Section 122 Expired July 24: New Section 301 Tariffs Explained for Contractors

Section 122 Expired July 24: What the New Section 301 Tariffs Mean for Contractors

By Virginia Viadas

The 10% global tariff that has sat on top of nearly every imported construction material since February expired at 12:01 a.m. Eastern on July 24, 2026 — and a replacement took effect the same minute. There was no gap and, for most contractors, no relief. What changed is the shape of the exposure: a flat surcharge became a tiered system that varies by country of origin, which means the procurement decisions you made in March may no longer be the cheapest ones.

What actually happened

Section 122 tariffs expired at 12:01 a.m. EDT on July 24, 2026, exactly 150 days from their February 24 effective date, and a replacement took effect at the same moment: new Section 301 duties of 10 to 12.5 percent. On July 23, the U.S. Trade Representative announced the new tariffs on imports from 60 foreign economies, after determining that the relevant governments failed to effectively enforce prohibitions on goods produced with forced labor. The duties took effect at 12:01 a.m. on July 24, with a narrow in-transit exception for goods loaded on the final leg of transit before the effective date. GingerControlHonigman

The two-tier structure is the operative detail. A 10% duty applies to goods from economies that have adopted rigorous forced-labor import prohibitions; the higher tier applies to those that have not. The EU and USMCA partners are largely insulated. Sterlinx Global LtdTariffstool

Sources: USTR announcement of July 23, 2026; White House proclamations of July 20, 2026; Section 232 rate structure as reported in the 2026 U.S. Construction Cost Outlook.

Why the net cost barely moved for most bids

Within an hour of the Section 122 expiration the new Section 301 regime was in place, and for many procurement teams the specific duty burden barely moved. If you were importing from a covered economy at 10% before, you may now be at 10% or 12.5% — a wash or a modest increase. The change that matters is directional: your rate is now a function of where the material came from, not a flat cost of importing anything. That distinction sits on top of a cost base already stretched, as our 2026 construction material cost analysis documented with BLS and ABC data. Z2Data

Three practical consequences:

1. Country-of-origin documentation just became a pricing input. Two identical loads of the same product now carry different landed costs depending on the mill.
2. Your February bids assumed a flat rate. Any fixed-price work priced between February and July embedded a 10% assumption that no longer describes reality for part of your material basket.
3. Substitution is now a real lever. Under a flat surcharge there was no origin arbitrage. Under a tiered system there is — and because USMCA partners are largely insulated, Mexican sourcing moves from a logistics conversation to a duty-avoidance one.

The August 19 problem nobody has priced

The bigger near-term risk isn't Section 301 — it's Section 338. On July 20, 2026, three proclamations invoked Section 338 of the Tariff Act of 1930, imposing a 50% ad valorem duty on select Canadian goods effective 12:01 a.m. Eastern on August 19, 2026, in the statute's first use in decades. The proclamations state the duties remain in effect indefinitely. Buchanan Ingersoll & Rooney

Critically, USMCA certification offers no relief on covered goods, and the duty applies to roughly $17.7 billion of Canadian trade, most of it at the full 50% rate. Reported coverage includes cement and furniture among other building-adjacent lines, and the duty stacks on top of other duties including AD/CVD. If cement is in your scope, cross-reference the exposure against the full properties and cost breakdown of cement products before you commit to a supplier. GlobaltradealertCustomsgenius

There is genuine ambiguity on wood. Wood Central reported that Canadian timber and lumber escaped the 50% tariff, with wood products named among the exclusions in the accompanying White House fact sheet. Other trade reporting has read the annexes differently. Until CBP guidance settles it, treat Canadian wood exposure as unresolved rather than safe. Wood Central

CBP's initial guidance also does not squarely address whether the new Section 301 duties stack with the 50% Section 338 tariffs. Honigman

What to do in the next 30 days

1. Pull every open PO with a Canadian origin and check it against the proclamation annexes before August 19.
2. Re-price any bid submitted between February and July that assumed the flat 10%.
3. Ask suppliers for country of origin in writing. Under a tiered regime, "steel" is no longer a single commodity.
4. Check your escalation language. Fixed-price contracts without tariff-adjustment clauses absorb all of this — and with nearly 500,000 unfilled positions already compressing margin, material exposure is the last place to carry uncovered risk.
5. Expect litigation, but don't budget around it. Section 301 has been a well-established basis for tariff action for more than four decades, and the Supreme Court recently declined to review an appeals decision affirming existing Section 301 tariffs, though challenges to the new duties are reasonably expected. Honigman

FAQ

Did construction material tariffs go away on July 24, 2026?
No. The 10% Section 122 global surcharge expired, but Section 301 forced-labor duties of 10% to 12.5% on roughly 60 economies took effect the same moment, and Section 232 metal and lumber tariffs were never affected.

What is the difference between Section 122 and the new Section 301 tariffs?
Section 122 was a flat surcharge on nearly all origins with a hard 150-day statutory limit. The Section 301 duties are tiered by country and tied to forced-labor enforcement findings, with no automatic expiration.

Does USMCA protect Canadian materials from the August 19 tariffs?
Not for goods on the Section 338 lists. USMCA certification does not exempt a listed good, and the duty stacks with other duties.

Is Canadian lumber covered by the Section 338 tariffs?
Reporting conflicts. The White House fact sheet was read as excluding wood products, but other analyses list wood lines as covered. Verify your specific HTSUS subheadings before August 19.

Should I lock in imported material now?
For anything with Canadian origin on the covered lists, yes — the effective date is August 19 and the duties are described as indefinite.