USTR Launches Awaited Section 301 Investigations of 16 Economies for Manufacturing Overcapacity

Shortly after the U.S. Supreme Court on February 20, 2026, held that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs, President Donald Trump announced the immediate imposition of 10 percent global tariffs under Section 122 of the Trade Act of 1974, which authorizes temporary import surcharges to address balance-of-payments deficits. However, Section 122 tariffs cannot exceed a 15 percent cap or 150-day duration limit; only Congress can authorize an extension and for 150 days only. The president made clear that he intended to use the 150-day Section 122 period to initiate investigations under Section 301 of the Trade Act of 1974, which could serve as the basis for additional tariffs that – unlike Section 122 tariffs – are not timebound or capped at a certain percentage. 

On March 11, 2026, the U.S. Trade Representative (USTR), using authority in Section 302 of the Trade Act of 1974, self-initiated the anticipated Section 301 investigations: one addressing structural excess manufacturing capacity across 16 economies, and a second addressing the failure of 60 economies to impose and effectively enforce forced labor import prohibitions.

The Section 301 Investigations

Manufacturing Overcapacity

The manufacturing overcapacity investigations will examine whether acts, policies and practices of the target economies relating to structural excess capacity and production in manufacturing sectors are "unreasonable" or "discriminatory" and burden or restrict U.S. commerce. USTR stated that key trading partners have developed production capacity untethered to domestic and global demand, leading to overproduction and large and persistent U.S. trade deficits, as well as excess industrial capacity. 

USTR expressed concern that such excess capacity undermines U.S. efforts to reshore supply chains and provide good-paying jobs for American workers. According to USTR, global manufacturing capacity utilization remains between 75 percent and 75.9 percent, below healthy utilization rates of approximately 80 percent. Despite this dynamic, USTR noted that global production continues to expand. 

USTR noted that excess capacity exists in sectors such as 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. 

These investigations focus on 16 economies that USTR determined exhibit structural excess capacity in various manufacturing sectors: China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India. 

USTR's Federal Register notice discusses each economy individually, noting for example that:

• China's global goods trade surplus exceeded $1.2 trillion in 2025, a record high, accounting for nearly 70 percent of all aggregate global goods trade surpluses. 
• The EU (with specific focus on Germany) maintained a bilateral surplus of trade in goods and services with the U.S. of $147 billion in 2024. 
• Vietnam's bilateral goods trade surplus with the U.S. stood at $178 billion in 2025. 
• Mexico's bilateral goods trade surplus with the U.S. was $197 billion in 2025, led by the automotive sector. 

Forced Labor

On March 12, 2026, USTR initiated a separate set of Section 301 investigations to examine whether the failure of various economies to impose and effectively enforce a prohibition on the importation of goods produced with forced labor is "unreasonable" or "discriminatory" and "burdens or restricts" U.S. commerce.

USTR noted that for almost 100 years, U.S. law has prohibited the importation of goods mined, produced or manufactured in whole or in part with forced labor, recognizing humanitarian concerns, as well as foreign policy and national security concerns arising from the exploitation of workers. According to the International Labour Organization, as of 2021, approximately 28 million people globally are in forced labor, an increase of 2.7 million since 2016, driven entirely by forced labor in the private economy. USTR observed that although some trading partners – including Canada, Mexico and the EU – have adopted measures intended to stop the importation or sale of products produced using forced labor, these economies have not effectively enforced their forced labor import prohibitions.

The forced labor investigations cover 60 economies and include major U.S. trading partners such as Canada, Mexico, the EU, Japan, South Korea, the United Kingdom, Australia and New Zealand, as well as China, India and a wide range of emerging markets. The full list of economies subject to these investigations is Algeria, Angola, Argentina, Australia, The Bahamas, Bahrain, Bangladesh, Brazil, Cambodia, Canada, Chile, China, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, El Salvador, European Union, Guatemala, Guyana, Honduras, Hong Kong, India, Indonesia, Iraq, Israel, Japan, Jordan, Kazakhstan, Kuwait, Libya, Malaysia, Mexico, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Pakistan, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Taiwan, Thailand, Trinidad and Tobago, Türkiye, United Arab Emirates, U.K., Uruguay, Venezuela and Vietnam.

Potential Outcomes

As a first step, USTR must determine whether the investigated acts, policies or practices are "actionable" under Section 301. If that determination is affirmative, USTR must determine whether trade action is appropriate and, if so, what action to take. For the overcapacity investigations, potential actions could include increased tariffs or other trade measures. For the forced labor investigations, USTR has expressly identified tariffs and import restrictions as potential remedies.

Given the administration's stated goal of using Section 301 tariffs to replace the IEEPA tariffs, these new Section 301 investigations likely will result in country-specific tariffs of the same (or very similar) magnitude as the IEEPA tariffs.

Key Dates: Overcapacity Investigations

Key Dates: Forced Labor Investigations

Implications for Stakeholders

These investigations present both potential risks and opportunities for affected stakeholders. Companies with manufacturing operations, supply chains or import relationships involving the target economies should evaluate their exposure to potential Section 301 tariffs or other trade actions. Note that Section 301 also requires that USTR consult with the target countries to discuss their trade practices; USTR indicates in the Federal Register notice that it has requested such consultations with the countries in question.

The compressed timeline, with written comments for both investigations due by April 15, 2026, provides a narrow window for stakeholders to submit input to USTR. For the overcapacity investigations, USTR has invited comments regarding the acts, policies and practices of each investigated economy, whether those practices are unreasonable or discriminatory, and whether they burden or restrict U.S. commerce, as well as what action, if any, should be taken, including tariff and non-tariff actions. For the forced labor investigations, USTR has invited comments on whether any economy maintains or is establishing a forced labor import prohibition, the extent to which the failure to do so is unreasonable, discriminatory or constitutes a persistent pattern permitting forced labor, effects on U.S. commerce, and what actions should be taken, including the level and scope of duties and import restrictions. Interested parties may also request to testify at the public hearings, which begin April 28, 2026, for forced labor and May 5, 2026, for overcapacity.

Given the breadth of the forced labor investigations – covering 60 economies and expressly contemplating import restrictions in addition to tariffs – companies should assess their supply chain exposure to forced labor risks.

Conclusion

The new Section 301 investigations represent the next phase of the administration's plan to use alternative legal authorities following the Supreme Court's decision invalidating the IEEPA tariffs. Unlike the now-in-place Section 122 tariffs, Section 301 tariffs offer the president the ability to adjust tariffs up or down, country-by-country specificity and a statutory foundation that has held up to court challenges in other circumstances. 

Companies with interests in trade with the target economies should monitor these investigations closely and consider whether to engage in the public comment process. Holland & Knight is closely tracking these developments. Please contact the authors of this alert or any member of Holland & Knight's Tariff Task Force or International Trade Group to evaluate your exposure and engagement strategies in light of these investigations.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.