The Donald Trump administration is initiating an investigation under Section 301 of the Trade Act to examine excess production and other unfair trade practices of 16 economic entities, including South Korea, Japan, China, and the European Union (EU).
This move comes in response to last month’s U.S. Supreme Court ruling that declared tariffs imposed under the International Emergency Economic Powers Act (IEEPA) illegal. The Trump administration is expected to use the findings from this investigation to impose new tariffs on major trading partners, replacing the reciprocal tariffs.
Following the Supreme Court’s decision, the administration had already announced plans to invoke Section 122 of the Trade Act and impose additional tariffs based on Section 301 of the Trade Act and Section 232 of the Trade Expansion Act to maintain the existing tariff structure.
The Office of the U.S. Trade Representative (USTR) announced on Wednesday that it had published this information in the Federal Register.
The investigation targets 16 economies, including South Korea, China, the EU, Japan, Mexico, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Vietnam, Taiwan, Bangladesh, and India.
USTR Ambassador Jamieson Greer stated in a preliminary briefing that this investigation aims to examine the policies and practices of specific economies related to structural excess production capacity in the manufacturing sector. He anticipates that various unfair trade practices linked to overproduction will be revealed.
Ambassador Greer explained that it believes that the major trading partners have built production capacities that do not align with domestic and global demand. This overproduction can lead to excess supply, persistent trade surpluses, and underutilized manufacturing capacity.
He indicated that the investigation would focus on countries suspected of structural overproduction, as evidenced by persistent trade surpluses, surpluses with the U.S., or production capacities built excessively beyond actual demand.
Greer pointed out that factors contributing to overproduction could include subsidy policies, non-commercial activities of state-owned enterprises, low wage structures, barriers limiting market access for foreign products, inadequate environmental and labor protection standards, subsidized loans, financial repression, and currency policies.
The USTR announced that it would begin accepting public comments from March 17 until April 15, with a public hearing expected to be held around May 5. Stakeholders will have an additional seven days after the final hearing to submit rebuttal comments.
Depending on the investigation’s findings, various response measures could be considered, including imposing tariffs, levying service fees, or demanding negotiations.
Ambassador Greer emphasized that while this stage is simply the initiation of an investigation, response measures could be proposed if deemed necessary after reviewing written comments and holding public hearings.
The Trump administration plans to complete the Section 301 investigation and impose new tariffs before the 150-day expiration of the global tariffs newly imposed under Section 122 of the Trade Act following the invalidation of reciprocal tariffs.
Ambassador Greer stated that they’re mindful of the 150-day timeframe and are focused on conducting this investigation as quickly as possible to reach conclusions. The goal is to complete the investigation before the Section 122 tariffs expire, but it cannot predict the outcome of the investigation in advance.
Section 301 of the Trade Act, enacted in 1974, allows the U.S. to investigate the impact on American commerce when foreign government policies or practices are deemed unreasonable or discriminatory. It permits the implementation of responsive measures, such as imposing tariffs, following the investigation. The USTR can initiate the investigation process directly.
When asked about the possibility of additional Section 301 investigations on issues like digital services taxes, Greer responded that they would consult with trading partners as required by law, adding that this investigation should not come as a surprise to them.
He further explained that issues such as digital services taxes, pharmaceutical pricing policies, access to seafood and rice markets, and environmental concerns like ocean pollution are areas that U.S. industries have raised. These issues could lead to additional investigations in the future.
Regarding whether tariffs could be imposed on countries with existing trade agreements as a result of this investigation, Greer clarified that while agreements remain valid, Section 301 investigations could still lead to tariffs or other measures if conducted.
He added that after the investigation process concludes and response measures are proposed, commitments made in existing agreements would be taken into consideration.
When asked about the possibility of additional investigations under Section 232 of the Trade Expansion Act, which is the basis for imposing tariffs on items like automobiles and steel, Greer responded that while they don’t anticipate new Section 232 measures in the coming weeks, it remains an option available to the current administration throughout its term.
Addressing concerns about potential tensions with the EU due to this Section 301 investigation, Greer pointed out that some of the tension stems from the EU’s failure to implement almost any of the commitments required by their trade agreement.
The EU Parliament postponed ratification of the trade agreement with the U.S. last month, following the Supreme Court’s decision invalidating reciprocal tariffs, stating that they needed assurances from the U.S. that it would honor the agreement.
Greer stated that it has already discussed these issues with the EU, so they are aware that this investigation will proceed. The level of tension will depend on how much the EU fulfills its commitments while it conducts the investigation process.
Additionally, Ambassador Greer announced plans to initiate a separate Section 301 investigation related to the ban on importing goods produced by forced labor.
He explained that the U.S. has enforced laws prohibiting the import of goods produced by forced labor for about 100 years. Congress strengthened this law about a decade ago, and it believes other trading partners should adopt similar measures.
Greer clarified that this investigation is not aimed at the internal situations of specific countries but rather at examining whether other nations have laws prohibiting the import of goods produced by forced labor. He mentioned that about 60 countries could be subject to this investigation, although he did not provide a specific list. It is expected that these countries will be separate from the 16 economic entities listed in today’s Federal Register notice.