The Office of the United States Trade Representative initiated two back-to-back investigations on the grounds of Section 301 of the Trade Act of 1974 on Wednesday and Thursday this week. According to local media reports, these investigations intend to replace the US President Donald Trump’s recently revoked blanket tariffs and could eventually result in tariffs, import restrictions or other trade remedies.
Probe targets manufacturing overcapacity across 16 economies
According to the USTR, the first investigation will focus on structural excess capacity in manufacturing sectors across 16 economies, including China, the European Union, Japan, India, Mexico and Vietnam, and will examine whether government policies contributing to excess production and overcapacity distort international competition and negatively impact US industries.
“In many […] sectors, the United States has lost substantial domestic production capacity or has fallen worryingly behind foreign competitors,” the official release by the USTR stated, including automobiles, machinery, non-ferrous metals and steel within these sectors.
Commenting on the investigation US Trade Representative Jamieson Greer said the new investigations show the US will no longer allow foreign countries to undermine its industrial base by exporting the effects of excess production capacity. He stated that the Trump administration aims to reshore critical supply chains and create well-paid manufacturing jobs. According to Greer, structural overcapacity in many trading partners leads to overproduction that displaces US output and discourages investment in domestic manufacturing, contributing to the loss of US industrial capacity and increasing competitive pressure from foreign producers.
Separate investigation to assess bans on imports produced with forced labor
The office has also initiated separate Section 301 investigations covering 60 economies, including Turkey.
The probe will assess whether governments have failed to impose and effectively enforce bans on imports produced with forced labor, and whether such failures burden or restrict US commerce.
Support from local industries
Several steel market participants have supported the move. “Overcapacity is a serious problem. In some cases, such as Chinese autos and steel, it has wrecked economies and industries as well as cost jobs in America. We commend the administration for initiating these investigations, which we hope will lead to meaningful action to defend American workers and manufacturers,” stated Paul Allen, president of the Alliance for American Manufacturing.
President of United Steelworkers International, Roxanne Brown, also welcomed the Office of the United States Trade Representative’s launch of Section 301 investigations into global overcapacity, stating that global overcapacity - particularly in sectors such as steel and aluminum - has harmed workers, communities and domestic industries, while forced labor remains widespread in China and other countries. She emphasized the need to identify companies benefiting from forced labor and to strengthen enforcement against such practices.
Section 232 versus Section 301: different legal frameworks
Within the US trade policy framework, Section 232 and Section 301 tariffs differ mainly in their legal basis and purpose.
Section 232 tariffs are imposed under the Trade Expansion Act of 1962 on national security grounds. These investigations are conducted by the United States Department of Commerce and allow the US government to restrict imports that threaten industries considered critical for national defense. Since 2018, these measures have been widely applied to sectors such as steel and aluminum.
In contrast, tariffs under Section 301 of the Trade Act of 1974 are designed to address unfair foreign trade practices, including discriminatory policies or intellectual property violations. These investigations are conducted by the USTR and typically target specific countries.
While Section 232 measures usually apply to particular industries and may affect multiple trading partners, Section 301 actions are generally country-specific and have frequently been used in trade disputes involving imports from China.