U.S. launches sweeping Section 301 probes into global ‘excess capacity,’ widening tariff threat beyond China

The U.S. Trade Representative has opened a broad new front in the Trump administration’s trade agenda, launching Section 301 investigations into what Washington calls “structural excess capacity and production” across a wide range of global manufacturing sectors.

A sweeping new use of Section 301

On March 11, U.S. Trade Representative Jamieson Greer initiated investigations under Section 301 of the Trade Act of 1974 into the “acts, policies, and practices” of 16 foreign economies. The probes span industries central to both traditional heavy manufacturing and the clean-energy supply chain, including aluminum, autos, steel, semiconductors, batteries, and solar modules.

In a March fact sheet announcing the move, the Office of the U.S. Trade Representative (USTR) said foreign structural overcapacity “presents a serious challenge to the Trump Administration’s reindustrialization efforts.”

Section 301 is a controversial authority that allows the United States to respond unilaterally to foreign measures it deems “unjustifiable, unreasonable, or discriminatory” and that “burden or restrict U.S. commerce.” In recent decades, major cases have typically focused on narrower targets—most prominently China, over intellectual property and technology-transfer issues, or specific disputes such as digital services taxes.

This time, USTR is using a more macroeconomic frame: whether government intervention abroad is creating persistent, under-used capacity that drives exports and suppresses prices globally.

Who and what is under investigation

The investigations cover: China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.

In a Federal Register notice, USTR said it is examining whether these governments’ industrial and macroeconomic policies “create and sustain structural excess capacity and production” that harms U.S. industry. The agency is soliciting public comment not only on whether the practices are actionable under Section 301, but also “what action, if any, should be taken,” including tariff and non-tariff measures.

Key dates include:

• March 17: Online dockets scheduled to open
• April 15: Deadline for written comments and requests to appear at hearings
• May 5–8: Public hearings before the interagency Section 301 Committee at the U.S. International Trade Commission
• One week later: Rebuttal comments due

Defining “structural excess capacity”

USTR’s filing offers an unusually detailed definition of “structural excess capacity,” describing it as persistent, under-used industrial capacity “sustained by government intervention, rather than by normal market forces or cyclical fluctuations.”

The notice points to a range of policies it says can contribute to such conditions, including:

• Subsidies and other support that drive production and exports “untethered” from demand
• Noncommercial activity by state-owned or state-controlled enterprises
• Suppressed domestic wages
• Lax labor and environmental standards
• Subsidized lending
• Barriers to foreign competitors

The agency argues these dynamics have contributed to chronic overproduction and large trade surpluses in several economies—particularly in higher-tech manufactured goods—while the United States has experienced persistent deficits and a declining manufacturing share of GDP.

USTR cited global capacity utilization remaining roughly between 75.0% and 75.9%, below “healthy” rates of about 80% for many sectors. It highlighted steel as an example, pointing to projections that excess capacity could reach 721 million metric tons by 2027, and stated that China’s share of the global gap between steelmaking capacity and demand rose to 54% in the third quarter of 2025.

China is central—but allies are included

China features prominently in USTR’s argument. The notice says China’s global goods trade surplus exceeded $1.2 trillion in 2025 and accounted for “nearly 70 percent of global goods trade surpluses.” It also cites China’s manufacturing capacity utilization at 74.4% in 2025, and notes that its lithium-ion battery production in 2022 was roughly 1.9 times the volume installed domestically.

But the inclusion of close U.S. allies and partners underscores the breadth of the new approach. USTR’s fact sheet lists economies including the European Union, Japan, South Korea, Mexico and India among those that “appear to exhibit structural excess capacity and production.”

That has prompted warnings abroad. European officials have said they will “respond firmly” if new U.S. tariffs violate a 2021 deal that replaced earlier U.S. national security tariffs on EU steel and aluminum with tariff-rate quotas. In South Korea, officials have indicated they will contest any characterization of their export sectors as structurally overbuilt; Korean media have reported autos, steel, petrochemicals and possibly semiconductors as areas of concern.

In India, local reports say the government is reassessing the timing of a potential bilateral trade deal with the United States. New Delhi has expanded production-linked incentive programs for solar modules, electronics and other goods, while also facing preliminary U.S. countervailing duty findings on some solar products.

Domestic politics and industrial strategy

At home, the investigations track with the administration’s pledge to expand tariffs and revive U.S. manufacturing, including after Supreme Court action curtailed the use of certain emergency national security authorities that supported prior trade measures. Administration allies have portrayed Section 301 and other provisions of the Trade Act of 1974 as a way to rebuild tariff policy on a more traditional legal foundation.

Greer, who helped design the first round of China-focused Section 301 tariffs while serving as chief of staff to former USTR Robert Lighthizer, has argued that tariffs can be used to encourage reshoring and wage growth rather than simply to maximize access to low-cost imports.

USTR’s notice supports that case with comparative data, including U.S. Commerce Department figures showing manufacturing accounted for 10.5% of U.S. GDP in 2023, compared with 28.1% in China, 22.7% in Germany, 21.7% in Japan, and a global average of 17.2%.

The stakes: tariffs, supply chains, and the energy transition

U.S. producers in steel, aluminum, chemicals, autos, batteries and solar equipment have long pressed Washington to crack down on what they view as state-driven overcapacity overseas, arguing it depresses prices and contributes to plant closures. Import-dependent manufacturers, retailers and consumer groups, by contrast, have warned in past Section 301 disputes that broad tariffs can raise costs for industrial inputs and consumer goods and disrupt supply chains.

Clean-energy advocates and some firms have also cautioned that tariffs on solar panels, batteries or electric vehicles could slow deployment of low-carbon technologies.

The new investigations reopen those debates on a larger canvas. The sectors highlighted—including energy-related goods, robotics, machine tools, transportation equipment and satellites—sit at the intersection of industrial policy, national security and climate and infrastructure goals.

What comes next

If USTR ultimately determines that the identified practices in one or more of the targeted economies are “unreasonable” or “discriminatory” and burden U.S. commerce, the administration could impose new tariffs, quotas, or other restrictions, or use the threat of such measures to seek negotiated changes.

Any broad tariff action under a “structural excess capacity” theory would likely invite challenges at the World Trade Organization and could face scrutiny in U.S. courts, particularly after recent rulings narrowed executive flexibility under emergency statutes.

For now, USTR has set in motion a process that will draw testimony from industries, labor unions, importers, foreign governments and policy analysts. The hearings and written record will help determine whether Section 301 evolves into a standing tool for managing global industrial capacity—or remains a weapon reserved for narrower trade fights.