USTR Launches Broad Section 301 Investigations Into Excess Supply, Forced Labor Prohibitions

Earlier this month, following the U.S. Supreme Court's decision invalidating President Trump's tariffs imposed on most imports from most countries under the International Emergency Economic Powers Act of 1977 (IEEPA), the Office of the U.S. Trade Representative (USTR) announced the initiation of two investigations under Section 301 of the Trade Act of 1974, 19 U.S.C. § 2411, intended to replace the overturned IEEPA tariffs. Over the next several months, the USTR will probe alleged unfair trade practices in 60 foreign economies in the areas of excess supply and forced labor prohibitions to determine whether they warrant tariffs or other remedial trade actions. For both investigations, written comments and requests to appear at public hearings from stakeholders are due by April 15, 2026.

Background and Section 301

As we advised in February, in Learning Resources, Inc. v. Trump, the Supreme Court held that IEEPA does not authorize the President to impose tariffs because, among other reasons, Congress did not mention tariffs or duties in IEEPA "as it consistently has in other tariff statutes." Even before this ruling, we explained the Trump Administration's history with those other tariff statutes and its plan to rely on them in place of IEEPA in the event of an adverse outcome in the Supreme Court. Indeed, President Trump immediately imposed a global 150-day tariff under Section 122 of the Trade Act of 1974, 19 U.S.C. § 2132, that took effect the moment the IEEPA tariffs ended—an action that is already being challenged in the U.S. Court of International Trade.

Now, as USTR Jamieson Greer forecast after the Supreme Court's ruling, the Administration also has turned to Section 301. That provision sets forth conditions under which the USTR, at the direction of the President, must or may act, including by imposing tariffs, fees, or other restrictions on goods or services, to enforce rights under a trade agreement or to eliminate unfair trade practices. Under the discretionary authority of Section 301(b), the USTR may take "appropriate" action where they determine that "an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce." The USTR must first initiate an investigation, whether in response to an interested party petition or on its own, and consult with the foreign governments involved. An interagency Section 301 Committee established under 15 C.F.R. § 2002.3 must solicit public comments and hold public hearings after which, if it determines that the conduct and harm exist, it will recommend action designed to eliminate the misconduct and solicit further public input before implementing any remedial action. The action may later be modified under Section 307 and, unlike under Section 122, is unbound in scope or duration, subject only to mandatory four-year reviews.

Section 301 was one of the first trade adjustment tools that President Trump used early in his tenure, with several other investigations and actions still ongoing. In 2017, the USTR investigated the Chinese government's technology transfer, intellectual property, and innovation practices, ultimately imposing tariffs of up to 25% on four tranches covering nearly all Chinese goods, which increased to as much as 100% for certain goods after the Biden Administration's review. In addition, following Biden-era investigations, the USTR late last year scheduled Section 301 tariffs to be imposed in 2027 on most Nicaraguan goods related to human rights practices and on Chinese semiconductors based on government activity in the sector, and tabled levies on some Chinese shipbuilding equipment until November 2026. Investigations initiated in the second half of last year into Brazilian digital trade and other practices and China's commitment to its 2020 trade agreement with the United States have yet to be completed.

New Investigations Into Excess Supply and Forced Labor Prohibitions

The Administration is now launching new Section 301 investigations into excess supply and forced labor prohibition practices of economies from which over 99% of U.S. imports originate, but as part of what officials have all but admitted is an effort to reconstruct the IEEPA tariffs precisely, with Treasury Secretary Scott Bessent expecting "that the tariff rates will be back to their old rate" upon the statutory expiration of the Section 122 tariff. Although Section 301(b) investigations usually must be completed within 12 months, USTR Greer has said that these will be conducted on an "accelerated timeline," presumably resulting in action effective no later than July 24, 2026.

