The Trump administration's Section 122 tariffs are set to expire at 12:01 a.m. Eastern Time on July 24, 2026, but American importers should not expect relief. A new Allianz Research report warns that the transition to Section 301 and Section 338 tariffs will push the U.S. average import tariff rate to 12.4 percent, exceeding even the heights reached during the 2025 trade war.

The analysis, published July 22, 2026, paints a picture of what economists are now calling "Trade War 3.0" — a permanent tariff architecture replacing the temporary emergency measures that have governed U.S. trade policy since February.

The End of Section 122

Section 122 tariffs were imposed on February 20, 2026, just hours after the Supreme Court struck down the administration's IEEPA-based tariffs in the landmark Learning Resources, Inc. v. Trump decision. The 10 percent flat tariff on virtually all imports was authorized under the Trade Act of 1974 for a maximum of 150 days to address "fundamental international payments problems."

That 150-day clock runs out on Thursday. Unlike other tariff authorities, the President cannot extend Section 122 unilaterally — only Congress can, and no extension has passed.

According to the Budget Lab at Yale, the current U.S. effective tariff rate stands at approximately 11 percent, the highest since 1943 when excluding the brief IEEPA tariff period in 2025.

What Comes Next

The administration has prepared replacement measures. The U.S. Trade Representative has pending Section 301 investigations proposing tariffs of 10 to 12.5 percent on imports from multiple countries. Unlike Section 122, these tariffs carry no statutory expiration date.

Section 301 and Section 338 authorities allow for more targeted, country-specific rates that can remain in place indefinitely. Vietnam and Germany are among the latest targets on the USTR's list, joining an expanding roster of trading partners facing elevated duties.

The Allianz report projects that these new tariffs will send the average import tariff to 12.4 percent, up from a May low of 7.7 percent when some temporary measures were eased.

The Inflation Question

For consumers and businesses alike, the key concern is what this means for prices. The report offers a mixed assessment: the inflation impact from the first wave of 2025 tariffs has largely passed through the economy, and the tariff drag on inflation should fade substantially in the second half of 2026, bringing the full-year tariff contribution down to roughly 0.3 percentage points.

However, this respite may be temporary. The new Section 301 and Section 338 duties represent a fresh round of import taxes that could filter through to consumer prices in 2027.

Economists have warned that sustained tariffs at these levels create what they call a "lasting tariff wall" that fundamentally reshapes supply chains and pricing structures across the economy.

Legal Uncertainty Adds Complexity

Adding another layer of uncertainty, the Court of International Trade struck down the Section 122 tariffs in May 2026, ruling them legally invalid. However, the decision is under appeal, and duties continue to be collected while the legal battle plays out.

Importers who preserve their protest rights now may be entitled to refunds if the ruling stands. Trade attorneys advise businesses to carefully document their entries and maintain records that could support future refund claims.

A New Normal for American Trade

The transition from Section 122 to Section 301 and Section 338 authorities marks a fundamental shift in how the United States conducts trade policy. Rather than emergency measures with built-in expirations, the administration is building a permanent tariff infrastructure that can be adjusted country by country.

For American businesses, the message is clear: elevated tariffs are not a temporary phenomenon but a structural feature of the new trade landscape. Companies that have been waiting for relief may need to permanently adjust their supply chains, pricing strategies, and sourcing decisions.

The expiration of Section 122 this week is not the end of America's tariff era. It is the beginning of a new chapter in which trade barriers become a lasting fixture of economic policy.