The global freight landscape shifted dramatically last week as the US Supreme Court struck down the Trump administration’s use of emergency powers to impose tariffs. Within hours, the administration responded with a new 10% global import surcharge under Section 122 of the Trade Act of 1974, preserving most trade barriers whilst reshaping the legal foundation of US trade policy.
The ruling eliminated the International Emergency Economic Powers Act (IEEPA) as a tariff tool. But freight forwarders and cargo solutions providers face minimal operational relief-the new regime keeps effective tariff rates nearly identical.
Section 122: The New Legal Foundation
President Trump signed an executive order introducing the 10% temporary surcharge effective Tuesday, 12:01 am EST, February 24, 2026. The measure runs for 150 days, expiring July 24, 2026, unless Congress votes to extend it.
Yale’s Budget Lab estimates the change reduces the overall effective US tariff rate by just two percentage points. Section 232 sectoral tariffs and Section 301 tariffs on specific trading partners remain intact. De minimis suspension continues despite the Supreme Court ruling.
Section 122 allows temporary surcharges to address fundamental international payments problems such as serious balance-of-payments deficits. The administration announced plans to raise the tariff to 15%-the legal maximum under Section 122-though the current order remains at 10%.
Goods in Transit: A Four-Day Window
Cargo loaded and moving before 12:01 am February 24 is exempt if entered for consumption before 12:01 am Saturday, February 28. This four-day clearance window offers limited relief for shipments already underway.
Postal shipments will be charged a 10% duty equal to the Section 122 surcharge rate. De minimis suspension remains active, maintaining pressure on small-value cross-border e-commerce.
Carve-Outs and Exemptions
The surcharge carves out significant product categories. Exempt goods include:
- Critical minerals and energy products
- Fertilisers and pharmaceuticals
- Certain electronics and passenger vehicles
- Many auto parts and selected aerospace products
- Goods entering duty-free under USMCA
- Certain textiles and apparel
- Imports already subject to Section 232 national security tariffs
These carve-outs protect supply chains for strategic industries but create complexity for freight forwarders quoting multi-commodity shipments. Buyers must validate Harmonised Tariff Schedule (HTS) codes to confirm exemption status.
Winners and Losers: Country-by-Country Impact
The shift from IEEPA to Section 122 produces uneven outcomes. Countries facing steep IEEPA surcharges see large tariff reductions: Brazil (-13.6 percentage points), China (-7.1 pp), and India (-5.6 pp) benefit most, since the flat Section 122 surcharge replaces country-specific IEEPA rates that were far higher.
Countries with low pre-existing tariffs now pay more. The United Kingdom (+2.1 pp), Italy (+1.7 pp), and Singapore (+1.1 pp) see the largest increases. Overall effective tariffs on China remain around 40% due to pre-existing Section 301 duties.
“Even the 10% global tariff introduced this week is bad for the UK, as it means Chinese exports to the US will plummet in price, eliminating the UK’s hard-fought advantage.”
UK Trade Deal in Limbo
The UK had previously agreed a trade arrangement with the US that set a tariff rate of 10%. Logistics UK is seeking urgent clarity on whether the previously agreed UK-US trade deal will be honoured under the new legal framework.
The US is the UK’s largest single-country trading partner and accounts for around one sixth of all UK exports. UK goods exports to the US fell from £60.4bn in 2023 to £59.2bn in 2025-a £1.2bn decrease. Exports to the US support nearly 1 million UK jobs, making stability in this relationship vital.
“Companies now need urgent clarity on how the proposed 15% levy will apply in practice and confirmation that previously agreed sector arrangements will be honoured.”
– Logistics UK
EU Pauses Trade Agreement
The European Union has paused implementation of its trade agreement with the US pending clarity on tariff levels. EU officials cited a growing “trust deficit” as the administration shifts legal frameworks and tariff rates without consultation.
Questions remain about the validity of trade agreements based on IEEPA tariffs. Some partners are awaiting further Federal Register notices before resuming implementation.
Freight Market Response: Stability During Lunar New Year
The transpacific ocean freight market is in complete stasis due to the Lunar New Year holiday, which falls on February 17, 2026. Total shutdown of manufacturing and logistics activity in Asia has frozen new bookings and shipping operations.
Ocean freight rates have held at breakeven levels established in early February:
- CEA to USWC: $1,450 to $1,600 per container
- CEA to USEC: $2,400 to $2,500 per container
- Air freight: high $3.00 to mid-$4.00 per kilogram
China-US air cargo rates dipped by 15% last week. Air cargo prices to Europe eased almost 10% last week. The market is expected to remain on autopilot until the end of the month, with post-holiday recovery anticipated in March.
What Freight Forwarders Must Do Now
Freight forwarders and cargo solutions providers face a volatile transition period. Here’s how to navigate the shift:
- Validate HTS codes for every shipment to confirm exemption status under Section 122 carve-outs
- Model multiple routing scenarios as carriers cautiously resume Red Sea and Suez Canal transits with naval escorts
- Avoid anchoring to outdated pricing-post-holiday contract rates will signal carrier strategies
- Prepare USMCA documentation ahead of the July 1, 2026 joint review (sixth anniversary of entry into force)
- Monitor Section 301 exclusions, extended through November 10, 2026, but only applicable if paperwork exactly matches the covered HTS line and product description
Strategic Capacity Shifts
Maersk and MSC have officially taken over operations at Panama Canal ports previously run by HK Hutchinson. Some ZIM vessels in Israel are facing port labour disruptions from union workers opposed to the planned sale to Hapag-Lloyd.
Maersk and Hapag-Lloyd have signalled they are resuming some Red Sea and Suez Canal transits with naval escorts as of mid-February. Mixed routings continue on a lane-by-lane basis, creating pricing volatility.
July Expiry and USMCA Review
The Section 122 surcharge expires July 24, 2026, unless Congress votes to extend it. Any increase to the 15% maximum would require a further formal legal step and Federal Register notice.
The first joint review of the USMCA is set to begin July 1, 2026, marking the sixth anniversary of entry into force. Freight forwarders handling North American trade lanes should prepare documentation and client communications ahead of this review cycle.
The ruling’s most significant impact may be geopolitical rather than economic. It removes the administration’s ability to quickly threaten and implement tariffs using IEEPA, forcing reliance on narrower statutory tools including Section 232, Section 301, and Section 201.
For freight forwarders, the shift from IEEPA to Section 122 changes the legal label but preserves the operational reality: complex routing, volatile pricing, and clients demanding fast quotes on multi-leg shipments.
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