The United States has launched a trade investigation into the manufacturing and industrial practices of 16 economies, including India and China, in a move widely seen as an effort to restore tariff pressure following a recent Supreme Court ruling.
The probe, being conducted under Section 301 of the Trade Act of 1974, will examine “acts, policies and practices” in manufacturing sectors that may be contributing to excessive production capacity disconnected from market demand.
Section 301 is among Washington’s most powerful trade enforcement tools, and reports suggest that the outcome of the investigation could lead to the imposition of new import tariffs.
US Trade Representative Jamieson Greer, however, said he did not want to prejudge the outcome of the probe.
“We expect that this investigation will uncover a variety of unfair trading practices related to excess capacity and production in manufacturing. Our view is that key trading partners have developed production capacity that is really untethered from the market incentives of domestic and global demand,” he said.
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Greer said excess manufacturing capacity can lead to overproduction, persistent trade surpluses and underutilised or idle capacity, particularly in key manufacturing sectors.
He added that such practices may stem from subsidies, state-directed industrial policies, market access barriers, subsidised lending, currency policies, or labour and environmental standards that lower production costs.
Besides India and China, the investigation will also cover the European Union, Japan, South Korea, Vietnam, Mexico, Taiwan, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand and Bangladesh.
Meanwhile, the USTR office has also indicated that it plans to launch a separate Section 301 investigation into whether countries effectively ban imports of goods made with forced labour.
The probes, according to a Reuters report, offer the Donald Trump administration an avenue to rebuild a credible tariff threat against trading partners to keep them negotiating and implement trade deals that were cut to reduce his higher tariff rates under the International Emergency Economic Powers Act.
Last month, the Supreme Court struck down a significant portion of President Donald Trump's global tariff regime, ruling that the power to impose taxes lies with Congress.