US Section 122 of Trade Act of 1974 Expires; Replacement Tariffs Push Effective Rate to 11.8%, China to 27.2%

The US Section 122 of the Trade Act of 1974 expired on July 24, 2026, ending its use as an interim tool during the invalidation of International Emergency Economic Powers Act (IEEPA) tariffs. The US has activated multiple replacement tariff arrangements. The US Trade Representative launched two parallel Section 301 investigations earlier this year: one targeting forced labor enforcement in 60 trade partners, and another covering industrial overcapacity in 16 major economies. The forced-labor Section 301 tariffs took effect on July 24, imposing a 12.5% additional duty on 46 economies and a 10% additional duty on 14 economies, covering over 99% of total US imports. The overcapacity Section 301 investigation remains in the comment period, focusing on steel, automobiles, and new energy equipment. Separately, a Section 301 investigation on Brazil has concluded, with a 25% tariff on most Brazilian goods effective July 22. Other ongoing Section 301 investigations involve Germany, the European Union, China, and Vietnam, among others. On Section 232, tariffs that have been implemented or announced cover steel, aluminum, timber, semiconductors, automobiles, and pharmaceuticals, while investigations continue on critical minerals, commercial aircraft, polysilicon, unmanned aerial vehicles, and industrial robots. Section 338 was used for the first time on July 20, imposing a 50% punitive tariff on Canadian imports of automobiles and parts, alcoholic beverages, clothing, and furniture, effective August 19. The current US weighted average effective tariff rate stands at approximately 11.3%. After the expiry of Section 122, it dropped to 8.3%, and following the implementation of new tariffs, it has risen back to 11.8%. China's average tariff rate increased from 25.9% to 27.2%, and Canada's from 5.3% to 7.8%. The IEEPA-related tariffs were ruled illegal, requiring a refund of $166 billion, of which $81 billion had been refunded as of May-June.