backOn March 11, 2026, the United States Trade Representative (“USTR”) issued a press release (and advanced Federal Register notice) announcing the initiation of investigations under Section 301 of the Trade Act of 1974, as amended (“Section 301”), into fifteen countries and the European Union (“EU”) “relating to structural excess capacity and production in manufacturing sectors.”
The investigations will determine whether the acts, policies, and practices of the identified economies are unreasonable or discriminatory and burden or restrict U.S. commerce, with a particular focus on large or persistent trade surpluses, as well as underutilized and unused capacity in the subject trading partners.
The expectation is that these Section 301 investigations (and potentially others) will provide a more durable U.S. statutory basis to reestablish the scope and level of the tariffs under the International Emergency Economic Powers Act of 1977 (“IEEPA”) and corresponding bilateral agreements prior to the Supreme Court decision striking down the IEEPA tariffs. Section 301 will also restore leverage for the President to adjust the remedies as needed to address critical policy objectives.
USTR, however, has the opportunity under Section 301 to modify the prior IEEPA-based tariff foundation in order to adjust the scope and level of the tariffs to better align with prevailing trade, economic, and national security priorities and to fix issues that may be creating unnecessary costs to new and expanding U.S. manufacturing investments.
Written comments (and requests to appear at the hearing) are due by April 15, 2026, and a public hearing will be held from May 5 to 8, 2026, with rebuttal comments due seven days after the final day of hearing.
The Economies and Sectors Under Investigation
In its Notice of Institution (“NOI”), USTR listed fifteen countries and the European Union subject to investigation and provided representative samples of the sectors appearing to contribute to structural excess capacity and production concerns in each of them:
Bangladesh: Textiles, leather products, and cement.
Cambodia: Garments, footwear, and travel goods.
China: Electronic equipment, machinery, automobiles and auto parts, plastics, furniture, articles of iron or steel, apparel, organic chemicals, toys and sporting goods, optical, photo, technical, and medical apparatus, iron and steel, footwear, ships and vessels, aluminum, and others.
European Union: Chemicals and related products, as well as machinery and vehicles. The NOI also specifically identifies Germany (automobiles and auto parts, machinery, electronic equipment, pharmaceutical products, chemicals, and others) and Ireland (pharmaceutical sector).
India: Textiles, health, construction goods, and automotive goods, the solar module sector, petrochemicals, steel, and others.
Indonesia: Metals, agricultural products, fuels, textiles, and construction goods.
Japan: Automobiles and auto parts, as well as optical, photo, technical, and medical apparatuses.
Korea: Electronic equipment, automobiles and auto parts, machinery, steel, and ships and marine vessels.
Malaysia: Electronic equipment, mineral fuels and oils, machinery, animal and vegetable fats and oils, and optical, photo, technical, and medical apparatuses, as well as the steel sector.
Mexico: Automotive sector, as well as construction, rail and ship transportation, and health, along with steel and process manufacturing in food and beverages.
Norway: Mineral fuels and oils, certain electronic equipment, and machinery, as well as seafood exports.
Singapore: Semiconductors, electronic equipment, petrochemicals, and pharmaceuticals.
Switzerland: Refined gold, pharmaceutical products, organic chemicals, and machinery.
Taiwan: Semiconductors, electronic products, information technology products, and machinery.
Thailand: Automobiles and auto parts, machinery, and rubber.
Vietnam: Electronic equipment, machinery, footwear, apparel, furniture, and steel, as well as cement. The NOI further states that “Vietnam also functions as a hub for the final assembly of goods before export, which contributes to its trade surplus.”
According to the NOI, the creation or maintenance of structural excess capacity and production in these economies may result from policy interventions that increase their domestic capacity and production while suppressing domestic demand. Examples include: (1) promoting production and exports untethered from market drivers of supply, demand, and investment, including through subsidies; (2) suppressing domestic wages; (3) non-commercial activities of state-owned or controlled enterprises; (4) sustained market access barriers; (5) lax or inadequate environmental or labor protection or social safety net; (6) subsidized lending; (7) financial repression and currency practices; and others.
U.S. Capacity Utilization and Affected Sectors
The NOI states that “[i]n the past fifteen years, U.S. capacity utilization peaked at 79.9 percent during President Trump’s first term, declining to a low of 75.2 percent in November 2024 near the end of President Biden’s term, further evidence that the U.S. industry is not operating at its full competitive potential.”
USTR provided an illustrative list of sectors “plagued by excess capacity and production” including aluminum, automobiles, batteries, cement, chemicals, electronics, energy goods, glass, machine tools, machinery, non-ferrous metals, paper, plastics, processed food and beverages, robotics, satellites, semiconductors, ships, solar modules, steel, and transportation equipment. The NOI emphasizes that “[i]n many of these sectors, the United States has lost substantial domestic production capacity or has fallen worryingly behind foreign competitors.”
Public Comments
The USTR docket for public comments will open on March 17, 2026. USTR encourages stakeholders, including industry participants, trade associations, and other interested parties to provide detailed written comments addressing the Section 301 investigation’s scope, evidence of harm, and suggestions of tariff and non-tariff actions. In particular, USTR is inviting comments on the following topics:
- The acts, policies, and practices of each investigated economy creating or maintaining structural excess capacity or production in specific sectors.
- Whether the acts, policies, and practices are unreasonable or discriminatory.
- Whether the acts, policies, and practices burden or restrict U.S. commerce, and if so, the nature and level of the burden or restriction. This topic would include economic assessments of the burden or restriction at issue.
- Whether the acts, policies, and practices are actionable under Section 301(b) of the Trade Act, and what action, if any, should be taken, including tariff and non-tariff actions.
- Whether there are additional considerations for assessing acts, policies, and practices that contribute to structural excess capacity or production in manufacturing sectors.
Key Takeaways
These Section 301 investigations represent a more aggressive use of this tool than we have seen in recent years, targeting a broad range of economies and manufacturing sectors simultaneously. If USTR determines that the acts, policies, and practices under investigation are actionable, the Administration could impose tariffs or other trade measures on products from any or all of the fifteen countries and the Member States of the European Union.
The use of Section 301 has largely been upheld by the courts, including with the China investigation conducted by President Trump’s first administration. Courts have signaled that their review will focus on compliance with the Administrative Procedure Act, and whether the USTR followed the necessary procedures outlined in the statute. The extent to which the Administration takes into account input from the public will likely inform the degree of risk the Administration faces in any future court challenge – particularly here given the wide scope of this announced Section 301 investigation.
Industry participants with supply chains or trade relationships involving the identified economies and sectors should carefully evaluate how potential trade measures may impact their operations and strategic plans. Stakeholders are advised actively to engage in the public comment and hearing processes to ensure their interests are represented.
Our team is closely monitoring Section 301 investigations and has extensive experience advising clients on trade policy matters. If you have any questions or would like to discuss written comments, hearing participation, and developing strategic responses to potential trade actions related to this investigation, please contact us.