The U.S. tariff landscape has shifted again fast, decisively, and with direct consequences for every importer operating into the United States. Following the Supreme Court’s rejection of the Administration’s IEEPA based “reciprocal tariff” program, the White House has executed a rapid pivot to a different legal authority: Section 122 of the Trade Act of 1974, imposing a 15% temporary import surcharge on most goods beginning February 24.
This is now the highest across the board tariff action in modern U.S. history.
But the headline number 15% is not the real story. The real story is the long list of products that will not be subject to Section 122, and the complex stacking rules that determine whether a firm pays 0%, 15%, or 15% plus existing 232 or 301 duties.
At Peacock Tariff Consulting, we are advising clients that this is not a “tariff announcement.” It is a classification event, a margin risk event, and a compliance event. The firms that map their exposure now will protect their cost base. The firms that assume “15% across the board” will get blindsided.
Why Section 122 and Why 15%?
Section 122 allows the President to impose temporary import surcharges of up to 15% for up to 150 days to address balance of payments problems. With the Supreme Court closing the door on IEEPA, Section 122 became the only remaining tool capable of delivering a broad, immediate tariff action without congressional approval.
The Administration has justified the move by pointing to:
- A goods trade deficit exceeding $1.2 trillion
- A current account deficit approaching 4% of GDP, the highest since 2008
- A negative primary income balance for the first time in more than 60 years
Whether one agrees with the macroeconomic framing or not, the operational reality is clear: a 15% surcharge now applies to most imports unless specifically excluded.
The 15% Surcharge Is Broad but Not Universal
The proclamation includes extensive exclusions far more than most importers expect. These exclusions are not marginal; they cover entire categories of goods that many firms assume will be hit by the 15%.
Based on the Administration’s published materials, the following categories are excluded from Section 122:
- Critical minerals
- Energy and energy products
- Pharmaceuticals and pharmaceutical ingredients
- Certain electronics and high tech components
- Aerospace products
- Select agricultural goods, including beef, tomatoes, and oranges
- Passenger vehicles, certain trucks, buses, and related parts
- Informational materials (books, printed matter)
- Donations and accompanied baggage
- Goods qualifying under USMCA
- Textiles and apparel from CAFTA DR countries
- All goods already subject to Section 232 tariffs (to avoid double charging)
This list is long enough that no importer should assume exposure without checking their HTS lines.
Section 232 Tariffs Remain Fully in Force
Section 122 does not override or replace existing tariff regimes. It sits on top of them.
Section 232 tariffs covering steel, aluminum, copper, softwood lumber, automobiles, trucks, and parts remain fully active. Goods already subject to Section 232 are excluded from the 15% surcharge, but the underlying 232 duties still apply.
For metals, automotive, and construction supply chains, this distinction is critical. A product may be exempt from Section 122 but still face significant 232 duties.
Section 301 Tariffs on China Also Remain Unchanged
Nothing in the Section 122 proclamation modifies the Section 301 China tariff regime. In fact, the Administration has signaled new Section 301 investigations, suggesting potential expansions later in 2025.
This means:
- Chinese origin goods already subject to 301 duties will continue to face them.
- Many will face 301 + 15% unless specifically excluded.
- The tariff stack is now more complex than at any point since 2018.
For importers sourcing from China, this is a moment to revisit landed cost models, supplier contracts, and pricing strategies.
The Real Risk: Misclassification and Misinterpretation
The greatest financial risk right now is not the 15% surcharge it’s the assumption that it applies universally. The exclusion list is where the savings are. The stacking rules are where the danger is.
Every importer must map each HTS line into one of four buckets:
- Excluded from Section 122 (0% surcharge)
- Subject to Section 122 only (15%)
- Subject to Section 122 + Section 301 (15% + China duties)
- Subject to Section 232 only (232 duties, no 122)
This mapping determines whether a firm is overpaying, underpaying, or exposed to penalties.
Operational Priorities Before February 24
1. Conduct a line by line HTS review
This is the single most important action. The exclusion list is detailed, and classification accuracy will determine duty liability.
2. Confirm preferential origin eligibility
USMCA and CAFTA DR origin can eliminate the surcharge entirely.
3. Update landed cost models immediately
Pricing, margin, and contract terms may need rapid adjustment.
4. Communicate with suppliers and logistics partners
Ensure all parties understand the surcharge, the exclusions, and the in-transit rules. Goods loaded before Feb 24 and entered before Feb 28 are exempt.
5. Identify refund and duty recovery opportunities
Misapplied duties especially where exclusions apply can be recovered through protests or post summary corrections.
6. Prepare for potential escalation
Section 122 allows up to 15%. The Administration is already at the ceiling. The next move could be duration extensions or targeted expansions.
What This Means for SMEs and Chambers
For SMEs, the difference between being excluded and being included in Section 122 can determine whether a product line remains viable. For Chambers, this is a moment to help members understand their exposure and avoid unnecessary cost.
Peacock Tariff Consulting is already mapping HTS lines against the exclusion list, modeling exposure scenarios, and preparing duty recovery strategies for clients ahead of the February 24 implementation.
This is not a passive moment. It is a classification moment, a compliance moment, and a margin protection moment.