The United States has opened a wide-ranging trade investigation into manufacturing and industrial practices across 16 economies, including India, amid concerns that large production capacities in these markets could be distorting global trade.
The probe, announced by the US Trade Representative (USTR) office on Wednesday (local time), will examine whether manufacturing sectors in these economies are producing far beyond actual market demand, creating trade imbalances and persistent surpluses that affect global markets.
Speaking during a White House press briefing, US Trade Representative Jamieson Greer said the inquiry would be conducted under Section 301 of the Trade Act of 1974, a key US trade enforcement law used to examine unfair trade practices.
Greer said the investigation will analyse “acts, policies and practices” that may be encouraging production levels far greater than domestic and global demand.
“We expect that this investigation will uncover a variety of unfair trading practices related to excess capacity and production in manufacturing,” Greer said.
He added that the US believes some trading partners have built manufacturing capacity “untethered from the market incentives of domestic and global demand.”
Countries under investigation
The USTR said the investigation covers Japan, China, Switzerland, Norway, South Korea, the European Union, Taiwan, Singapore, Vietnam, Mexico, Cambodia, Thailand, Indonesia, Malaysia, and Bangladesh.
Together, these economies represent some of the world’s largest manufacturing and export hubs, spanning industries such as chemicals, textiles, electronics, automobiles, and energy.
US officials argue that production levels in some countries exceed actual market demand. According to them, this can result in excess supply, continued trade surpluses, and underused industrial capacity in several sectors.
Officials say such situations may arise due to factors including market access restrictions, state-backed industrial policies, currency practices, government subsidies, subsidised loans, or weaker labour and environmental standards that reduce production costs.
“This excess capacity leads to, among other factors, overproduction and larger persistent trade surpluses, as well as underutilised and unused capacity, particularly in manufacturing sectors,” Greer said.
China, the EU and Asian exporters dominate global surpluses
Among the economies under scrutiny, China stands out as the largest exporter, with its goods trade surplus exceeding $1.2 trillion in 2025, accounting for nearly 70 per cent of global goods trade surpluses.
China also recorded a $361 billion bilateral trade surplus with the United States in 2024, the biggest among US trading partners. Its exports cover sectors such as steel, machinery, automobiles, electronics, and consumer products.
The European Union is another major economic bloc in the investigation. The euro area reported a $451 billion goods trade surplus in 2024, along with a $147 billion bilateral surplus with the United States.
Several Asian manufacturing centres are also part of the probe. Vietnam recorded one of the fastest-growing trade surpluses, reaching $196 billion globally in 2025, while its surplus with the US rose to $178 billion, driven largely by electronics and machinery exports.
South Korea reported a $52 billion global trade surplus in 2024, while Taiwan posted $73.3 billion, both supported by the semiconductor and electronics industries.
India’s trade surplus also under review
India has also been included in the investigation. The country recorded a $58 billion bilateral trade surplus with the United States in 2025.
According to the report, key sectors contributing to India’s surplus include health products, construction materials, textiles, and automobile manufacturing.
The assessment also notes that some Indian industries show significant production capacity compared with domestic demand. In the solar sector, for instance, manufacturing capacity is estimated to be almost three times higher than local demand. Additional excess capacity is reported in industries such as petrochemicals and steel.
Elsewhere, Bangladesh and Cambodia rely heavily on garment and footwear exports, while Thailand exports automobiles and machinery. Mexico’s large surplus with the United States is driven mainly by the automotive sector.
Meanwhile, Switzerland’s surplus comes largely from refined pharmaceuticals, gold, and machinery, while Norway and Indonesia benefit from exports of fuels, metals, and agricultural commodities.
How the US investigation will proceed
The USTR has outlined a multi-step process before any decision is taken.
Around March 17, a public docket will open for written submissions and requests to appear at hearings. Written comments and hearing requests will be accepted until April 15.
Public hearings are expected to begin around May 5, after which rebuttal comments will be invited. During this period, US officials will also hold consultations with the economies involved in the investigation.
After the process is completed, the USTR will publish its findings and determine whether any action should be recommended to US President Donald Trump.
Possible responses could include restrictions on services, tariffs on goods, or negotiated commitments with partner countries.
Greer said the investigation remains at an early stage, and no decision on punitive action has been taken.
“After USTR has received written comments, had a hearing and received rebuttal comments, and of course, during that time we’ll also be consulting with our trading partners who are subject to this investigation,” he said.
“After all of that, the USTR will have our findings and our analysis, and we will propose, if necessary, a responsive action. A responsive action can take a number of forms.”
He also referred to a previous Section 301 probe into China during Donald Trump’s first presidential term, which resulted in tariffs, tighter investment screening rules and export controls.
In addition to the manufacturing probe, Greer indicated that the USTR is preparing to launch another Section 301 investigation focused on whether countries effectively ban imports of goods produced using forced labour.