March 19, 2026

New Tariffs to Replace IEEPA: USTR Initiates Sweeping Section 301 Investigations Targeting Excess Capacity and Failures on Forced Labor

Collin Douglas, Lucas Rock, Angela Santos, Mario Torrico ArentFox Schiff + Follow Contact LinkedIn Facebook X Send Embed

The Trump Administration’s tariff strategy has undergone a significant legal pivot in recent weeks. After the February 20 US Supreme Court ruling that invalidated the International Emergency Economic Powers Act (IEEPA) tariffs, the Administration immediately announced that they would impose tariffs under alternative authorities, seemingly in an attempt to mirror the IEEPA tariff regime.

See our previous alerts here and here.

First, the Administration invoked Section 122 of the Trade Act of 1974 “Section 122” to impose a temporary 10% global tariff aimed at addressing balance-of-payments deficits. That authority, however, is limited; Section 122 tariffs may not exceed 15% and expire after 150 days, with any extension requiring congressional approval. Recognizing these constraints, the Administration made clear from the outset that it would use the Section 122 period as a bridge to pursue a more durable trade remedy: investigations under Section 301 of the Trade Act of 1974 (Section 301), which carries no cap on tariff rates and no statutory time limit on their duration.

On March 11, the Office of the United States Trade Representative (USTR) announced the initiation of investigations under Section 301 targeting acts, policies, and practices of 16 countries relating to structural excess capacity and production in manufacturing sectors. On March 12, the USTR announced a second investigation into 60 countries relating to the alleged failures to take action on forced labor. The investigations will determine whether those acts, policies, and practices are unreasonable or discriminatory, and whether they burden or restrict US commerce.

Below, we summarize the scope of the investigations, the countries and sectors under scrutiny, the potential implications for affected stakeholders, and actions companies can take.

Remedial Authority Under Section 301

Section 301 authorizes the USTR to take a broad range of actions to remedy acts, policies, or practices found to be unreasonable or discriminatory. These remedies include: (1) imposing duties or other import restrictions, (2) withdrawing or suspending trade agreement concessions, or (3) entering into a binding agreement with the foreign government to eliminate the offending conduct or the resulting burden on US commerce, or to compensate the United States with satisfactory trade benefits. Notably, where the USTR elects to impose import restrictions, it must give preference to duties (i.e., tariffs).

Many companies are familiar with the use of Section 301 as a tariff mechanism. During President Trump’s first term, his Administration relied on Section 301 to impose broad tariffs on goods from China, which were applied in successive tranches. These tariffs remain in effect and range from 7.5% to 100% on nearly all Chinese-origin products, with limited exceptions.

Scope of the Section 301 Investigations

Structural Excess Capacity and Production Investigation

According to the USTR, the excess capacity investigations are a response to a serious challenge to US reindustrialization efforts. Key trading partners have developed production capacity untethered from the incentives of domestic and global demand, leading to overproduction, large or persistent trade surpluses, and underutilized and unused capacity (see here).

The USTR identified several categories of foreign government policies that, in its view, create structural excess capacity, including: (1) promoting production and exports untethered from market drivers of supply, demand, and investment, including through subsidies; (2) suppressing domestic wages; (3) non-commercial activities of state-owned or state-controlled enterprises; (4) sustained market access barriers; (5) lax or inadequate environmental or labor protections or social safety nets; (6) subsidized lending; and (7) financial repression and currency practices.

The investigations cover a broad range of manufacturing sectors, focused on aluminum, automobiles, batteries, cement, chemicals, electronics, energy goods, glass, machine tools, machinery, non-ferrous metals, paper, plastics, processed food and beverages, robotics, satellites, semiconductors, ships, solar modules, steel, and transportation equipment.

