A 10% duty on most goods coming into the United States takes effect at 12:01 a.m. EST on Feb. 24. President Donald Trump signed the proclamation on Feb. 20, and the charge runs for 150 days unless Congress extends it.
The legal hook is Section 122 of the Trade Act of 1974. That law lets a president act against what it calls fundamental international payments problems, such as balance-of-payments deficits or the risk of currency depreciation. The White House said the duty is meant to hold down imports, keep dollars from flowing overseas and encourage production and hiring at home.
The duty is charged on top of tariffs, taxes and fees already in place. Goods that were in transit before the start date escape it if they are entered for consumption by Feb. 28. The proclamation rewrites the Harmonized Tariff Schedule to put the change into effect.
The case the administration makes
Officials built their argument on 2024 figures. The current account deficit stood at 4.0% of gross domestic product, nearly double the roughly 2.0% that held from 2013 through 2019 and the widest since 2008. The goods trade deficit hit $1.2 trillion; the White House says it grew by more than 40% under the Biden administration.
Two other numbers got attention. In 2024, for the first time in more than 60 years, Americans earned less on the capital and labor they put to work abroad than foreigners earned on what they put to work in the United States. Remittances also now carry more money out of the country than into it.
The U.S. net international investment position was negative $26 trillion at the end of 2024, or 89% of GDP. Administration officials called it one of the most negative among developed countries. Trump’s advisors reviewed Bureau of Economic Analysis data before concluding the deficits were large and serious by several measures.
“These fundamental international payment problems can, among other things, endanger the ability of the United States to finance its spending, erode investor confidence in the economy, distress the financial markets, and endanger U.S. economic and national security,” the White House said in a fact sheet.
What is exempt
The list of carve-outs is long. Certain critical minerals, metals used in currency and bullion, energy and energy products are out. So are natural resources and fertilizers the country cannot produce in sufficient quantities, along with pharmaceuticals and their ingredients. Beef, tomatoes and oranges are exempt too.
Passenger vehicles, certain light trucks, medium and heavy-duty vehicles, buses and some of their parts are excluded. Books and other informational materials, donations and accompanied baggage get a pass as well.
Anything already covered by Section 232 actions, or that later falls under them, stays outside the new duty. The same goes for USMCA-compliant goods from Canada and Mexico, and for certain textiles and apparel from Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua that enter duty-free under the Dominican Republic-Central America Free Trade Agreement.
A separate executive order continued the suspension of duty-free de minimis treatment for low-value shipments, including those sent through the international postal system. Those parcels will now face the new 10% charge.
The Supreme Court backdrop
The fact sheet calls the Supreme Court’s decision that day “disappointing” and says it will not deter Trump’s push to reshape global trade. Trump also directed the Office of the U.S. Trade Representative to use Section 301 authority to investigate what the White House describes as unreasonable and discriminatory practices that burden U.S. commerce.
The White House said trading partners covering more than half of global GDP have agreed to trade and investment deals because of the tariffs. It added that the United States will keep honoring its Agreements on Reciprocal Trade and expects its partners to do the same. The legal authorities for future tariffs may change, the fact sheet said, but the direction of reshoring production and widening market access abroad will not.
Sources
- President Trump imposes temporary 10% import surcharge to address US payments deficit
- Fact Sheet: President Donald J. Trump Imposes a Temporary Import Duty to Address Fundamental International Payment Problems
