The United States has launched new trade investigations under Section 301 of the Trade Act of 1974. For countries such as India, the outcome could mean greater scrutiny of supply chains, new compliance requirements and the potential risk of additional US trade restrictions, explains Ajay Srivastava
What is the Section 301 law?
Section 302 of the Trade Act of 1974 is a US law used to challenge unfair trade practices by other countries. It allows the Office of the United States Trade Representative (USTR) to investigate whether foreign policies are unreasonable, discriminatory or restrict US commerce.
These can include subsidies, market-access barriers, currency practices, intellectual-property rules or state support for domestic industries. If such practices are found to harm US interests, it can impose higher tariffs, or import restrictions on the countries.
New Section 301 probes launched
In March 2026, the USTR launched two new investigations under Section 301. The first, announced on March 11, examines whether industrial policies in 16 economies have created excess manufacturing capacity that harms US industries. The second, announced on March 12, investigates whether about 60 economies have failed to prevent goods made with forced labour from entering global trade.
Washington argues that such practices lower production costs unfairly and hurt US firms. The probe forms part of a wider US effort to tighten oversight of labour standards in global supply chains. It is closely linked to the Uyghur Forced Labor Prevention Act, which presumes that goods made in China’s Xinjiang region involve forced labour unless importers can prove otherwise.Both investigations name India as one of the economies under investigation.
What is the timeline for the probe?
Public submissions will open today, March 17, allowing firms and governments to file comments. Requests to appear at hearings must be submitted by April 15. Public hearings will take place from May 5-8 at the US International Trade Commission in Washington.
Rebuttal comments must be filed within seven days after the hearings. After reviewing evidence and consulting the governments concerned, the USTR will decide whether the practices are unreasonable or discriminatory and whether they harm US commerce. If so, it may impose tariffs or other trade restrictions.
Which Indian sectors could face scrutiny?
The investigation into excess-capacity will cover sectors such as steel, aluminium, automobiles, batteries, electronics, chemicals, machinery, semiconductors and solar modules globally. The US authorities will review policies including subsidies, support for state-owned firms, market-access barriers and currency practices that may encourage overproduction.
In the case of India, the US notice highlights several industries where rising production or export surpluses could attract scrutiny. These include solar modules, petrochemicals, steel, textiles and garments, pharmaceuticals, construction materials and automotive products.
The US officials note that India’s solar manufacturing capacity is now about three times domestic demand, suggesting a potential surplus aimed at export markets. Rapid capacity expansion in petrochemicals and steel has also been cited as a possible source of global oversupply.
Effect of forced-labour probe
Many Indian export industries rely on imported inputs from China and Myanmar, where forced-labour concerns have been reported. If such inputs are embedded in goods shipped to the US, Indian exporters may face tighter inspections, more documentation requirements and deeper supply-chain audits, raising compliance costs.
Previous probes against India
The US has previously used Section 301 to challenge Indian policies affecting American companies. In 2014, the USTR examined India’s intellectual-property rules, particularly pharmaceutical patent standards and compulsory licensing provisions. In 2020, it launched another investigation into India’s 2% Equalisation Levy, a digital tax on foreign online services, arguing that the measure discriminated against US technology firms.
Why these investigations now
The timing of the probes appears to be linked to a shift in US trade strategy after the US Supreme Court ruling on reciprocal tariffs, which struck down the legal basis for the Trump administration’s reciprocal tariff policy. Soon after this, Washington imposed a 10% tariff under Section 122 of the Trade Act of 1974 on imports from all nations.
However, many trading partners had already agreed to higher tariff levels or concessions in trade deals with the US. Since the new 10% tariff applies to all equally, those with trade deals now have no incentive to maintain those commitments. In this context, the new Section 301 probes appear aimed at restoring negotiating leverage and discouraging countries from walking away from the trade deals.
With earlier tariff strategies constrained by legal rulings, the US appears to be turning again to formal probes to challenge foreign industrial policies and labour practices.
The writer is founder, GTRI