When a client who sources rattan furniture out of Vietnam called me at 7 a.m. this week, he opened with one question: "Does my landed cost drop on Friday?" I had to tell him the honest answer, which is the answer most importers do not want to hear. His cost is more likely to go up. That single conversation captures the whole problem with the July 24 tariff cliff. Everyone assumes a surcharge expiring means a bill shrinking. The mechanics say otherwise.
So here is the practitioner's version of the July 24 handoff: what the replacement actually looks like, and the concrete steps I am running through with every client lane before the deadline.
What Section 122 actually did, and why it dies July 24
Section 122 of the Trade Act of 1974 lets the President impose a temporary import surcharge to address a balance-of-payments emergency. The statute caps that surcharge at 15% and, critically, limits it to 150 days. The administration set the rate at 10% across the board and used it to replace the earlier IEEPA-based tariffs on 24 February 2026. Holland & Knight
Count 150 days from that effective date and you land on Friday. The surcharge sunsets at 12:01 a.m. ET on 24 July 2026 by operation of law. This is not a policy choice anyone gets to revisit. The President cannot extend Section 122 unilaterally, and Congress has not passed legislation to keep it alive. USTR The clock simply runs out.
Under the surcharge, the rule was clean. Goods that qualified under USMCA stayed duty-free. Everything else carried the flat 10%. When that layer disappears, non-qualifying goods do not fall to zero. They fall back toward standard Most-Favored-Nation rates, which for a lot of manufactured goods sit in the 3-4% range depending on the tariff line. CBP For a narrow window, before any successor duty is finalized, some entries could genuinely see a lower rate. That window is the trap, and I will come back to it.
The Section 301 successor: no cap, no clock
Here is the part that reframes the whole "expiration" narrative. The administration is not letting the 10% simply vanish. It is moving a Section 301 successor duty into position, also under the Trade Act of 1974, with a proposed rate of roughly 12.5% covering about 46 countries. The reported list includes China, Vietnam, India, Thailand, Japan and South Korea. USTR
Treat both of those figures as proposed and subject to finalization. USTR issued its determination on 2 June and held a public hearing on 7 July, and the final rate and country list land in a Federal Register notice that, as of late July 2026, importers are still watching for. The 12.5% number could shift; reporting has described a band as low as 10%. USTR
Why Section 301 instead of another emergency measure? Because it solves the exact weakness that just killed Section 122. Section 301 has no statutory rate ceiling and no 150-day fuse. It is the instrument you reach for when you want a tariff that stays. That is a deliberate structural swap from a temporary tool to a durable one, and it tells you the direction of travel: this is not a wind-down.
What you actually pay after July 24
The net effect is not uniform. It depends entirely on origin and USMCA status. For countries that only ever paid the 10% Section 122 baseline, a 12.5% successor is a straight increase. Vietnam and Cambodia sit in that bucket, and so does Thailand. Mexico and Canada goods that qualify under USMCA rules of origin were duty-free before and, on the surcharge question alone, stay duty-free after.
Let me put the lanes I am modeling into one place.
| Origin / USMCA status | Before 24 July (Section 122) | After 24 July (direction) |
|---|---|---|
| Mexico or Canada, USMCA-qualifying | Duty-free | Duty-free on this axis (watch the separate USMCA review) |
| Mexico or Canada, non-qualifying | 10% surcharge | Reverts toward MFN ~3-4%, then Section 301 if the origin is listed |
| Vietnam | 10% | Proposed ~12.5% if finalized — net increase |
| Thailand | 10% | Proposed ~12.5% — net increase |
| India | 10% | Proposed ~12.5% if listed |
| Japan / South Korea | 10% | Proposed ~12.5% if listed |
| China | 10% baseline | ~12.5% successor stacking on pre-existing Section 301 lines |
| Brazil | 10% | Section 301 ~25% (separate track; effective 22 July 2026, in-transit grace to 29 July) |
Run the arithmetic on a real lane and it stops being abstract. Take that Vietnam furniture importer, roughly $500,000 in FOB value per shipment. At the 10% surcharge, his duty exposure on that value is about $50,000. At a finalized 12.5% successor, it becomes $62,500. That is $12,500 more per shipment, on a lane he assumed was about to get cheaper. Multiply across his annual volume and the "expiration" costs him money.
The China picture is messier and I flag it as such with clients. China already carries Section 301 duties from the earlier lists, so a new successor layer would sit on top of what is already there rather than replace it. The exact stacked outcome for a given HTS line is something I verify tariff-line by tariff-line, not by rule of thumb.
Vietnam deserves the same caution for a different reason. It is the subject of several concurrent Section 301 investigations and carries one of the largest goods-trade surpluses with the United States, which puts it near the top of the stacking-risk list rather than at the simple 10-to-12.5 story. USTR If a meaningful slice of your book comes from Vietnam, model the downside where more than one duty layer lands, not just the headline successor rate.
