On March 11, the U.S. Trade Representative (USTR) announced the initiation of a series of Section 301 investigations under the Trade Act of 1974 into “structural excess capacity and production in manufacturing sectors.” The investigations target the following countries: China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India. The Administration has identified these as countries that “appear to exhibit structural excess capacity in various manufacturing sectors, such as through large or persistent trade surpluses or underutilized or unused capacity.”
Notably, these are by and large the same countries with which the U.S. entered into trade framework agreements over the past year. As discussed in prior updates, the U.S. Supreme Court’s February 20, 2026, decision in Learning Resources v. Trump removed the domestic legal authority for the tariff rates set in those agreements. The investigations may therefore serve as a basis for establishing Section 301 tariff authority in connection with the rates set in each trade framework agreement, as Section 122 duties are set to lapse at the end of 150 days from February 24, 2026.
Comment Period and Hearing (Key Deadline: April 15, 2026)
In the accompanying Federal Register notice, USTR requests comments on its investigation into structural excess capacity and “certain manufacturing sectors,” due April 15, 2026. A hearing is set for May 5, 2026.
USTR specifically invites comments on the Section 301 factors, including “the acts, policies, and practices of each investigated economy creating or maintaining structural excess capacity or production in specific sectors.” This comment period presents an opportunity for affected companies to submit evidence and arguments regarding sectors that are demonstrably not impacted by excess capacity, and to seek additional exemptions on that basis. Companies that believe certain sectors should receive greater tariff protection, including sectors previously shielded from IEEPA duties through Annex II exclusions, may also wish to participate.
Background
The concept of structural excess capacity has been a longstanding concern in U.S. trade policy underpinning a number of recent trade actions, including numerous Section 232 investigations, beginning with steel in 2017, the advent of transnational subsidy countervailing duty investigations, and a range of initiatives in the critical minerals space. The Federal Register notice explains, in summary:
Structural excess capacity and production in manufacturing sectors presents a serious challenge to U.S. efforts to re-shore supply chains and provide good-paying jobs for American workers. Key trading partners have developed production capacity untethered from the incentives of domestic and global demand. This excess capacity leads to, among others, overproduction and large or persistent trade surpluses, as well as underutilized and unused capacity, in manufacturing sectors. Structural excess capacity has been characterized generally as under-utilized industrial production capacity that is sustained through governmental interventions or policies incentivizing companies to maintain or grow their unused capacity inefficiently.
USTR also cites the relationship between excess capacity, low capacity utilization, and “large or persistent goods trade imbalances,” and outlines an argument that structural excess capacity in each of the targeted countries has contributed to persistent trade deficits in goods. The notice argues that Chinese excess capacity in industrial sectors such as autos causes ripple effects in other markets, which then shift their own exports elsewhere.
Targeted Sectors
USTR identifies the following sectors as those “plagued by excess capacity”:
Aluminum, automobiles, batteries, cement, chemicals, electronics, energy goods, glass, machine tools, machinery, non-ferrous metals, paper, plastics, processed food and beverages, robotics, satellites, semiconductors, ships, solar modules, steel, and transportation equipment.
Other Countries
The Section 301 investigations—and the tariffs that may result from them—are specific to the countries identified. For other countries, it is anticipated that there will be additional Section 301 investigations or other actions that will be announced in the new future.
Next Steps
Companies with exposure to the identified jurisdictions or sectors should assess potential tariff risk and consider submitting comments by April 15, 2026. With Section 122 duties set to expire 150 days after February 24, 2026, and these investigations potentially forming the basis for longer-term Section 301 tariffs, companies should also evaluate supply chain exposure and contractual tariff provisions in advance of possible new measures.