USA initiates Section 301 investigations into global manufacturing overcapacity, targeting several countries including India

Introduction

On 11 March 2026, the Office of the United States Trade Representative (‘USTR’) initiated investigations under Section 301 of the U.S. Trade Act of 1974 (‘Section 301’) into the policies of several economies concerning excess capacity and production in manufacturing sectors.1]

The investigation will assess whether the policies and practices adopted by the economies create or maintain excess global manufacturing capacity, which may lead to overproduction, persistent trade surpluses, and increased exports into the U.S.[2]

If the USTR determines that such practices are actionable, it may take appropriate and proportionate action, including imposition of additional tariffs, import restrictions, or other trade measures against the relevant economies.[3]

Countries covered by the Investigation

The investigation covers 16 economies, namely, China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.

Products and Sectors covered by the Investigation

The USTR Notice identifies several manufacturing sectors where structural excess capacity is believed to exist across the investigated economies. Illustrative sectors identified in the USTR Notice include aluminum, automobiles and automotive components, batteries, cement, chemicals, electronics, energy goods, glass, machinery and machine tools, non-ferrous metals, paper, plastics, processed food and beverages, robotics, semiconductors, ships and marine vessels, solar modules, steel, and transportation equipment.

Investigations relating to India

The USTR Notice also identifies India as one of the investigated economies. In particular, it highlights the following sectors as potentially exhibiting excess production capacity in India:

• solar modules[4]
• textiles
• health industry
• automotive goods
• petrochemicals
• steel
• construction goods

Public Comments and Hearing

As part of the investigation, USTR has invited inputs from interested stakeholders. The key milestones and dates are set out below.
 

Stakeholders may submit comments addressing:
 

• Acts, policies, and practices creating or maintaining structural excess capacity or production in specific sectors,
   
• Whether such acts, policies, and practices are unreasonable or discriminatory,
   
• Whether they restrict U.S. commerce and the nature and level of the restriction,
   
• Whether they are actionable under Section 301 and the appropriate remedial measures, if any; and
   
• Any additional factors relevant to assessing structural excess capacity or production in manufacturing sectors.
   

Past actions under Section 301

In the past, the U.S. has relied on Section 301 to address unfair trade practices. In 2018, following a Section 301 investigation into China’s policies related to technology transfer, intellectual property, and innovation, the U.S. imposed additional tariffs on a wide range of Chinese imports. These tariffs remain in effect and are reviewed periodically. 

LKS Comments

These investigations should be viewed in the context of recent developments in U.S. trade policy. Following the recent Supreme Court ruling striking down the reciprocal tariffs and fentanyl tariffs, President Trump indicated that the U.S. will increasingly rely on existing statutory tools, including Sections 232 and 301, to address perceived trade imbalances and industrial overcapacity.

This investigation also comes at a time of ongoing U.S.–India trade engagement. The U.S. and India recently agreed on a framework for an interim trade deal. In this context, the extent to which any potential measures arising from the present investigation may intersect with broader bilateral trade negotiations remains to be seen. Historically, tariff measures adopted under Section 301 have also been modified or removed after a trade deal has been entered into between U.S. and the affected trading partners.

Additionally, in previous Section 301 actions, USTR has provided product exclusions and exemptions from additional duties for certain goods. Accordingly, Indian enterprises, and business/trade associations operating in potentially affected sectors are encouraged to participate in the comments process and hearings, as submissions may help support requests to exclude products from any duties or trade measures that may be imposed following this investigation.

[1] USTR, Notice of initiation of investigations and hearings, and a request for comments (‘USTR Notice’), accessible here, last visited on 12 March 2026.

[2] Through these investigations, the USTR will examine whether the relevant acts, policies, or practices are ‘unreasonable or discriminatory’ and whether they burden or restrict U.S. commerce. See Section 301(b), Trade Act.

[3] See Section 301(c) of the Trade Act of 1974.

[4] The Notice indicates that India’s solar module manufacturing capacity is nearly three times greater than domestic demand.