The timing question at 12:01 a.m. ET
This is where an entry filed at the wrong hour can cost you. The surcharge lapses at 12:01 a.m. ET on 24 July. If the Section 301 successor is not finalized and effective at that same instant, there is a genuine gap where non-qualifying goods clear at the lower MFN rate instead of any 10% or 12.5% figure.
I have watched enough tariff transitions to distrust clean handoffs. Two things can happen. Either the successor duty is timed to take effect the moment the surcharge dies, closing the gap, or there is a short seam where clearance timing genuinely changes the landed cost. For goods already on the water and arriving that week, the entry date matters. I am telling clients not to rush a filing on a guess, but to have the paperwork staged so they can move on the day the Federal Register notice actually posts. Speculating on a favorable gap that may last hours is not a strategy. Being ready is.
One related point worth checking separately: importers who paid the earlier IEEPA tariffs before the February switch may have refund questions of their own, which run on a different legal track than anything happening this week. I walk through that in the IEEPA tariff refund guide rather than muddy the Section 122 timeline here.
Brazil is its own animal
Do not fold Brazil into the 46-country successor conversation. The Section 301 action on Brazil was published on 15 July 2026 and its roughly 25% duty takes effect on 22 July 2026, two days before the Section 122 surcharge even sunsets, with a narrow in-transit grace period that runs out on 29 July 2026. USTR It sits on a separate track from the ~12.5% successor being proposed for the broader list. If you have Brazilian goods on the water this week, check the in-transit provisions before that 29 July cutoff. If you source out of Brazil, your July math is not "10% becomes 12.5%." It is a materially larger number, and it deserves its own landed-cost model. I have one client on a Brazilian lane who is already re-quoting downstream contracts because a 25% duty does not absorb quietly into margin.
Your lane-by-lane checklist for the next two weeks
This is the exact sequence I am working through, and none of it requires guessing at the final rate. It requires knowing your own book.
- Recompute landed cost per lane, not per company. A blended average hides the lanes that just got more expensive. Model each origin against both the MFN fallback and the proposed ~12.5% successor.
- Verify USMCA rules-of-origin qualification for every Mexico and Canada SKU. Duty-free status hangs entirely on this, and I still find goods that were riding the 10% surcharge because nobody re-ran the origin analysis. If they qualify, they are duty-free on the surcharge axis; if they don't, they revert toward MFN and then face Section 301 if the origin is listed.
- Pull and review your HTS classifications. The MFN fallback rate is line-specific. A wrong classification that did not matter at a flat 10% suddenly matters a lot when the real rate could be anywhere from ~3% to ~12.5%.
- Decide entry timing deliberately for shipments arriving the week of 24 July. Know your entry dates, stage the documents, and move when the notice posts.
- Watch the USTR Federal Register notice for the final Section 301 list and rate. Until that publishes, the 12.5% and the 46-country count are proposed, not settled. Assign someone to watch it daily.
- Confirm who is legally on the hook. The importer of record owns the duty liability and the classification accuracy, and this is a bad quarter to be fuzzy about that role.
Duty-deferral tools worth a second look
When a rate is about to rise and the final number is still uncertain, the timing of when duty is assessed becomes a lever you can actually pull. I am not going to re-explain the mechanics here, because they deserve their own treatment, but two options move to the front of the list this month.
A bonded warehouse lets you land goods and defer the duty payment until you withdraw them for consumption, which buys time and can matter when a rate is mid-transition. The full mechanics are in the bonded warehouse deferral strategy. A foreign-trade zone goes further for some operations, letting you defer duty and, in certain cases, avoid it entirely depending on what you do with the goods inside the zone; that is covered in the foreign-trade zones guide. Neither is a magic eraser. Both are timing and structuring tools, and whether they pencil out depends on your volume and your holding pattern.
How this differs from the USMCA review noise
One clarification, because clients conflate the two constantly. The USMCA six-year joint review happened on 1 July 2026. The US declined to extend the agreement for a fresh 16-year term, and that is not the same as tearing it up: USMCA stays in full force, currently out to at least 2036, but it now moves into an annual review cycle that adds its own layer of uncertainty for North American supply chains. That outcome is a separate question from the Section 122 sunset. The review is about the future of the agreement itself and how North American trade gets renewed. What we are discussing here is a surcharge lapsing and a Section 301 duty replacing it. They interact, since USMCA qualification still governs duty-free treatment, but they are not the same event. If your question is really about the agreement's renewal path, that lives in the USMCA joint review scenario guide, not in this playbook.
If I had to compress two weeks of client calls into one recommendation, it is this: stop treating 24 July as a discount and start treating it as a rate change with an uncertain final number. Pull your top five lanes by duty exposure this afternoon, model each one against both the MFN fallback and the proposed ~12.5% successor, confirm your USMCA qualifications before you assume anything is duty-free, and stage the entries for anything arriving that week. Do not file on a bet about a pricing gap that may last a few hours. Assign one person to watch the Federal Register notice, and price your Brazil lanes on the ~25% reality rather than the 10% you have been paying. The importers who get hurt this month will be the ones who assumed a sunset meant relief. The ones who do the lane-level math today will simply know their number the morning it changes.