On Wednesday, the Trump administration said it is opening two new trade investigations. One will look at excess industrial capacity in 16 major trading partners, including India. The other will examine the use of forced labour. This move comes after the US Supreme Court struck down much of Trump’s earlier tariff program in February.
US Trade Representative Jamieson Greer said the “Section 301” investigation into unfair trade practices could lead to new tariffs by this summer. The countries that could be affected include China, the European Union, India, Japan, South Korea, and Mexico.
Trump admin launches trade investigation: Countries in the excess capacity probe
Other nations included in the investigation are Taiwan, Vietnam, Thailand, Malaysia, Cambodia, Singapore, Indonesia, Bangladesh, Switzerland, and Norway. Canada, the US’s second-largest trading partner, was not listed in the probe.
Greer explained, “So these investigations will focus on economies that we have evidence appear to exhibit structural excess capacity and production in various manufacturing sectors, such as through larger persistent trade surpluses or underutilised or unused capacity.”
The USTR notice highlighted the automotive sectors in China and Japan, and added that many companies are unprofitable or unable to pay interest on their operations.
Even though China produces more electric vehicles than its domestic market needs, its top EV manufacturer, BYD, is now expanding overseas. It already has factories in Uzbekistan, Thailand, Brazil, Hungary, and Turkey, and is expected to increase production in Europe, where existing plants are running at about 55% capacity.
The USTR also cited large US trade surpluses in Germany and Ireland as evidence of EU excess capacity. Singapore has excess global capacity in semiconductors despite a trade deficit with the US, and Norway shows excess capacity through large fuel and seafood exports.
Forced labor probe
In addition to excess capacity, Greer said that on Thursday, the administration would start a probe under Section 301 to ban US imports of goods made with forced labor. This investigation will cover more than 60 countries.
Greer said the administration hopes to complete the Section 301 investigations, including proposed remedies, before the temporary tariffs imposed in late February expire in July. After the Supreme Court struck down Trump’s global tariffs on February 20, a 10% tariff was applied for 150 days under Section 122 of the Trade Act of 1974.
The US has already targeted solar panels and other products from China’s Xinjiang region under the Uyghur Forced Labor Protection Act, signed into law by President Joe Biden. The new probe could expand similar actions to other countries.
Greer said the goal is for other countries to enforce similar bans on goods made with forced labor, based on a trade law that has existed for nearly a century.
The US claims that Chinese authorities have set up labor camps for Uyghurs and other Muslim groups in western China. China denies these allegations.
These investigations give the Trump administration a way to rebuild a credible tariff threat, encouraging trading partners to negotiate and stick to trade deals that were altered to reduce higher tariff rates under the International Emergency Economic Powers Act.
‘Trump is determined to pursue tariffs’
Greer said the probes should not surprise trading partners. He added that countries should honour their deals, though he did not guarantee this would prevent all new Section 301 tariffs.
He said, “Trump is determined to pursue tariffs. He will find a way to deal with unfair trading practices. He’ll find a way to get our trade deficit down. He’ll find a way to protect US manufacturing. We have a lot of tools to do it.”
The investigations come as Trump officials, led by US Treasury Secretary Scott Bessent, prepare to meet Chinese counterparts in Paris this week. These talks are expected to pave the way for a meeting between Trump and Chinese President Xi Jinping in Beijing at the end of March.
Trump’s tariffs on Chinese goods were effectively reduced by 10 percentage points after the Supreme Court ruling and temporary tariffs, weakening US leverage on trade and export control negotiations.
During his first term, Trump used a Section 301 investigation to justify tariffs of about 25% on many Chinese imports. The law is considered legally strong and has survived previous court challenges.