Section 122 tariffs on imported HVAC equipment and components are set to expire on July 24, 2026, closing out a five-month experiment in emergency tariff authority that added a 10% surcharge to compressors, coils, controls and finished air conditioning and heating systems arriving from overseas. The statutory 150-day cap on the tariff, first imposed by proclamation on Feb. 24, 2026, will lapse regardless of how a pending federal court appeal turns out, according to trade attorneys tracking the case. For HVAC distributors and contractors who have spent the year recalculating landed costs every few weeks, the sunset adds a fourth major tariff variable to a supply chain already reshaped by Section 232 duties on steel, aluminum and copper.
How Section 122 Tariffs Reached Their Expiration Date
The tariff traces back to a Supreme Court ruling earlier this year that invalidated a separate set of duties the administration had imposed under the International Emergency Economic Powers Act. Rather than let that revenue disappear, the administration turned to Section 122 of the Trade Act of 1974, a rarely used statute that lets the president impose a balance-of-payments surcharge of up to 15% for no more than 150 days without congressional approval. Proclamation 11012 set the rate at 10% and started the clock on Feb. 24, 2026, meaning the tariff expires on its own terms by July 24 regardless of any other legal developments. On May 7, 2026, a divided three-judge panel at the Court of International Trade ruled that the proclamation was invalid because it failed to identify the type of balance-of-payments deficit the statute requires. The government appealed to the U.S. Court of Appeals for the Federal Circuit the next day, and on June 11, 2026, that court granted a stay allowing the administration to keep collecting the 10% tariff while the appeal proceeds. Importers across all sectors have paid an estimated $25 billion in Section 122 duties since collection began, according to trade groups tracking the litigation.
For the HVAC industry, the Section 122 tariff arrived on top of an already complicated set of import costs. Section 232 tariffs on steel, aluminum and copper, imposed under a separate national security authority, were untouched by the Supreme Court's IEEPA ruling and remain in effect no matter what happens to Section 122 this month. On April 6, 2026, the administration changed how Section 232 duties are calculated on derivative products, applying them to the full customs value of an imported item rather than just its metal content, a shift that raised costs on finished coils, compressors and cabinets built overseas. Section 122's 10% surcharge applied on top of those Section 232 duties for many HVAC products, compounding the effect for equipment and components sourced from China, Mexico and other trading partners.
HVAC Distributors Brace for Life After Section 122 Tariffs
Alex Ayers, HARDI's vice president of government affairs, has been among the most active voices tracking tariff policy on behalf of HVACR distributors this year. When the administration lowered Section 232 tariff rates on residential HVAC equipment from 25% to 15% in June, Ayers said HARDI's initial analysis showed the adjustment would help customers keep nearly $2.3 billion in their pockets that would otherwise have gone toward price increases. No comparable estimate has circulated for the Section 122 sunset, in part because trade attorneys say it is unclear what, if anything, will replace the tariff once it lapses July 24. Congress could pass new tariff legislation, the administration could invoke a different statutory authority, or the surcharge could simply disappear without a substitute. HARDI members raised the issue directly with lawmakers during the association's congressional fly-in earlier this year and have sent thousands of messages through its advocacy platform urging clarity on the post-Section 122 landscape.
Most manufacturers and distributors are pricing equipment conservatively through the third quarter of 2026 on the assumption that Section 232 duties on the metal inputs used in HVAC manufacturing will remain in place indefinitely, and that whatever follows Section 122 is unlikely to be materially cheaper. Trade lawyers note a separate open question: if the Federal Circuit or, eventually, the Supreme Court agrees with the Court of International Trade that Section 122 tariffs were unlawfully imposed, importers could be entitled to refunds on duties paid since February, a process that would take months to sort out and that HVAC distributors are not counting on in their near-term pricing.
