Last week, the Office of the U.S. Trade Representative (USTR) launched two sets of investigations under Section 301 of the Trade Act of 1974. In these investigations, USTR will examine the acts, policies, and practices of 16 economies related to structural excess capacity and production in certain manufacturing sectors, as well as the acts, policies, and practices of 60 economies related to the importation of goods produced with forced labor. These investigations are part of the Trump Administration’s plans to reestablish the global tariffs the Administration had imposed under the International Emergency Economic Powers Act (IEEPA) that the U.S. Supreme Court struck down last month. In addition to restoring the IEEPA tariffs, the Trump Administration could use these investigations to impose further remedies on the targeted economies, such as additional tariffs.

Any interested parties, including U.S. and international firms, trade associations, and individuals, will have opportunities to provide written comments and participate in hearings as part of both sets of Section 301 investigations. This public consultation process is a critical tool for stakeholders to help shape the scope and outcome of the investigations and any eventual remedies. 

Section 301 Authority

Section 302(b) of the Trade Act empowers USTR to launch an investigation under Section 301(b) to determine whether an act, policy, or practice of a foreign country is “unreasonable or discriminatory” and “burdens or restricts United States commerce.” If USTR determines as the result of an investigation that the statutory criteria are met, it may impose a wide range of remedies, including but not limited to the following: duties or other import restrictions on goods of the foreign country, fees or restrictions on services of the foreign country, and suspension or withdrawal of the foreign country’s trade agreement concessions.

Excess Capacity Section 301 Investigations

On March 11, USTR initiated investigations of 16 economies focused on structural excess capacity and production in certain manufacturing sectors, a problem that USTR characterized as “present[ing] a serious challenge to U.S. efforts to re-shore supply chains and provide good-paying jobs for American workers.”

USTR explained that it chose 16 economies as the focus of the investigations—including China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Mexico, Japan, and India—because they “appear to exhibit structural excess capacity and production in various manufacturing sectors, such as through large or persistent trade surpluses or underutilized or unused capacity.” USTR also listed country-specific allegations of excess capacity and production for each of the 16 economies.

USTR also highlighted certain sectors. According to USTR, the following sectors are “plagued by excess capacity and production”: 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.

In the investigations, USTR will seek to identify specific acts, policies, and practices that may facilitate excess capacity in these sectors in these economies. In the notice, USTR signaled the types of acts, policies, or practices that it will investigate. According to USTR, it is concerned by the following types of “interventions by trading partners” that “maintain capacity and production well above what would be expected under more market-oriented conditions”: “(1) promoting production and export untethered from market drivers of supply, demand, and investment, including through subsidies; (2) suppressing domestic wages; (3) non-commercial activities of state-owned or controlled enterprises; (4) sustained market access barriers; (5) lax or inadequate environmental or labor protection or social safety net; (6) subsidized lending; and (7) financial repression and currency practices…”

USTR will accept written comments and requests to appear at the hearing, along with a summary of each witness’s proposed testimony, until 11:59 p.m. ET on April 15, via this website. USTR invites comments regarding the following issues: 

• The acts, policies, and practices of each investigated economy creating or maintaining structural excess capacity or production in specific sectors.
• Whether the acts, policies, and practices are unreasonable or discriminatory. 
• Whether the acts, policies, and practices burden or restrict U.S. commerce, and if so, the nature and level of the burden or restriction. This would include economic assessments of the burden or restriction.
• Whether the acts, policies, and practices are actionable under Section 301(b) of the Trade Act, and what action, if any, should be taken, including tariff and non-tariff actions. 
• Whether there are additional considerations for assessing acts, policies, and practices that contribute to structural excess capacity or production in manufacturing sectors.

USTR will also convene public hearings covering each investigated economy starting on May 5. The hearings will be held in the main hearing room of the International Trade Commission starting at 10 a.m. ET and will continue until May 8, as necessary. 

Forced Labor Section 301 Investigations

On March 12, USTR initiated a separate set of investigations focused on the acts, policies, and practices of 60 economies relating to the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor. USTR characterized confronting forced labor as an “economic and national security imperative for the United States,” emphasizing that goods produced with forced labor have artificial cost advantages that threaten U.S. domestic producers. 

