India Under US Scanner For Unfair Trade Practices? Jamieson Greer Announces Probes, Warns New Tariffs Could Be Imposed

(MENAFN- Live Mint) The Trump administration said on Wednesday that it is launching two new trade investigations. One targets excess industrial capacity among 16 major trading partners, including India. The other focuses on forced labour practices Reuters reported.

The move aims to rebuild tariff pressure after the US Supreme Court struck down much of Trump's tariff programme in February.

US Trade Representative Jamieson Greer said the“Section 301” investigation into unfair trade practices could result in new tariffs by this summer. He named China, the European Union, India, Japan, South Korea, and Mexico among the economies that could be affected, Reuters reported.

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Other trading partners included in the excess capacity investigation are Taiwan, Vietnam, Thailand, Malaysia, Cambodia, Singapore, Indonesia, Bangladesh, Switzerland, and Norway.

However, Canada, the second-largest trading partner of the United States, was not listed among the countries targeted in the probe, reported Reuters.

"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 on a conference call.

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

It said that although China's electric vehicle production capacity exceeds domestic demand, the country's leading EV manufacturer, BYD, is rapidly expanding its global manufacturing presence. The company has established factories in Uzbekistan, Thailand, Brazil, Hungary, and Turkey, and is also expected to increase capacity in Europe, where existing automotive plants are currently operating at about 55% capacity, Reuters reported.

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USTR cited large US trade surpluses in Germany and Ireland as evidence of EU excess capacity. It said Singapore had excess global capacity in semiconductors despite a trade deficit with the US. It added that Norway had excess capacity as evidenced by large fuel and seafood exports.

Forced labor probe

Greer also said he would launch another investigation on Thursday under Section 301 of the Trade Act of 1974 aimed at banning US imports of goods made using forced labour. The probe is expected to cover more than 60 countries.

The United States has already taken action against imports of solar panels and other products from Xinjiang, China, under the Uyghur Forced Labor Protection Act, which was signed into law by former President Joe Biden. The new investigation could extend similar measures to goods from other countries.

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.

The US alleges that Chinese authorities have established labour camps for ethnic Uyghur and other Muslim groups in the western region, though Beijing denies allegations of abuse.

Greer said he hoped to conclude the Section 301 investigations, including proposed remedies, before new temporary tariffs imposed by Trump in late February expire in July. After the Supreme Court struck down Trump's global tariffs as illegal under a national emergencies law on 20 February, he imposed a 10% tariff for 150 days under Section 122 of the Trade Act of 1974.

He laid out a swift timeline for the excess capacity probe, with public comments accepted through 15 April and a public hearing slated for about 5 May.

The probes offer the Trump administration an avenue to rebuild a credible tariff threat against trading partners. The goal is to keep them negotiating and implement trade deals that were cut to reduce higher tariff rates under the International Emergency Economic Powers Act.

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Greer said the new probes, long telegraphed by administration officials, should come as no surprise to trading partners. He said they should stick to their deals, although he stopped short of saying this would make them immune to all new Section 301 tariffs.

He said that Trump was determined to pursue tariffs. "He 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," Greer said.

The investigations come as Trump officials, led by US Treasury Secretary Scott Bessent, prepare to meet Chinese counterparts in Paris this week.

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The talks are expected to pave the way for a meeting between Trump and Chinese President Xi Jinping in Beijing at the end of March.

Trump's tariffs on Chinese goods were effectively reduced by 10 percentage points following a US Supreme Court ruling and the implementation of temporary tariffs, weakening Washington's leverage in trade and export control negotiations with China.

During his first term, Trump relied on a Section 301 investigation to justify tariffs of around 25% on many Chinese imports. The law is considered legally strong and has previously withstood court challenges.

The excess capacity probe targets a concern raised with China by successive administrations from Trump's first term through the Biden administration. It focuses on growing state-supported manufacturing output that is flooding the world with cheap goods.

Greer said this includes production "untethered" to market demand and that the problem has spread to other countries. He said the probe will focus on evidence, including large global current account surpluses, government subsidies, suppressed domestic wages, noncommercial activities of state-owned enterprises, inadequate environmental and labour standards, and subsidized lending and currency practices, Reuters reported.

(With inputs from Reuters)

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