Donald Trump’s administration said on Wednesday it was launching two new trade investigations, according to a Reuters report: one into industrial overcapacity among 16 major trading partners, including India, and another into forced labor practices.
The move aims to renew tariff pressure after the US Supreme Court struck down most of Trump’s tariff program last month.
Jamieson Greer, the US trade representative, said the “Section 301” investigation into unfair trade practices could lead to new tariffs by this summer on several economies, including China, the European Union, India, Japan, South Korea and Mexico, according to Reuters.
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Other trading partners included in the overcapacity investigation are Taiwan, Vietnam, Thailand, Malaysia, Cambodia, Singapore, Indonesia, Bangladesh, Switzerland and Norway.
However, Canada, the United States’ second-largest trading partner, was not listed among the countries targeted by the probe, Reuters reported.
“So these investigations will focus on economies that we have evidence of showing structural excess capacity and production in various manufacturing sectors, for example through larger persistent trade surpluses or unused or underutilized capacity,” Greer told reporters on a conference call.
USTR’s official notice of the overcapacity investigation cited the auto sector in China and Japan and said a growing number of companies are loss-making or unable to pay interest from operations.
It said that although China’s electric vehicle manufacturing capacity exceeds domestic demand, the country’s leading electric car maker, BYD, is rapidly expanding its global manufacturing presence. The company has established factories in Uzbekistan, Thailand, Brazil, Hungary and Turkey and is also expected to increase capacity in Europe, where existing car plants are currently operating at about 55% capacity, Reuters reported.
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The USTR cited large US trade surpluses in Germany and Ireland as evidence of EU overcapacity. Singapore had excess global semiconductor capacity despite a trade deficit with the US, and Norway had excess capacity based on evidence of large fuel and seafood exports, he added.
Forced Labor Probe
Jamieson Greer also said he would open another investigation Thursday under Section 301 of the Trade Act of 1974, which aims to ban the importation of goods made with forced labor into the US. The probe is expected to cover more than 60 countries.
The United States has already taken action against imports such as solar panels and other products from China’s Xinjiang under the Uyghur Forced Labor Protection Act signed by former President Joe Biden. The new investigation could extend similar measures to goods from other countries.
Greer said he wants other countries to enforce bans on goods made with forced labor, similar to those enshrined in the nearly century-old trade law.
The US says Chinese authorities have set up labor camps for ethnic Uighurs and other Muslim groups in the western region, although Beijing denies allegations of abuse.
Greer said he hopes to conclude the Section 301 investigation, including proposed remedies, before new temporary tariffs imposed by Trump at the end of February expire in July. After the Supreme Court on February 20 struck down Trump’s global tariffs as illegal under a national emergency law, he imposed a 10% tariff for 150 days under Section 122 of the 1974 Trade Act.
He set a fast-track timeline for the overcapacity investigation, with public comments accepted through April 15 and a public hearing scheduled for around May 5.
The investigation offers a path for the Trump administration to renew a credible tariff threat against trading partners to keep them from negotiating and implementing trade deals that have been reduced to reduce his higher tariffs under the International Emergency Economic Powers Act.
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Greer said the new probes, long telegraphed by administration officials, should come as no surprise to trading partners and should stick to their agreements, though he stopped short of saying that would make them immune from any new Section 301 tariffs.
He said Trump is committed to enforcing tariffs and “will find a way to deal with unfair trade practices. He will find a way to reduce our trade deficit. He will find a way to protect American manufacturing. We have a lot of tools to do that,” Greer said.
The probe comes as Trump officials – led by US Treasury Secretary Scott Bessent – meet their Chinese counterparts in Paris this week.
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The 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 cut by 10 percentage points following a US Supreme Court ruling and the imposition of temporary tariffs, weakening Washington’s influence in negotiating trade and export controls with China.
During his first term, Trump relied on Section 301 investigations to justify tariffs of around 25% on many Chinese imports. The law is considered legally strong and has previously withstood court challenges.
The overcapacity probe focuses on an area of concern raised with China by successive administrations from Trump’s first term through the Biden administration, rising state-backed manufacturing that is flooding the world with cheap goods.
Greer said this includes production “untethered” to market demand and that the problem has spread to other countries. He said the investigation would focus on evidence including large global current account surpluses, government subsidies, suppressed domestic wages, non-commercial activities of state-owned enterprises, inadequate environmental and labor standards, subsidized loans and currency practices, Reuters reported.
(With inputs from Reuters)
