Following the Supreme Court decision, which ruled against the legality of the Trump administration’s implementation of tariffs under International Economic Emergency Protection Act (IEEPA), the White House did not hesitate to move forward with a 10% Section 122 tariff in its place, for a 150-day period, set to expire in late July, for what it describes as serious international payment imbalance and a growing U.S. balance-of-payments deficit, as well as pushing for increased domestic manufacturing, and stemming the flow of fentanyl across U.S. borders from Canada and Mexico
But that is not the only lever it is pulling in an effort to continue to use tariffs, as evidenced by steps taken by the Office of the United States Trade Representative (USTR) this week to launch Section 301 investigations under the Trade Act of 1974 related to what it called structural excess capacity and production in manufacturing sectors. USTR explained that these investigations will determine whether those acts, policies, and practices are unreasonable or discriminatory and burden or restrict U.S. commerce. It said that the economies subject to the Section 301 investigations are: China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.
“The United States will no longer sacrifice its industrial base to other countries that may be exporting their problems with excess capacity and production to us. Today’s investigations underscore President Trump’s commitment to reshore critical supply chains and create good-paying jobs for American workers across our manufacturing sectors,” said USTR Ambassador Jamieson Greer. “The Trump Administration’s reindustrialization efforts continue to face significant challenges due to foreign economies’ structural excess capacity and production in manufacturing sectors. Across numerous sectors, many U.S. trading partners are producing more goods than they can consume domestically. This overproduction displaces existing U.S. domestic production or prevents investment and expansion in U.S. manufacturing production that otherwise would have been brought online. In many sectors, the United States has lost substantial domestic production capacity or has fallen worryingly behind foreign competitors.”
In what could be seen as a challenge for shippers, Pete Mento, Director, Global Trade Management Services, Baker Tilly, told LM that Section 301 tariffs, which focus on unfair trade practices, are extremely difficult for companies to challenge in court.
Industry stakeholders have not seen the full force of the Section 301 tariffs, noted Mento.
“It seems like forever ago, but it was really only a year ago that the United States was dealing with the misery of suddenly being watched so closely with regards to forced labor and slave labor, and we really took a stand,” he said. “And we did that in an international community to do so. That information that they were gathering on 301s only strengthens the claim that could be used by the government. Slave labor, forced labor, unfair trade practices like currency manipulation, the effective American intellectual property are all things that ultimately can become the basis for the argument by the government to implement those 301, tariffs. And I believe that they will, again, making it very hard to do those in court. I think they make a good base case for why they should have them in place.”
In a LinkedIn post, Mento said that if the USTR’s Section 301 investigation concludes that the industrial policies for the countries being looked into are unreasonable or distort trade, the U.S. can subsequently respond with tariffs.
That process, he said, would include the following steps: investigation, public comments, hearings, findings, and new duties (tariffs).
As for next steps, the Office of the USTR said that a docket for comments regarding the investigations will open up on March 17, and a hearing will start on May 5.
Chris Rogers, Head of Supply Chain Research, at S&P Global Market Intelligence, wrote in a research note that the overall economic impacts of trade policy, following the Supreme Court ruling, may be limited, in that the IEEPA duty rates are likely to be replaced with other programs with functionally similar rates.
“The global economy at large has proven to be resilient to tariffs so far and faces bigger challenges from uncertainty regarding conflict in the Middle East and the impact on oil prices,” noted Rogers.