The 60 economies subject to these investigations include all 16 economies that are subject to the excess capacity investigations, as well as other major U.S. trading partners, including Canada, the United Kingdom, Australia, and Brazil. While USTR did not explain how each of these 60 economies was chosen, it did explain some of its choices. In particular, USTR asserted that three economies—the European Union, Mexico, and Canada—have adopted prohibitions on imports produced using forced labor in response to U.S. engagement but have failed to effectively enforce these prohibitions. USTR also asserted that “several” unnamed economies have committed to adopting similar prohibitions in the context of ongoing U.S. reciprocal trade agreement negotiations but have not yet adopted such measures or effectively enforced them. 

USTR will accept written comments and requests to appear at the hearing, along with a summary of the testimony, “until April 15,” via this website. (Note: While USTR has not specified the precise time on April 15 when these submissions are due—unlike in the case of the excess capacity investigations, where the deadline is set at 11:59 p.m. that day—it is presumably the same deadline). USTR invites comments regarding the following issues:

• Whether any economy subject to these investigations maintains or is in the process of establishing a forced labor import prohibition, and whether any such import prohibition is being effectively enforced. 
• The extent to which the failure of any economy to establish and effectively enforce a forced labor import prohibition is unreasonable, discriminates against U.S. goods, or constitutes a persistent pattern of conduct that permits any form of forced or compulsory labor. 
• The extent to which the failure of any economy to establish and effectively enforce a forced labor import prohibition has negatively affected U.S. commerce, such as through lost U.S. exports or economic output, lower prices for U.S. goods, or lower wages for U.S. workers.
• What action, if any, should be taken to address these issues, including:
  • The level and scope, if any, of duties on products of any economy subject to these investigations.
  • The level and scope, if any, of import restrictions on products of any economy subject to these investigations.
• The appropriate aggregate level of trade to be covered by any additional duties on products of any economy subject to these investigations.

Additionally, USTR will hold public hearings in the main hearing room of the International Trade Commission starting at 10 a.m. ET on April 28 and will continue until May 1, as necessary. 

Background

The initiation of the new Section 301 investigations is the latest step in the Trump Administration’s “Plan B” to reimpose the IEEPA tariffs following the Supreme Court decision striking them down. In January, National Economic Council Director Kevin Hassett stated that the Trump Administration has “a very, very detailed backup plan” for the IEEPA tariffs and might invoke Sections 122 and 301 of the Trade Act of 1974 as alternative legal authorities to restore the tariffs if the Supreme Court strikes them down. In January, USTR Ambassador Jamieson Greer also confirmed that the Trump Administration has a backup plan to promptly reimpose the IEEPA tariffs in case of an unfavorable outcome.

On February 20, the same day the Supreme Court struck down the IEEPA tariffs, President Trump invoked Section 122 and announced a 10% global tariff that took effect on February 24. (On February 21, the President announced that the Section 122 tariff would rise to 15% “effective immediately,” but that has not occurred yet.) The 10% tariff is expected to be in effect for 150 days, which is the statutory limit. At that end of that period (i.e., on July 24, 2026), the tariff will terminate unless it is extended by Congress. 

The Section 122 tariffs were the first part of Plan B. Section 301 tariffs are the second.

On February 20, USTR announced that it would initiate several Section 301 investigations to “cover most major trading partners and to address areas of concern such as industrial excess capacity, forced labor, pharmaceutical pricing practices, discrimination against U.S. technology companies and digital goods and services, digital services taxes, ocean pollution, and practices related to the trade in seafood, rice, and other products.” USTR stated that it “intend[s] to conduct these investigations on an accelerated timeframe” and “if these investigations conclude that there are unfair trading practices and that responsive action is warranted, tariffs are one tool that may be imposed.” Separately, Ambassador Greer stated that he hopes to conclude the Section 301 investigations and propose remedies before the Section 122 tariffs expire July 24.

Therefore, with respect to the Section 301 investigations related to excess capacity and forced labor, it is expected that USTR will seek to reach determinations and announce any remedies by July 24. While USTR has up to 12 months under the statute to make these decisions, it may move quicker, and it often does. 

As noted, if USTR finds that the subject economies’ acts, policies, and practices are actionable, it has a wide range of remedies available to address them, including tariffs. 

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Given their vast scope, these Section 301 investigations could have significant implications for international commerce. WilmerHale is well positioned to help clients participate in the public consultations processes and take other steps to advocate for their interests in these investigations.