. This week is shaping up to be one of the most consequential of 2026, with a new punitive tariff on South America taking effect on Wednesday and the Section 122 global surcharge set to expire on Friday, while sweeping changes to cross-border e-commerce are on the way.

With all that going on, there’s no time to waste. Let’s get into the critical news you need to know this week:

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What’s New

• The Section 122 global surcharge officially expired: As of 12:01 a.m. EST on Friday, July 24, the temporary 10% global tariff imposed under Section 122 of the Trade Act of 1974 lapsed. Without congressional intervention to extend it, the 150-day tariff has been repealed.
• Section 301 forced labor tariffs take effect: At the same time on Friday, the US Trade Representative’s finalized Section 301 tariffs went into effect. The duties target 60 global economies for perceived failures in enforcement of forced labor laws. Tariffs of 10% or 12.5% now apply to up to 99% of US imports, effectively replacing the expired Section 122 surcharge.
• Admin imposes Section 338 tariffs on Canada: On July 20, President Trump issued three proclamations imposing 50% tariffs on approximately $20 billion worth of Canadian imports under Section 338 of the Tariff Act of 1930. The duties, targeting dairy, motor vehicles, and alcoholic beverages, will take effect on August 19. This is the first time in history a US president has invoked this specific authority.
• DOJ launches a dedicated trade enforcement section: The Department of Justice established the Global Trade & Commerce Enforcement Section (GTCES) to aggressively prosecute criminal customs fraud and trade violations. Concurrently, Customs and Border Protection (CBP) began deactivating Importer of Record (IOR) accounts that have not filed an entry in the past 366 days under the new “Strengthening Customs Enforcement” executive order.

Who’s Impacted

This week’s stories will have ripple effects across the entire supply chain:

• Global importers: The expiration of Section 122 tariffs and the implementation of the replacement Section 301 duties didn’t relieve any financial burdens for importers, but simply changed the legal frameworks governing goods originating from the 60 targeted economies.
• Canadian supply chains: US Importers of Canadian motor vehicles, cheese, and alcohol face a devastating 50% margin hit mid-next month. The targeted nature of these proclamations is designed to maximize pressure on specific Canadian industries.
• Infrequent importers: Companies that only occasionally import goods risk having their IOR status deactivated by CBP, which will prevent them from filing future entries until the account is formally re-activated.

What We’re Seeing

With the new US tariff policy in place, proactive supply chain leaders are adjusting quickly:

• Businesses are mapping the Section 122-to-Section 301 transition: Trade compliance teams are urgently auditing their supply chains to see which origins have caught a break. While imports from the 60 economies hit by the new forced labor tariffs remain subject to 10% or 12.5% duties, imports from countries not on the USTR’s list have just seen their 10% Section 122 surcharge vanish entirely.
• Importers are rushing Canadian freight: With the unprecedented 50% Section 338 tariffs taking effect on August 19, businesses that import Canadian motor vehicles and alcoholic beverages are aggressively accelerating their purchase orders. They are attempting to clear as much inventory as possible before the mid-August deadline.
• Companies are initiating internal compliance audits: In response to the DOJ’s new GTCES division and the Trade Fraud Task Force hitting $1 billion in recoveries, corporate legal teams are treating customs compliance as a high-risk criminal liability, rather than just an administrative function. Many are initiating rigorous internal audits to ensure their valuation and classification practices can withstand federal scrutiny.

What We’re Monitoring

Even though the week was packed with new happenings, we continue to monitor these ongoing stories:

• The Brazil 25% tariff rollout: Following the July 22 implementation of the 25% Section 301 tariff on Brazilian imports, we are monitoring the first wave of entries as they clear through ACE. We are specifically looking for any friction with HTS classification or CBP scrutiny regarding the carved-out exemptions for Brazilian agricultural and aerospace goods.
• Postal logistics disruptions: With July 24 also marking the date when standard duties applied to postal shipments and the Delivered Duty Paid (DDP) threshold rose to $2,500, we’re keeping an eye on the nation’s ports for any bottlenecks or clearance delays affecting direct-to-consumer e-commerce parcels.
• Phase 3 CAPE refunds: As the July launch window for Phase 3 of the CAPE portal closes, we continue to monitor the Court of International Trade. We are watching for any legal developments that might unlock these historic IEEPA refunds for the broader importing community, rather than just active plaintiffs.

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Sources

• Section 122 Tariffs Expire, Honigman
• Tariffs Aimed at Over 80 Countries Go Into Effect, New York Times
• 50% Tariffs on Canada in First Use of Section 338, White & Case
• Fraud Task Force Signals New Era of Trade Enforcement, Akin Gump