Washington: U.S. President Donald Trump's administration has initiated a trade investigation targeting South Korea, China, Japan, and 13 other economies to address concerns over "unfair" trade practices related to "structural" excess capacity and production. This move, which may lead to the imposition of tariffs, was announced by the U.S. Trade Representative (USTR) on Wednesday.
According to Yonhap News Agency, USTR Jamieson Greer disclosed during a press call that the Trump administration has published a Federal Register notice to commence an investigation under Section 301 of the 1974 Trade Act. This legal provision empowers the USTR to scrutinize unfair foreign trade practices on a country-by-country basis.
The announcement coincides with the administration's efforts to replace the invalidated country-specific "reciprocal" tariffs that were previously implemented under the International Emergency Economic Powers Act (IEEPA), which the Supreme Court nullified last month.
Greer stated, "This investigation will examine acts, policies, and practices of certain economies relating to structural excess capacity and production in manufacturing sectors." He emphasized the expectation that the investigation will reveal multiple unfair trading practices linked to excess capacity and production. The economies under investigation include South Korea, China, India, Japan, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Vietnam, Taiwan, Bangladesh, and Mexico.
The Trump administration believes that these key trading partners have developed production capacity misaligned with market incentives for domestic and global demand. This misalignment has led to issues such as overproduction, persistent trade surpluses, and underutilized manufacturing capacity.
Greer highlighted that the investigation will focus on economies where there is evidence of structural excess capacity, identified through indicators such as persistent trade surpluses, bilateral surpluses with the United States, or unused and underutilized production capacity. The investigation will also examine policies promoting production and exports detached from market demand, including subsidies, suppressed domestic wages, and non-commercial activities by state-owned enterprises.
Further scrutinized will be market barriers that hinder foreign exports, inadequate environmental or labor protections, subsidized lending, financial repression, and currency practices. Greer noted, "At this stage, we are simply initiating the investigation. Our goal is to better understand the drivers of structural excess capacity and then determine the appropriate response."
The investigation process is intended to be "public and transparent," involving public hearings and soliciting comments from interested parties. The USTR will open a docket for written submissions and requests to appear at hearings, anticipated to open around Tuesday, with a submission deadline set for April 15. Public hearings are slated for around May 5, followed by a period for rebuttal comments.
After reviewing submissions, holding hearings, receiving rebuttal comments, and consulting with trading partners, the USTR will conclude the investigation and propose responsive actions if necessary. "Responsive actions can take several forms. They may include tariffs, fees on services, negotiations, or other measures," Greer stated.
Additionally, the USTR plans to initiate a second Section 301 investigation, likely after Thursday afternoon, focusing on import bans on goods produced with forced labor and examining whether other countries have implemented similar measures.
The Trump administration has been vocal about reconstructing tariff policy following the high court's ruling against IEEPA tariffs, with Section 301 investigations serving as a foreordained measure. These investigations aim to address areas of concern, such as industrial excess capacity, forced labor, pharmaceutical pricing practices, and discrimination against U.S. technology companies and digital goods and services.