The US has singled out “excess capacities” created by India in solar modules, petrochemicals and steel along with its trade surplus in goods like automotive goods, health related goods, construction goods and textiles to launch an investigation into its domestic policies that enable this.
The investigation under Section 301 of the Trade Act of 1974 also includes the European Union and 14 other countries as it seeks to bring back extra tariffs to address its large trade deficit by making imports more expensive and creating conditions for building domestic manufacturing capacity.
While justifying inclusion of India into the list of countries against whom investigations under Section 301 will be launched, the US had pointed $ 58 billion trade deficit it had with India in 2025.
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Legal Shift
The latest move seeks to put the Donald Trump administration’s use of extra tariffs on a more secure legal base after the US Supreme Court on February 20 invalidated country-specific tariffs imposed by it under the International Emergency Economic Powers Act (IEEPA).
Immediately after the court’s ruling the US imposed 10% additional duties on all imports under Section 122 of the Trade Act. These surcharges to address large and serious balance of payment deficits can be imposed only for 150 days and their upper limit is 15%
Other countries that are a target of the investigation are China, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico and Japan.
Impact on India’s Solar
“Several of these countries had already negotiated trade arrangements with Washington under the earlier tariff framework which was struck down by the Supreme Court. With its earlier tariff strategy effectively dismantled, the US appears to be turning to trade investigations and targeted measures to maintain leverage in negotiations with trading partners,’ founder of Global Trade Research Initiative (GTRI) Ajay Srivastava said.
India’s solar module exports to the US has been a target of the administration. On February 24 it imposed 125.9% preliminary countervailing duty on Indian solar cells and modules pending final ruling by July 6.
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The notice starting the probe says that 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.
The initiation of investigations regarding the acts, policies and practices of various economies that lead to excess capacities and exports was announced late Wednesday by US Trade Representative Jamieson Greer.
The notice of the investigation said, “These investigations will focus on the economies that appear to exhibit structural excess capacity in various manufacturing sectors, such as through large or persistent trade surpluses or underutilized or unused capacity.”
“The result of this overproduction is large or persistent trade surpluses, including the expansion of exports to the United States or to third countries that, in turn, export to the US. This displaces existing US domestic production or prevents investment and expansion in US manufacturing production that otherwise would have been brought online,” the notice added.
Upon initiation of an investigation, the USTR must seek consultations with the economies whose acts, policies, or practices are under investigation. After inviting comments and holding public hearing, the investigation would move forward.
The investigation under Section 301 to see if the US can act against a particular practice typically takes 12-18 months. If tariffs are the chosen remedy, the USTR publishes a proposed list of products. That are followed by another round of public hearing before tariffs are finally imposed.
TOPICSTrump TariffThis article was first uploaded on March twelve, twenty twenty-six, at twenty-five minutes past six in the evening.