US starts tariff investigation against India and 15 other countries

USTR opens Section 301 investigations into 16 economies, including India, over excess manufacturing capacity that Washington says undermines US industrial revival

The United States Trade Representative (USTR) on Thursday (India time) announced the launch of tariff-related investigations against 16 trade partners, including India, accusing these countries’ “structural excess capacity and production in manufacturing sectors” of adversely affecting America’s reindustrialisation efforts. 

The investigations are being launched under Section 301(b) of the Trade Act of 1974, which will examine whether the policies of America’s trade partners are discriminatory and burden US trade. If confirmed, Washington will respond with retaliatory trade measures. 

Section 301(b) of the 1974 Trade Act authorises the USTR to initiate investigations into foreign trade practices that are "unreasonable or discriminatory" and burden US commerce, potentially leading to retaliatory tariffs or restrictions. 

 

The probes will cover sectors such as steel, aluminium, automobiles, batteries, electronics, chemicals, machinery, semiconductors, and solar modules. Apart from India, economies subject to these investigations are: China, the European Union (EU), Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, and Japan. 

The launch of these investigations came less than a month after the US Supreme Court struck down the legal basis for the US President Donald Trump-led administration’s country-specific “reciprocal tariffs”. Thereafter, Trump imposed a blanket 10 per cent surcharge on all countries for 150 days under Section 122 of the Trade Act from February 24. 

“The US will no longer sacrifice its industrial base to other countries that may be exporting their problems with excess capacity and production to us. Today’s investigations underscore President Trump’s commitment to reshore critical supply chains and create good paying jobs for American workers across our manufacturing sectors,” an official release quoted USTR Jamieson Greer as saying. 

According to Greer, across sectors, these nations are producing more goods than they can consume domestically. The overproduction is displacing existing US domestic production or preve­nting investment and expansion in manufacturing.

 

In many sectors, the US has lost substantial domestic production capacity, or has fallen worryingly behind foreign competitors, he said. 

The USTR has requested consultations with the governments of all the 16 countries whose acts, policies, or practices are under investigation. 

Comments regarding the investigations will open on March 17. To be assured of consideration, interested persons should submit written comments and requests to appear at the hearing, along with a summary of the testimony, by April 15, the USTR said in a statement. The USTR will hold hearings in connection with these investigations starting May 5.

 

Engineering Export Promotion Council of India (EEPC India) Chairman Pankaj Chadha said the engineering sector has already been dealing with a lot of uncertainties, and the Section 301 investigation adds to the challenges. The impact on India's exports will be clearer only after the investigation concludes. However, it seems the move is aimed at imposing a new tariff once the 150 days for the 10 per cent global tariff expires, Chadha added.

 

“This does not bode well for the Indian engineering sector, given that the 50 per cent tariff imposed by the Trump administration on items such as steel, aluminium, autos, and auto components remains in place,” Chadha said, adding that the latest USTR decision may also be intended to have leverage during trade negotiations with India.

 

Ajay Srivasatava, former trade ministry official and founder of Delhi-based think tank GTRI, said that the US investigation identifies several sectors in India where structural excess capacity or export surpluses may exist. “According to the notice, India’s solar-module manufacturing capacity is already nearly three times domestic demand, suggesting the possibility of export-driven production surpluses. Similar concerns are raised about expanding capacity in petrochemicals and steel,” Srivastava said.

 

“GTRI notes that while Section 301 remains an important US trade tool, it is slower and more legally constrained than the reciprocal tariff system invalidated by the Supreme Court. Section 301 investigations require evidence of harm and must be tied to specific trade practices,” he added.