US launches Section 301 probes into 16 economies over manufacturing excess capacity

WASHINGTON — The United States has initiated formal trade investigations into 16 of its major trading partners, targeting what it describes as structural excess capacity and overproduction in manufacturing sectors that burden American industry and displace domestic jobs.

United States Trade Representative (USTR) Jamieson Greer announced the investigations on 11 March 2026 under Section 301 of the Trade Act of 1974.

The economies subject to investigation are China, the European Union (EU), Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.

The probe could ultimately result in new import tariffs against any economy found to have engaged in unfair trade practices. Greer said he hoped to conclude the investigations before temporary tariffs imposed by President Donald Trump in late February expire in July 2026.

"The United States will no longer sacrifice its industrial base to other countries that may be exporting their problems with excess capacity and production to us," Greer said in announcing the investigations.

Background to the investigations

Section 301 of the Trade Act of 1974 is designed to address unfair foreign practices that burden or restrict US commerce. The Trade Representative is authorised to self-initiate investigations and, where findings are affirmative, to determine what action — including tariff and non-tariff measures — is appropriate.

The USTR stated that key trading partners have developed production capacity untethered from the incentives of domestic and global demand. According to US government estimates, global manufacturing capacity utilisation currently stands between 75.0 and 75.9 percent, below the approximately 80 percent threshold considered healthy for many sectors.

The investigations come weeks after the US Supreme Court struck down a key component of Trump's earlier tariff programme, which had imposed levies on a broad range of countries in April 2025. Following the ruling, Trump announced a new 10 percent global tariff, describing the court's decision as "terrible" and the justices who rejected his trade policy as "fools."

The administration subsequently signalled it would raise the levy to 15 percent, though the rate that came into effect remained at 10 percent. The new Section 301 investigations are widely seen as offering the administration a legal basis to rebuild its tariff strategy.

The probe was announced ahead of planned talks between senior US and Chinese officials in Paris, which are expected to lay groundwork for a meeting between Trump and Chinese President Xi Jinping in Beijing at the end of March 2026.

The case against each economy

China faces the most extensive set of allegations. Its global goods trade surplus exceeded US$1.2 trillion in 2025, a record high accounting for nearly 70 percent of global goods trade surpluses. Its bilateral surplus with the United States, inclusive of goods and services, stood at US$361 billion in 2024 — the largest of any US trading partner.

China's capacity utilisation rate stood at 74.4 percent in 2025, down from 75 percent the previous year. The Global Forum on Steel Excess Capacity (GFSEC) found that China's share of global steel excess capacity rose to 54 percent in the third quarter of 2025, up from 47 percent in the same period in 2024. Production of lithium-ion batteries in China reached 1.9 times the volume of domestically installed batteries as far back as 2022.

The EU maintained a goods trade surplus of US$451 billion, equivalent to 2.3 percent of GDP, in 2024, and a bilateral surplus with the United States in goods and services of US$147 billion in the same year. Within the EU, Germany's bilateral goods surplus with the United States reached US$102 billion in 2024, while capacity utilisation in its chemicals sector fell to 72.7 percent as of January 2026. Ireland recorded a goods trade surplus of US$97 billion in 2024, with pharmaceuticals comprising the majority of its exports to the US.

Singapore is alleged to maintain a goods trade surplus of US$47 billion in 2024, equivalent to 8.6 percent of GDP, led by semiconductors, electronic equipment, petrochemicals, and pharmaceuticals. Its bilateral trade surplus with the United States for goods and services stood at US$27 billion in 2024. The USTR also noted that Singapore's state-owned industrial landlord has continued to expand manufacturing capacity despite a recent decline in industrial occupancy rates.

Japan recorded a global goods trade deficit of approximately US$36 billion in 2024, but maintained a bilateral surplus with the United States of US$57 billion, heavily concentrated in the automotive sector. Japan exported 4.2 million vehicles in 2024 and is among the world's largest vehicle exporters. The USTR cited a growing share of Japanese firms that remain operational despite failing to generate profit as evidence of excess capacity.

