President Donald J. Trump signed a proclamation Friday imposing a temporary 10% import duty on a broad range of goods entering the United States, effective February 24 at 12:01 a.m. Eastern standard time. The action, taken under Section 122 of the Trade Act of 1974, is intended to address what the administration characterizes as “fundamental international payment problems” and rebalance trade relationships.
The duty applies to all articles imported into the U.S., with exceptions for certain goods deemed critical to the U.S. Economy or necessary to effectively address the identified payment issues. These exemptions include critical minerals, metals used in currency and bullion, energy products, natural resources and fertilizers unavailable domestically, certain agricultural products like beef, tomatoes, and oranges, pharmaceuticals, and passenger vehicles, among others. Goods already subject to Section 232 tariffs, and those originating from Canada and Mexico under the USMCA agreement, are too excluded.
The move comes after a recent Supreme Court ruling limited the President’s ability to impose tariffs using the International Emergency Economic Powers Act (IEEPA). According to the White House, Section 122 provides a legal basis for temporary import surcharges when the U.S. Faces significant balance-of-payments deficits or financial instability. The duty is set to last for 150 days.
The administration points to a substantial deterioration in the U.S. Current account balance as justification for the tariffs. A White House fact sheet released Friday stated that the U.S. Goods trade deficit increased by over 40% during the prior administration, reaching $1.2 trillion in 2024. The U.S. Experienced a negative balance on primary income in 2024 – the first time in over 60 years that income earned on U.S. Investments abroad was less than income earned by foreigners on investments in the U.S.
The current account deficit, which tracks trade in goods and services, investment income, and voluntary transfers, stood at -4.0% of GDP in 2024, nearly double the average between 2013 and 2019, and the largest annual deficit since 2008. The administration also highlighted the declining U.S. Net international investment position, which reached $26 trillion at the end of 2024 – equivalent to 89% of U.S. GDP, the highest negative position of any country globally.
In addition to the Section 122 tariffs, President Trump also reaffirmed the suspension of de minimis duty-free treatment for low-value shipments, including those sent through the international postal system, subjecting them to the 10% duty. The Office of the United States Trade Representative has also been directed to investigate unfair trade practices under Section 301 of the Trade Act of 1974.
The White House stated that tariffs will remain a key tool for protecting American businesses, encouraging domestic production, and improving trade terms. The administration emphasized its commitment to reciprocal trade agreements and signaled that the overall direction of its trade policy – reshoring production and expanding market access – will continue despite the change in legal authority for imposing tariffs.
