Will Section 122 tariffs expire by August 2026 without a permanent replacement tariff regime enacted?
Current Prediction
Prediction History
Companion legislation market dropped to ~10%, increasing probability that Section 122 expires without enacted permanent replacement.
Why This Question Matters
Section 122 has a statutory 150-day limit, expiring approximately July 2026. If it lapses without permanent replacement, Costco's tariff exposure effectively resets — de-escalating the REGULATORY_EXPOSURE assessment and removing the primary cost pressure threatening gross margin expansion. This is the most concrete de-escalation trigger in the analysis, testing whether the regulatory environment improves rather than worsens.
Prediction Distribution
Individual Predictions(5 runs)
Slight upward revision from 0.57 to 0.62. The companion tariff-legislation market has decreased from 0.13 to 0.10 — implying higher probability that Congressional action does NOT pass before Section 122 expires. Resolution criteria for THIS market is whether Section 122 expires by August 2026 WITHOUT a permanent replacement enacted. That requires (a) Section 122 reaches statutory expiry (~July 24, 2026) — this is automatic absent Congressional extension, and (b) no permanent replacement is enacted. If the companion market is at 10% on broad >15% legislation, then ~90% probability no such legislation passes. Some of the remaining bearish probability (~30%) reflects scenarios where Section 122 itself is extended or where alternative executive authority replaces it (administration's 'new global tariffs for 150 days' suggests rolling executive actions). Net 0.62 — a modest move higher.
Below run 1. The 'new global tariffs for at least the next 150 days' framing from Q2 earnings suggests the administration intends to maintain tariff pressure through some mechanism — either an extension of Section 122, a new executive order, or a Congressional bridge. The resolution language requires the Section 122 specifically to expire WITHOUT a permanent replacement. If the administration substitutes another temporary executive authority for Section 122 right at expiry, that may technically satisfy YES (no permanent replacement) — but the de-facto tariff regime continues. The interpretive ambiguity about 'permanent' replacement keeps probability near coin-flip. 0.55 reflects this ambiguity.
Splitting the difference between the two opus runs at 0.60. Section 122 is highly likely to expire — that's a statutory matter. The question is whether Congressional permanent replacement enacts in the window. The companion market estimates that at ~10%, leaving ~90% probability of no permanent replacement. Adjusting downward modestly for the residual probability of Section 122 extension or administrative succession that might be classified as 'replacement.'
Holding near the prior batch of 0.57 but slightly higher to reflect the companion market's directional information (lower legislation probability implies higher probability of expiry without replacement). Within the same range as the cluster.
Companion legislation market at ~10%. Statutory expiry automatic. Probability ~60% expires without permanent replacement.
Resolution Criteria
Resolves YES if as of August 31, 2026, the Section 122 tariff authority has expired AND no new federal legislation has been enacted establishing broad-based import tariff rates at or above the Section 122 level (10%+). Resolves NO if Section 122 is extended, renewed, or replaced with equivalent or higher tariff legislation before August 31, 2026.
Resolution Source
Federal Register, Congressional Record, or executive orders regarding tariff authority
Source Trigger
Section 122 expires (July 2026) without replacement
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