Vietnam's bilateral goods trade surplus with the United States stood at US$178 billion in 2025, driven largely by electronics and machinery. Its cement sector is reported to carry overcapacity of nearly 100 percent of domestic demand. The USTR noted that a prior Section 301 investigation in 2021 found Vietnam's currency intervention and undervaluation to be unreasonable.

South Korea's bilateral goods and services trade surplus with the United States reached US$56 billion in 2024. The Korean government has itself acknowledged the need to reduce capacity in the petrochemicals sector.

Mexico's bilateral goods surplus with the United States was US$197 billion in 2025, led by the automotive sector. The United States accounts for 79.7 percent of Mexico's automotive exports. The USTR also cited a 46 percent increase in Mexico's steel production capacity between 2000 and 2019.

India recorded a bilateral surplus with the United States of US$58 billion in 2025. Its solar module manufacturing capacity is estimated at nearly triple annual domestic demand. The USTR also cited excess capacity in petrochemicals, steel, and other industries.

Thailand's manufacturing sector has been operating below 60 percent capacity utilisation for two consecutive years, with only one-third of industries having recovered to pre-pandemic levels. Its bilateral goods surplus with the United States rose to US$51 billion in 2025 from US$46 billion in 2024.

Malaysia's bilateral goods and services trade surplus with the United States stood at US$16 billion in 2024. Its steel sector recorded capacity growth of 22 percent between 2018 and 2022 despite a 25 percent decline in domestic demand during the same period.

Indonesia's bilateral goods surplus with the United States reached US$56.15 billion by November 2025. The USTR cited permanent oversupply in Indonesia's cement industry as evidence of structural imbalance.

Taiwan's bilateral goods and services surplus with the United States grew to a record US$65 billion in 2024, led by semiconductors and information technology products.

Bangladesh's bilateral goods surplus with the United States stood at US$6.15 billion, driven by textiles. The government provides cash incentives for exports across 43 sectors. The USTR noted that Bangladesh's cement industry is operating at less than 40 percent of total capacity.

Switzerland's goods trade surplus reached US$75 billion, or 8.0 percent of GDP, in 2024. Its bilateral goods surplus with the United States stood at US$44 billion that year. The USTR noted that Switzerland does not publish official capacity utilisation statistics, but has pursued currency intervention policies that are said to contribute to structural excess capacity.

Norway's goods trade surplus stood at US$67 billion in 2024, equivalent to 13.8 percent of GDP. Its capacity utilisation rate fell to 77.7 percent in the fourth quarter of 2025, more than two percentage points below its level three years prior. Norway's seafood exports hit a record high in 2025, reaching 2.8 million metric tons valued at US$18 billion.

Cambodia's bilateral surplus with the United States was approximately US$1 billion in 2024. Its garment, footwear, and travel goods sector exported US$11.8 billion in the first nine months of 2025, a 16 percent increase from the same period in 2024.

Canada, the second-largest US trading partner, was not named as a target of the investigations.

What happens next

Under Section 303 of the Trade Act, the USTR is required to seek consultations with the governments of all 16 investigated economies. A public comment docket will open on 17 March 2026.

To be assured of consideration, written comments and requests to appear at the public hearings must be submitted by 11:59 p.m. Eastern Standard Time on 15 April 2026, through the USTR's online portal at comments.ustr.gov.

The Section 301 Committee will convene public hearings from 5 to 8 May 2026 at the US International Trade Commission in Washington, DC. Post-hearing rebuttal comments may be submitted within seven calendar days of the final hearing day.

Under Section 304 of the Trade Act, the Trade Representative must determine whether the practices under investigation are actionable and, if so, what measures are appropriate. These may include tariff and non-tariff actions.

Greer said the Trump administration's reindustrialisation efforts continue to face significant challenges due to foreign economies' excess manufacturing capacity. He noted that US manufacturing value added accounted for just 10.5 percent of national GDP in 2023, compared with 22.7 percent in Germany, 28.1 percent in China, and a global average of 17.2 percent.