The United States has begun investigating the policies of numerous countries to assess potential structural excess capacity and production in the manufacturing realm and the impact on domestic industries, marking a potential precursor to new tariffs.
The Section 301 investigation specifically targets China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India, per a March 11 Federal Register filing from the Office of the U.S. Trade Representative.
“Key trading partners have developed production capacity untethered from the incentives of domestic and global demand,” the filing says. “This excess capacity leads to, among others, overproduction and large or persistent trade surpluses, as well as underutilized and unused capacity, in manufacturing sectors.”
During the investigation, the USTR will evaluate potential supply and demand imbalances, wage suppression policies and market access barriers, among other factors.
The filing lists a wide range of sectors it says are currently subject to overcapacity and excessive production, including aluminum, glass, machinery, non-ferrous metals, paper, plastics, steel and more. “In many of these sectors, the United States has lost substantial domestic production capacity or has fallen worryingly behind foreign competitors,” the filing states.
“Across numerous sectors, many U.S. trading partners are producing more goods than they can consume domestically,” USTR Jamieson Greer said in a statement. “This overproduction displaces existing U.S. domestic production or prevents investment and expansion in U.S. manufacturing production that otherwise would have been brought online.”
The USTR will open a docket for public comments on the investigation on March 17, with a hearing scheduled for May 5.
This latest investigation adds to a growing list of Section 301 probes initiated by the U.S. in the last year, with more likely to come as the Trump administration attempts to reconstruct a tariff regime largely wiped out by a February Supreme Court ruling.
Following the high court’s order that eliminated a wide swath of levies President Donald Trump installed last year, Greer said the U.S. would launch Section 301 investigations into the practices of “many trading partners” on “an accelerated timeframe.” Last week, Greer clarified that he expected the investigations to be completed within the next five months, coinciding with the expiration of a temporary 10% global tariff Trump installed in the wake of the Supreme Court’s ruling.
“So, while everyone has been watching the court fights over tariffs, the policy machine in Washington has quietly been looking for the next legal lever to pull, and Section 301 is a very big lever,” Pete Mento, director of global trade advisory services at Baker Tilly, said in a LinkedIn post. “If the investigation concludes that these industrial policies are ‘unreasonable’ or distort trade, the U.S. can respond with—you guessed it—tariffs.”
The Trump administration has leveraged Section 301 investigations previously, using the trade mechanism to review trading practices of individual countries, such as Brazil and Nicaragua, the latter of which resulted in levies.
