(Corrects paragraph 3 to refer to partners instead of countries.)
WASHINGTON - The Trump administration announced on March 12 that it has opened two formal trade inquiries under Section 301 of the Trade Act of 1974, reviving a tariff-focused approach after the Supreme Court curtailed a large portion of the prior tariff program in February.
U.S. Trade Representative Jamieson Greer said the first investigation targets structural excess industrial capacity and underused production across 16 major trading partners. The probe will examine factors including persistent trade surpluses and underutilized manufacturing capacity as potential evidence of unfair trade practices.
Greer identified a broad set of economies under scrutiny that could face new tariffs as early as this summer if the investigations find remedies are warranted. The list includes China, the European Union, India, Japan, South Korea and Mexico. Additional partners named in the excess-capacity action include Taiwan, Vietnam, Thailand, Malaysia, Cambodia, Singapore, Indonesia, Bangladesh, Switzerland and Norway. Notably, Canada - the United States' second-largest trading partner - was not included.
USTR's official notice singled out the automotive sector in China and Japan, asserting that a growing number of companies in those markets were unprofitable or unable to meet interest payments. The notice also flagged China’s electric-vehicle sector, saying national EV capacity now outstrips domestic demand. USTR pointed to leading Chinese EV maker BYD as "aggressively expanding" its overseas manufacturing footprint with facilities already operating in Uzbekistan, Thailand, Brazil, Hungary and Turkey, and noted expectations of further capacity additions in Europe, where it said existing automotive plants are operating at just 55% of capacity.
Japan said it was scrutinizing the details of the probe but would continue to implement its existing trade agreement with the United States, Chief Cabinet Secretary Minoru Kihara told reporters. Taiwan’s cabinet said the reciprocal trade agreement it signed with the U.S. last month had created consensus on many issues that may fall under the probe’s scope. Indonesia said its bilateral agreement with the United States remained the primary guideline for trade relations.
USTR also pointed to large German and Irish surpluses in goods trade with the United States as part of its evidence for EU excess capacity. The agency called out Singapore’s, Norway’s and Switzerland’s substantial surpluses with the U.S. alongside what it characterized as indications of structural excess production.
Reactions from partners were immediate. China rejected the premise behind the excess-capacity probe, calling the U.S. claim a "false proposition" and saying Beijing opposed what it described as "political manipulation under this pretext," a Foreign Ministry spokesperson, Guo Jiakun, said at a regular press conference. China also reiterated its opposition to unilateral tariff measures.
The 27-nation European Union said it wants any new tariffs to align with the terms of an agreement reached last July at Turnberry, arguing that levies should reflect the broad 15% overall U.S. tariff rate agreed at that time. At the same time, European Parliament trade committee chair Bernd Lange expressed continued uncertainty, asking rhetorically on social media: "Who can guarantee that the final outcome will not mean even higher tariffs for the EU? It is not enough to simply assume - on both sides - that we will end up within the Turnberry framework. We need clarity."
Greer told reporters the excess-capacity investigation will concentrate on sectors where USTR has evidence of structural excess capacity and production, using signals such as large, persistent trade surpluses and underutilized industrial plant.
USTR also will launch a second Section 301 action focused on goods produced with forced labor, Greer said. That investigation will invoke an authority intended to ban U.S. imports made with forced labor and is expected to cover shipments from more than 60 countries.
The United States has already restricted imports of solar panels and other products from China's Xinjiang region under the Uyghur Forced Labor Prevention Act, which the article notes was signed into law by President Joe Biden. Greer said he wants other countries to adopt enforcement approaches similar to those embodied in long-standing U.S. trade law.
The U.S. alleges that Chinese authorities have established labor camps for ethnic Uyghur and other Muslim groups; Beijing denies allegations of abuse.
Timing is central to the administration's approach. Greer said he aims to complete the Section 301 investigations, including proposed remedies, ahead of the expiration in July of temporary tariffs President Trump imposed in late February. Those temporary tariffs, set at 10% for 150 days under Section 122 of the Trade Act of 1974, came after the Supreme Court on February 20 struck down the broader Trump-era global tariffs as unlawful under a national emergencies law.
USTR will accept written public comments on the excess-capacity probe through April 15 and plans to hold a public hearing around May 5, according to the agency’s notice.
Separately, the U.S. Treasury will engage diplomatically on these issues this week: Treasury Secretary Scott Bessent is scheduled to meet with Chinese counterparts in Paris as part of preparations for President Trump to travel to Beijing for a meeting with Chinese President Xi Jinping at the end of the month.
Market observers can expect the investigations to place particular focus on industrial manufacturing and automotive value chains, as well as on products and suppliers potentially implicated in forced-labor concerns. The administration's stated objective is to identify structural imbalances and labor practices that it believes justify targeted trade remedies under Section 301.
Public comment deadlines and the stated timeline for proposed remedies mean stakeholders across manufacturing, automotive, electric vehicles and selected supply-chain segments will have a limited window to present data and arguments to USTR before potential tariff measures could be finalized.
The outcome and scope of any remedies remain to be determined through the Section 301 process, which will include opportunities for public input and hearings as outlined by USTR.