Post-IEEPA: Why the US has launched Section 301 investigation into India, 15 others

The US has launched a Section 301 investigation into more than a dozen countries, including India and China, citing structural excess capacity and overproduction in certain manufacturing sectors. This is the first probe launched by the Trump administration after the US Supreme Court declared the International Emergency Economic Powers Act (IEEPA)- tariffs illegal last month.

“These investigations will focus on economies that appear to exhibit structural excess capacity and production in various manufacturing sectors, such as through large or persistent trade surpluses or underutilised or unused capacity: China, the EU, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India,” United States Trade Representative (USTR) said.

Trade deficits

International trade experts said that the countries targeted in the investigation have trade deficits in goods with the US. Deborah Elms, Head of Trade Policy at Singapore-based Hinrich Foundation, in a social media post, said this is a “very fast” investigation with a short comment window and the mandated hearing in early May.

USTR said that it formally initiated the investigations on March 11 and will open dockets for submission of written comments on March 17, and on May 5, the Section 301 Committee will convene public hearings. This could mean that fresh tariffs could be imposed on India and other countries after May.

Sectors and capacity

Targeting India over “structural excess capacity and production”, USTR said, in 2025, India had a bilateral trade surplus with the United States of $58 billion, and that India’s global goods trade surplus sectors include textiles, health, construction goods, and automotive goods.

“For example, evidence suggests the solar module sector is plagued by excess capacity, including that India’s current module manufacturing is nearly triple the annual domestic demand. India also has created significant excess capacity in petrochemicals, steel, and other industries,” USTR said.

Trade deal

This assumes significance as India and the US agreed to a trade deal but have not formally signed it. Commerce Minister Piyush Goyal last month said that the negotiations would resume after further clarity on the tariff situation. The EU had paused the implementation of the EU-US trade deal after the US Supreme Court ruling, while other countries sought clarity from the US on the trade deal.

USTR argued that structural excess capacity and production in manufacturing sectors present a serious challenge to US efforts to re-shore supply chains and provide good-paying jobs for American workers, and that 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 underutilised and unused capacity, in manufacturing sectors. Structural excess capacity has been characterised generally as under-utilised industrial production capacity that is sustained through governmental interventions or policies incentivising companies to maintain or grow their unused capacity inefficiently,” USTR said.

Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, specializing in economic policy and financial regulations. With over five years of experience in business journalism, he provides critical coverage of the frameworks that govern India's commercial landscape. Expertise & Focus Areas: Mishra’s reporting concentrates on the intersection of government policy and market operations. His core beats include: Trade & Commerce: Analysis of India's import-export trends, trade agreements, and commercial policies. Banking & Finance: Covering regulatory changes and policy decisions affecting the banking sector. Professional Experience: Prior to joining The Indian Express, Mishra built a robust portfolio working with some of India's leading financial news organizations. His background includes tenures at: Mint CNBC-TV18 This diverse experience across both print and broadcast media has equipped him with a holistic understanding of financial storytelling and news cycles. Find all stories by Ravi Dutta Mishra here ... Read More