What it is:
Section 122 of the Trade Act of 1974 authorizes the President to impose temporary import surcharges of up to 15 percent or quotas for no more than 150 days when the United States faces fundamental international payments problems, such as a serious balance-of-payments deficit or rapid dollar depreciation. It was enacted after President Nixon used the Trading with the Enemy Act (TWEA) to impose a temporary 10 percent import surcharge in 1971. Section 122 thus represents Congress's effort to codify a narrower, time-limited version of that emergency tariff authority, intending it as a short-term tool to stabilize the dollar, not as a long-term protectionist policy.

What changed:
Section 122 remained unused for decades after the U.S. shifted to floating exchange rates in 1973, making balance-of-payments tariffs largely obsolete. In February, however, the Trump administration became the first to invoke the provision, imposing a 10 percent tariff on most imports after earlier tariffs under emergency economic authorities were invalidated. In May, the Court of International Trade ruled that the administration exceeded its authority, finding that modern trade deficits and industrial-policy concerns did not meet the statute’s original legal threshold.

How it works now:
Section 122 allows the President to impose temporary, broadly applied tariffs or import restrictions without prior investigation or consultation. Measures generally expire after 150 days unless extended by Congress. Following the recent court ruling, however, the scope of Section 122 is legally uncertain, and future uses are likely to face close judicial scrutiny. At the same time, the administration has already begun pursuing alternative tariff authorities, including Section 301, investigations tied to forced labor and foreign manufacturing practices.

Implications for international exporters:
If courts ultimately restrict the use of emergency economic powers for tariffs, future administrations could attempt to use Section 122 as a temporary stopgap for broad import tariffs. However, the recent court ruling increases the risk of injunctions, litigation, and potential tariff refunds if courts determine the statutory requirements have not been met. Exporters should therefore expect continued tariff uncertainty, particularly as administrations increasingly rely on alternative trade authorities such as Section 301.