Country-Specific Highlights

The USTR provides detailed, country-specific evidence of excess capacity for each investigated economy. Among the headline figures, the USTR highlighted China’s global goods trade surplus exceeding $1.2 trillion in 2025, which accounted for nearly 70% of global goods trade surpluses, and the European Union’s trade surplus of $451 billion in 2024, with Germany singled out for a bilateral goods trade surplus with the United States of $102 billion. The USTR also identified specific sectors in each country exhibiting excess capacity and trade surpluses, which we summarize below.

| Country | Targeted Sectors and Notes |
| China | Electronic equipment; machinery; automobile and auto parts; plastics; furniture; articles of iron or steel; apparel; organic chemicals; toys and sporting goods; optical, photo, technical, and medical apparatus; iron and steel; footwear; ships and vessels; and aluminum. |
| European Union | Chemical, machinery, and vehicle sectors. The USTR specifically called out Germany’s excess capacity, led by the automobile, machinery, electronics, pharmaceutical, and chemical sectors, as well as Ireland’s pharmaceutical sector. |
| Singapore | Semiconductor, electronics, petrochemicals, and pharmaceutical industries. |
| Switzerland | Refined gold, pharmaceuticals, organic chemicals, and machinery. |
| Norway | Mineral fuels, certain electronics, and machinery. |
| Indonesia | Metals, agricultural, fuels, textiles, and construction goods sectors, including cement. |
| Malaysia | Electronics, mineral fuels and oils, machinery, animal and vegetable fats and oils, and optical, photo, technical, and medical apparatus. |
| Cambodia | Garment, footwear, and travel goods. |
| Thailand | Semiconductor, electronics, information technology products, and machinery. |
| South Korea | Electronics, automobiles, machinery, steel, and marine. |
| Vietnam | Electronics, machinery, footwear, apparel, furniture, steel, and cement sectors. |
| Taiwan | Semiconductor, electronics, IT products, and machinery. |
| Bangladesh | Textiles. |
| Mexico | Automotive, construction, rail and ship transportation, and health. |
| Japan | Automotive; optical, photo and technical; and medical apparatuses. |
| India | Textile, health, construction goods, automotive, and solar modules. |

Forced Labor Investigation

The forced labor investigations are aimed at whether the failure of the 60 targeted economies to take concrete measures at implementing or enforcing forced labor is unreasonable or discriminatory and burdens or restricts US commerce. For example, Mexico and Canada implemented forced labor import bans as part of their obligations under the US -Mexico- Canada -Agreement (USMCA), but few or no shipments have been detained under those procedures.

The economies subject to investigation are listed in Annex A include: Algeria; Angola; Argentina; Australia; The Bahamas; Bahrain; Bangladesh; Brazil; Cambodia; Canada; Chile; China; Colombia; Costa Rica; Dominican Republic; Ecuador; Egypt; El Salvador; European Union; Guatemala; Guyana; Honduras; Hong Kong; China; India; Indonesia; Iraq; Israel; Japan; Jordan; Kazakhstan; Kuwait; Libya; Malaysia; Mexico; Morocco; New Zealand; Nicaragua; Nigeria; Norway; Oman; Pakistan; Peru; Philippines; Qatar; Russia; Saudi Arabia; Singapore; South Africa; South Korea; Sri Lanka; Switzerland; Taiwan; Thailand; Trinidad and Tobago; Türkiye; United Arab Emirates; United Kingdom; Uruguay; Venezuela; and Vietnam.

Section 301 has not traditionally been used to treat labor issues as an “unreasonable” practice under the statute. However, in December 2025, the Trump Administration announced tariffs following an investigation into labor and human rights, including forced labor, on Nicaragua (see our alert here).

Key Deadlines and Public Participation

As part of Section 301’s public input process, the USTR has opened a public comment and hearing process for both Section 301 investigations.

• Excess Capacity: The docket for submission of written comments opens on March 17 and closes on April 15. The Section 301 Committee will convene a public hearing beginning on May 5, at the US International Trade Commission. Post-hearing rebuttal comments, which should be limited to rebutting or supplementing testimony presented at the hearing, may be submitted within seven calendar days after the last day of the public hearing.
• Forced Labor: The docket for submission will similarly close on April 15, and the Section 301 Committee will hold a public hearing on April 28.

Section 301 Impact on Stakeholders: Expect New Tariffs

These Section 301 investigations carry significant implications for a wide range of stakeholders. Companies that import goods from or maintain supply chains with touchpoints in any of the targeted countries face the most direct exposure, particularly if they import any of the identified goods. Tariff action could substantially increase the landed cost of goods across numerous manufacturing sectors. These importers should begin mapping their exposure now and evaluating mitigation and deferral strategies such as alternative sourcing, first sale, duty drawback programs, or foreign trade zones.

All affected stakeholders should strongly consider submitting written comments by April 15, as this is a meaningful opportunity to present data and arguments that may shape the outcome of the investigations, including the specific products, countries, and tariff levels ultimately targeted.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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