In the first investigation, initiated March 11, the USTR will determine whether alleged "structural excess capacity and production in certain manufacturing sectors" in 16 different customs jurisdictions including China, the European Union (EU), and Mexico (but not Canada)[1] are unreasonable or discriminatory and burden or restrict U.S. commerce. For each of these jurisdictions, the notice cites either a global trade surplus or a bilateral surplus with the United States in the sector as evidence of excess capacity and production, which it claims is spurred by certain policy interventions that untether domestic supply from domestic demand, undermining the U.S. market. Written comments and requests to appear at the May 5 hearing at the U.S. International Trade Commission (ITC), which must include a summary of testimony, are due via the online USTR docket April 15. The notice invites comments regarding:

• The actions of each investigated economy creating or maintaining structural excess capacity or production in specific sectors.
• Whether the conduct: (i) is unreasonable or discriminatory; (ii) burdens or restricts U.S. commerce, and if so, the nature and level of the burden or restriction; (iii) is actionable under Section 301(b) of the Trade Act; and (iv) what action, if any, should be taken, including tariff and nontariff actions.
• Whether there are additional considerations for assessing conduct that contributes to structural excess capacity or production in manufacturing sectors.

The second investigation, initiated March 12, focuses on the alleged "failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor" by the United States' 60 largest trading partners,[2] including those subject to the excess capacity investigation—meaning some could face two Section 301 tariffs. Under Section 301(d)(3)(B)(iii)(III), "a persistent pattern of conduct that … permits any form of forced or compulsory labor" is by definition unreasonable. The notice claims that these governments have failed to enact or at least to enforce laws to prevent trade in goods produced by forced labor, resulting in artificially low-cost exports. In contrast, under 19 U.S.C. § 1307, U.S. Customs and Border Protection excludes goods found to be made with forced labor through "withhold release orders." Comments and requests to appear at the April 28 hearing at the ITC are again due April 15, with topics including:

• Whether any investigated economy 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 investigated economy to establish and effectively enforce a forced labor import prohibition (i) is unreasonable, discriminates against U.S. goods, or constitutes a persistent pattern of conduct that permits any form of forced or compulsory labor and (ii) has negatively affected U.S. commerce.
• What action, if any, should be taken to address these issues, including the level and scope of (i) duties or (ii) import restrictions on products of any investigated economy.
• The appropriate aggregate level of trade to be covered by any additional duties on products of any investigated economy.

Importantly, these are only two of the trade practices that USTR Greer identified after Learning Resources, in addition to pharmaceutical pricing practices, discrimination against U.S. technology companies and digital goods and services, digital services taxes, ocean pollution, and those related to the trade in seafood, rice, and other products. We can expect to see investigations into those areas begin or resurface soon, but, in the meantime, the USTR and the trade have their hands full. China's commerce ministry has already responded with its own probes into U.S. policies that "disrupt global supply and industrial chains" and "hinder trade in green products." And while courts have given much deference to the use of Section 301 to impose tariffs—for instance, the modifications adding the latter two tranches in the 2017 China investigation were the subject of an unsuccessful challenge that is now under consideration for review by the Supreme Court—there undoubtedly will be more litigation challenging the Trump Administration's resort to this authority in these instances.

+++

DWT's International Trade, Investment & National Security team can assist domestic and foreign stakeholders in preparing comments and testimony to present to the Section 301 Committee and in developing strategies to respond if action is unveiled. Please contact Russell Semmel, Burt Braverman, or Stacey Sprenkel if you have any questions or need assistance. To stay informed, sign up for our alerts.

[1] The investigation will also focus on Bangladesh, Cambodia, India, Indonesia, Japan, Malaysia, Norway, Singapore, South Korea, Switzerland, Taiwan, Thailand, and Vietnam, and sectors include aluminum, automobiles, batteries, cement, chemicals, electronics, energy goods, glass, machine tools, machinery, nonferrous metals, paper, plastics, processed food and beverages, robotics, satellites, semiconductors, ships, solar modules, steel, and transportation equipment.

[2] Targeted for review are Algeria, Angola, Argentina, Australia, the Bahamas, Bahrain, Bangladesh, Brazil, Cambodia, Canada, Chile, China, Colombia, Costa Rica, the Dominican Republic, Ecuador, Egypt, El Salvador, the EU, 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, the Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Taiwan, Thailand, Trinidad and Tobago, Türkiye, the United Arab Emirates, the United Kingdom, Uruguay, Venezuela, and Vietnam.