More tariffs coming? US launches '301' probe on 16 trading partners including India, China

The Donald Trump-led US administration on Wednesday declared two new trade investigations into excess industrial capacity in 16 major trading partners, including India, and into forced labour.

This comes as a bid to refresh tariff pressure after the US Supreme Court deemed Trump's tariff programme as illegal last month.

US trade representative Jamieson Greer said that the Section 301 of unfair trade practices investigation could lead to fresh tariffs against countries like China, the European Union, India, Japan, South Korea and Mexico by summer.

Other countries that are being probed include Taiwan, Vietnam, Thailand, Malaysia, Cambodia, Singapore, Indonesia, Bangladesh, Switzerland and ‌Norway.

Canada, the second-largest US trading partner, was not mentioned as ​a target of the probe.

"So these investigations will focus on economies that we have evidence appear to exhibit structural excess capacity and production in various manufacturing sectors, such as through larger persistent trade surpluses or underutilized or unused capacity," Greer told reporters.

USTR's official notice for excess capacity probe cited the automotive sector in China and in Japan, and said a growing number of companies were unprofitable or unable to meet interest payments from operations.

It said that China's biggest electric vehicle manufacturer, BYD was "aggressively expanding" its overseas manufacturing despite outpacing domestic demand, with factories ⁠in Uzbekistan, Thailand, Brazil, Hungary and Turkey and was expected to expand capacity in Europe.

Further, it cited trade surpluses with the US in Germany and Ireland as evidence of EU excess capacity.

Singapore had excess global capacity in semiconductors despite a trade deficit with the US and Norway had excess capacity by evidence of large fuels and seafood exports, it added.

Forced labour probe

Greer added that another probe would be initiated on Thursday. This would potentially lead to ban on imports of goods produced with forced labour.

This will cover more than 60 countries. The US has already sprung into action solar panel imports and other goods from China's Xinjiang region under the Uyghur Forced Labor Protection Act signed ‌into law by former President Joe Biden. The probe could expand on such suspensions.

Greer said he wanted other countries to enforce bans on goods produced with forced labour similar to those enshrined in a nearly ⁠century-old trade law.

Greer said that he hoped to conclude the Section 301 investigations, including proposed ‌remedies, before new temporary tariffs imposed by Trump in late February expire in July.

Following the Supreme Court order that deemed tariffs as illegal under a national emergencies law on February 20, the US imposed a 10 per cent tariff for 150 days under Section 122 of the Trade Act ‌of 1974.

The probe now offer the Trump administration a way to rebuild a credible tariff threat against trading partners.

Greer said the US president was determined to pursue tariffs and "will find a way to deal with unfair trading practices. He'll find a way to get our trade deficit down. He'll find a way to protect U.S. manufacturing. We have a lot of tools to do it."

In his first term from 2016-2020, Trump used Section 301 probe to back his tariffs on ​many Chinese imports of about 25 per cent and the law is widely viewed as legally robust, having withstood prior court challenges.

(With inputs from Reuters)