Reactive (response to change)

US imposes 15% global tariff under Section 122 — what UK exporters need to know

On 24 February 2026 the US imposed a 15% ad valorem tariff on virtually all imports, using Section 122 of the Trade Act of 1974. This overrides the UK's negotiated 10% rate under the Economic Prosperity Deal and affects around 40,000 UK businesses exporting to the US.

Change event: US 15% global tariff under Section 122 — effective 24 February 2026 Effective 24 February 2026

What is changing

From 24 February 2026, the United States is imposing a 15% ad valorem tariff on virtually all imported goods, including those from the UK. The tariff was signed by executive order under Section 122 of the Trade Act of 1974, following the US Supreme Court's ruling on 20 February 2026 that struck down the previous IEEPA-based tariffs as exceeding presidential authority.

Section 122 permits temporary import surcharges of up to 15% to address "large and serious" balance-of-payments deficits. Unlike the previous IEEPA regime, this tariff is non-discriminatory — it must apply uniformly to all trading partners. This means the UK's negotiated 10% baseline rate under the UK-US Economic Prosperity Deal (agreed 8 May 2025) is effectively overridden.

New US tariff rate
15% ad valorem on most goods
Effective date
24 February 2026
Legal authority
Section 122, Trade Act of 1974
Duration
150 days (expires 24 July 2026 unless Congress extends)
UK businesses affected
Approximately 40,000 exporters
Estimated additional cost
£3 billion (British Chambers of Commerce estimate)
Previous UK rate (under EPD)
10%

What is exempt

The 15% surcharge does not apply to all goods. Important exemptions include:

  • Steel and aluminium — already subject to separate 25% Section 232 tariffs. The Section 122 surcharge does not stack on top of existing Section 232 duties.
  • Automobiles — UK vehicles continue under the EPD arrangements (combined 10% tariff rate, 100,000-unit annual quota). Vehicles are also subject to separate Section 232 duties.
  • Pharmaceuticals and medical technology — covered by the UK-US Agreement in Principle on Pharmaceutical Pricing (December 2025).
  • Aerospace products — tariff-free bilateral trade under the EPD.
  • Other exemptions — energy and energy products, semiconductors, copper, critical minerals, lumber, certain agricultural products (beef, tomatoes, oranges), and informational materials.

If you export goods that fall into one of these categories, check the White House executive order and HMRC guidance for the precise scope of each exemption.

How this affects the UK-US Economic Prosperity Deal

The EPD, announced on 8 May 2025, secured the UK a preferential 10% baseline tariff — lower than the rates facing most other countries. The Section 122 mechanism requires uniform application across all trading partners, meaning the UK's negotiated advantage has been eliminated for general goods.

However, sector-specific carve-outs agreed under the EPD (steel, automotive quotas, pharmaceuticals, aerospace) appear to remain in force as they operate under different legal authorities (principally Section 232). The UK government has stated it expects the UK's "privileged trading position with the US to continue" and is in active discussions with Washington.

Businesses should not assume the EPD rate will be restored automatically. The situation remains fluid, and you should monitor developments through official channels.

The 150-day clock and legal uncertainty

Section 122 tariffs are explicitly temporary. The 15% surcharge expires on 24 July 2026 unless the US Congress votes to extend it. This creates a defined window of disruption — but also uncertainty, as the political outcome is unpredictable.

There is also significant legal doubt about the tariff's validity. Section 122 requires "large and serious" balance-of-payments deficits. Trade experts argue that the US does not have such a deficit (its capital account is in surplus), making further court challenges likely. However, businesses should plan on the basis that the tariff will apply for the full 150-day period.

⚠️ Impact on pricing and contracts

The 5-percentage-point increase (from 10% to 15%) will raise landed costs for US buyers of UK goods. If your export contracts do not include tariff adjustment clauses, you may need to absorb these costs or renegotiate pricing. The British Chambers of Commerce estimates the total additional cost to UK exporters at approximately £3 billion.

❗ What you need to do

If you export goods to the US, take these steps now:

  • Check which tariff rate applies — use the GOV.UK Check duties and customs procedures for exporting goods service to confirm whether your goods are subject to the 15% surcharge or fall under an exemption.
  • Review your customs classifications — ensure your Harmonized System (HS) codes are accurate. Incorrect classification could mean you pay more than necessary or face compliance action.
  • Assess your pricing — model the impact of a 15% duty on your margins and your US customers' willingness to pay. Consider whether you need to renegotiate contracts.
  • Add tariff fluctuation clauses — for new contracts, include provisions that allow price adjustments if tariff rates change (the 150-day expiry and potential legal challenges make this especially important).
  • Review your supply chain — consider whether sourcing inputs from different countries could reduce your overall tariff exposure.
  • Engage a customs agent or trade compliance adviser — if you do not already use one, professional advice can help you navigate classifications, valuations, and potential mitigation strategies such as foreign trade zones.
  • Monitor developments — the tariff could change through Congressional action, further court rulings, or renewed negotiations. Sign up for updates from HMRC and the Department for Business and Trade.

Sector-specific considerations

Manufacturing and engineering: General manufactured goods face the full 15% surcharge. Exporters of machinery, electrical equipment, and consumer goods should assess whether US buyers will absorb the cost or seek alternative suppliers.

Steel and metals: Steel and aluminium remain at the existing 25% Section 232 rate. The Section 122 surcharge does not add to this — but the underlying rate was already high.

Automotive: UK vehicles continue under the EPD's 10% combined rate (7.5% IEEPA-successor + 2.5% MFN) for the first 100,000 units per year. Check whether auto parts not covered by the vehicle exemption are now subject to the 15% surcharge.

Food and drink: Some agricultural products (beef, tomatoes, oranges) are exempt. Other food and drink exports will face 15%. Check specific commodity classifications carefully.

Pharmaceuticals and life sciences: Covered by the December 2025 Agreement in Principle. Exempt from the Section 122 surcharge.

Technology and digital services: Semiconductors are exempt. Digital services are not subject to import duties (though the US Digital Services Tax negotiations remain ongoing under the EPD).

Related updates