Trade Policy Plan B: Goodbye, IEEPA Tariffs. Hello, Section 301 Investigations

On March 11 and 12, 2026, the Office of the U.S. Trade Representative (USTR) launched two new investigations under Section 301 of the Trade Act of 1974 into certain acts, policies, and practices of the economies of 60 of the U.S.'s largest trading partners:

• Thefirst investigation covers the 16 economies of China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India and relates to structural excess capacity and production in manufacturing sectors. For this investigation, USTR has called for written comments to be submitted as soon as March 17 and no later than April 15, 2026, and has set a public hearing for May 5, 2026.
• The second investigation covers all 60 economies (see here) and relates to failures to impose and effectively enforce a prohibition on the importation of goods produced with forced labor. For this investigation, USTR has called for written comments to be submitted no later than April 15, 2026, and has set a public hearing for April 28, 2026.

Although USTR could take up to 12 months to complete these investigations, it is moving on an accelerated basis with the perceived expectation that the USTR will seek new tariffs and/or other import restrictions before the current Section 122 tariffs expire on July 24, 2026.

Introduction and Policy Context

On March 11 and 12, 2026, the Office of the United States Trade Representative (USTR) initiated two new investigations under Section 301 of the Trade Act of 1974. At issue in both investigations is whether certain foreign country acts, policies, and practices are unreasonable or discriminatory and burden or restrict U.S. commerce. The acts, policies, and practices at issue in the first investigation relate to structural excess capacity and production in manufacturing sectors. The acts, policies, and practices at issue in the second investigation relate to failures to impose and effectively enforce a prohibition on the importation of goods produced with forced labor.

If the investigations conclude that the measures at issue are unreasonable or discriminatory and burden or restrict U.S. commerce, the Trade Representative may take actions including the imposition of duties on imports of goods of the countries in question. There is no limit on the level of duties that may be imposed. Nor is there a limit on the time for which they may be imposed. However, any actions taken under Section 301 are subject to review after four years to determine whether they continue to be necessary.

The structural excess capacity investigation concerns 16 different economies. The forced labor investigation concerns 60 different economies, including the 16 at issue in the structural excess capacity investigation.

Although Section 301 had been invoked from time to time prior to the establishment of the World Trade Organization, it fell mostly dormant for over two decades following the WTO's establishment. President Trump revived Section 301 in his first term, invoking it to impose tariffs upon a finding of certain unreasonable measures of China. It has been invoked 11 times since then, usually with regard to measures of a single country. The one exception until today was a multi-country investigation initiated in 2019 with regard to certain countries' digital services taxes.

Although a section 301 investigation may last up to 12 months, the recent announcements by USTR suggest a much more accelerated schedule. It is possible that findings and determinations regarding appropriate responsive action will be rendered as early as May or June.

In a statement to reporters, Trade Representative Jamieson Greer said that he hoped to conclude the Section 301 investigations, including proposed remedies, before the 10 percent tariffs ⁠imposed by President Trump in February under Section 122 of the Trade Act of 1974 expire in July. Given the timing, the Section 301 investigations appear to represent an effort to maintain the administration's reindustrialization and trade agenda following the Supreme Court's invalidation of previously implemented tariffs under the International Emergency Economic Powers Act (IEEPA).

Economic Rationale and Core Allegations

The stated objective of the structural excess capacity investigation is to support policy initiatives aimed at reshoring critical supply chains and addressing recent contractions in U.S. manufacturing employment. The agency posits that specific trading partners are generating production volumes that significantly surpass both domestic and global demand, attributing this trend to state-sponsored intervention rather than natural market dynamics. According to the USTR's framework, this resulting "structural excess capacity" generates an artificial market oversupply, which subsequently displaces domestic production and disincentivizes capital investment within the U.S. manufacturing sector.

The stated objective of the forced labor investigation is to determine whether the failure of the targeted foreign economies to impose and effectively enforce bans on the importation of goods produced with forced labor is "unreasonable or discriminatory and burdens or restricts U.S. commerce." A major underlying concern, as stated by Ambassador Greer, is that U.S. workers and businesses are being forced to compete against foreign producers who gain an artificial cost advantage by exploiting forced or compulsory labor.

Structural Excess Capacity Investigation

The investigation into "structural excess capacity" involves sixteen distinct economies that have persistent bilateral trade surpluses with the United States. This includes nations across the Indo-Pacific and Asia (such as China, Japan, South Korea, Taiwan, India, Indonesia, Malaysia, Singapore, Thailand, Vietnam, Cambodia, and Bangladesh), as well as the European Union, Switzerland, Norway, and Mexico.

The USTR has identified a broad spectrum of critical sectors that it assesses as impacted by this overcapacity. These range from foundational materials like aluminum, steel, cement, and chemicals to advanced manufacturing goods including semiconductors, robotics, and machine tools. The inquiry also encompasses the energy and automotive sectors, specifically electric batteries and solar modules, as well as consumer goods.

The USTR hypothesizes that this production surplus is facilitated by non-market practices, including direct state subsidies, non-commercial operations by state-owned enterprises, wage suppression, inadequate environmental protections, and sustained barriers restricting U.S. export market access.

Forced Labor Investigation

The forced labor investigation involves 60 different economies that allegedly have failed to impose and effectively enforce a prohibition on the importation of goods produced with forced labor. The USTR considers that such a failure subjects U.S. producers to an uneven playing field.

Procedural Framework and Timeline

At issue in each of the investigations is whether the acts, policies, and practices at issue are unreasonable or discriminatory and burden or restrict U.S. commerce.

Although it has up to 12 months to complete investigations, the USTR has stated that it intends to operate on an expedited timeline. This urgency may be driven by the impending July 24 expiration of the temporary 10 percent global tariffs on most imported goods implemented under Section 122 of the Trade Act of 1974 following the recent Supreme Court's February 20 ruling leading to the termination of IEEPA tariffs. For the excess capacity investigation, the public comment docket opens on March 17, with written submissions and hearing requests due by April 15. The USTR will hold public hearings from May 5-8. Written submissions in the forced labor investigation also are due April 15, and a public hearing is set for April 28.

Potential Outcomes and Future Policy Implications

Although Ambassador Greer has stated that the USTR will not prejudge the outcome of the investigations, Section 301 provides the Trade Representative with broad discretion to implement measures in response to finding that foreign country acts, policies, or practices are unreasonable or discriminatory and burden or restrict U.S. commerce. Actions that may be taken include the imposition of tariffs on imports of goods of the country in question. Section 301 does not impose a limit on such tariffs, which may remain in place for such time as the Trade Representative determines to be appropriate (subject to four-year review).

The USTR has indicated that the findings of the Section 301 process will be weighed against commitments made by foreign nations in existing reciprocal trade agreements. However, the USTR also noted that the statute contemplates negotiated resolutions, allowing for scenarios where targeted nations might implement structural reforms and increase purchases of U.S. exports to mitigate trade friction.

As the fallout from the Supreme Court's February 20 decision in Learning Resources, Inc. et al v. Trump continues to unfold, businesses are navigating a rapidly shifting landscape of new tariff orders, refund opportunities, and urgent supply chain adjustments. To help our clients make sense of these complex developments, Baker Botts has formed a multidisciplinary Tariff & Trade Strategy Task Force. Uniting decades of government and private practice experience across our international trade, litigation, corporate, and tax groups, the Task Force is uniquely positioned to help you secure owed refunds, hedge against future risks, and address these unprecedented international trade challenges from every possible angle.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.