The Section 122 surcharge is a US tariff measure applied to goods that do not originate in a USMCA-qualifying country. It stacks on top of the existing Most-Favored-Nation (MFN) duty rate set by the Harmonized Tariff Schedule. The current schedule raises the Section 122 rate to 15% effective February 22, 2026, which substantially increases the landed cost of goods sourced from China, Vietnam, India, and other non-North-American manufacturing hubs.
How it works in practice
A practical example: a brand imports yoga mats with HS code 3918.10 from China. The MFN duty on that code is roughly 5.3%. With the Section 122 surcharge applied at the new 15% rate, the total duty on that shipment becomes 20.3%. On a $100,000 shipment, that’s $20,300 in duty rather than the $5,300 the brand would have paid without the surcharge. If those same yoga mats were sourced from a USMCA-qualifying producer in Mexico or the US, the duty would drop to 0%.
The surcharge is collected at entry by the customs broker, paid to CBP, and added to the landed cost of the goods. There’s no rebate, no refund, and no way to claw it back unless the importer can prove a misclassification or origin error.
Why it matters
Section 122 is the policy lever that has reshaped North American sourcing decisions in 2025-2026. Brands that previously sourced everything from Asia are now actively running cost-of-goods scenarios on near-shoring to Mexico, FTZ structures to defer duty, and bonded warehouse arrangements to delay the surcharge. The 15% rate compounded with existing MFN duties is enough to wipe out the margin advantage of Asian sourcing for many product categories.
Common misconceptions
- Section 122 is not a one-time fee. It’s a per-shipment ad valorem duty applied to every entry.
- USMCA qualification does exempt goods from Section 122, but the qualification rules are strict. Origin claims need real documentation.
- The surcharge is not deferrable indefinitely. Even in an FTZ, the surcharge applies when goods leave the zone for US commerce.