US Tariff Update July 2026: Section 122 Expired : What International Sellers Need to Know

TITLE: US Tariff Changes July 2026: New Section 301 Tiers & FBAR Compliance

If you are an international seller trading into the United States, your compliance landscape just underwent a significant shift.

As of 12:01 a.m. ET on July 24, 2026, the broad, temporary 10% global import surcharge under Section 122 has officially expired.

However, this is not a return to "business as usual." In its place, the U.S. Trade Representative (USTR) has implemented a more targeted, permanent regime of Section 301 tariffs focused on forced-labor enforcement. For UK Limited Companies and international ecommerce brands, understanding these new tiers is critical to maintaining your margins and ensuring your goods clear customs without unexpected delays.

This guide breaks down exactly what happened, which countries are affected, and how the latest IRS changes to FBAR filings add another layer of complexity to your US operations.

The Transition: From Section 122 to Section 301

The Section 122 surcharge was always designed to be a temporary measure. By statute, these surcharges are capped at 15% for no more than 150 days unless Congress intervenes. With no extension enacted, the 10% global tariff expired by operation of law.

It is also worth noting the legal backdrop: on May 7, 2026, the Court of International Trade declared the Section 122 tariff unconstitutional. While that ruling is currently on appeal, the administration has moved forward with a different legal mechanism: Section 301: to maintain trade pressure while focusing on human rights and forced-labor prohibitions.

The most important takeaway for you: These new Section 301 tariffs are permanent (subject to review every four years) and are tied directly to how individual countries handle forced-labor import bans.

The New Tiered Rate System (10% vs. 12.5%)

The new regime divides trading partners into two primary categories based on their commitment to enacting and enforcing prohibitions on goods produced with forced labor.

The 10% Tier: Compliant Trading Partners

If you source your goods from countries that have committed to adopting forced-labor import prohibitions, you will face an additional 10% tariff. This list currently includes 17 key trading partners:

• Britain (UK)
• Canada
• Mexico
• Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Pakistan, Sri Lanka, and Trinidad and Tobago.

The 12.5% Tier: Non-Committed Economies

For countries that have not yet enacted forced-labor import bans or haven't met the U.S. standards for enforcement, the tariff rate is higher at 12.5%. This tier covers approximately 39 economies, most notably China.

This is why it matters: If your supply chain relies heavily on Chinese manufacturing, your import duty burden has actually increased by 2.5% compared to the previous Section 122 surcharge. Conversely, if you are a UK-based Amazon FBA seller, your duty rate remains essentially the same, but under a new legal classification.

Critical Deadlines and Grace Periods

Don't panic if you have goods currently in transit. The transition includes a small window of protection for shipments that were already moving before the July 24 deadline.

• Goods loaded before July 24: If your products were loaded onto a vessel destined for the US before 12:01 a.m. ET on July 24, 2026, they are not subject to the new Section 301 forced-labor tariffs.
• Consumption Entry Deadline: These goods must be entered for consumption in the US before July 28, 2026, to qualify for the old rates.

If your goods do not meet both criteria, they will be assessed at the new 10% or 12.5% rates depending on their country of origin.

Essential Exemptions You Should Know

Not every product is caught in this new net. The U.S. government has maintained specific exemptions to prevent price spikes in critical sectors. You are exempt from these new Section 301 tariffs if you are importing:

1. Section 232 Goods: Items already subject to Section 232 duties, such as steel, aluminum, and certain automotive parts.
2. Food and Agriculture: Most food products and agricultural commodities are excluded.
3. Energy Products: Critical energy resources and fuels.
4. Informational Materials: Books, news, and other informational media.
5. Product-Specific Exemptions: The USTR has provided a list of specific HS (Harmonized System) lines that are exempt due to lack of domestic availability or other economic factors.

Checking your specific HS codes against the USTR's latest list is essential to ensure you aren't overpaying.

IRS Alert: FBAR Compliance Just Got Stricter

While you are managing your customs duties, don't overlook a critical change from the IRS that affects international sellers with US business structures (like a US LLC).

As of July 1, 2026, the IRS has eliminated the Delinquent FBAR Submission Procedures (DFSP). Previously, this program provided a "safe harbor" for taxpayers who needed to file late FBARs (FinCEN Form 114) but had already paid all taxes on their foreign income. It was a predictable, penalty-free way to catch up on compliance.

The new reality:

• No more guaranteed penalty-free filing: The formal program is gone.
• Case-by-case assessment: The IRS will now review late filings on a case-by-case basis. While they still consider "reasonable cause," the protection is no longer administrative or automatic.
• Urgency is key: If you have missed FBAR filings for your foreign bank accounts or business interests, you must file as soon as possible to demonstrate a non-willful attempt to comply.

For international sellers operating cross-border, this highlights the need for rigorous, ongoing bookkeeping and reporting.

Action Plan for International Sellers

Navigating these changes requires a structured approach. Use this checklist to ensure your business stays compliant and profitable:

1. Audit Your Supply Chain: Identify the country of origin for all your major product lines. Are you sourcing from a 10% or a 12.5% country?
2. Verify Loading Dates: Check your Bill of Lading for any shipments arriving in late July to see if they qualify for the grace period.
3. Check HS Codes: Review the USTR exemption list to see if your specific products (especially in food or energy) are excluded from the new tariffs.
4. Review Pricing Models: If you are sourcing from China or other 12.5% countries, calculate the 2.5% increase in your landed cost and adjust your pricing strategy accordingly.
5. Secure Your FBAR Filing: If you hold a US LLC or have US-related financial accounts, verify that all FBAR filings are up to date. Don't wait for the IRS to contact you.

We Manage the Compliance, You Manage the Growth

Tax and customs regulations are moving faster than ever. Between the expiration of Section 122 and the new complexities of Section 301 forced-labor enforcement, international sellers cannot afford to guess.

At Sterlinx Global, we specialize in end-to-end compliance for UK Limited Companies and international sellers. Let us handle the complex filings and tariff classifications so you can focus on growing your cross-border business.