US 'unfair trade' probe raises concerns over future trade and tariff policies

With the US launching an unfair trade negotiation against India and 15 other countries, there are rising concerns over further trade and tariff policies of the Donald Trump administration and their impact on the domestic industry.

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United States Trade Representative Jamieson Greer on March 11 announced the initiation of investigations regarding the acts, policies, and practices of various economies under Section 301(b) of the Trade Act of 1974 relating to structural excess capacity and production in manufacturing sectors.  The investigations are focussed on China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.   

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Greer has warned that the investigation could lead to new tariffs being imposed against these countries.
 
The probe by the US has been launched soon after the US Supreme Court struck down the reciprocal tariffs, putting a question mark over the future of the trade deals negotiated by the US. US President Donald Trump has since then imposed a 10% tariff for 150 days under Section 122 of the Trade Act of 1974 and has said it will soon be replaced by a 15% tariff.
 
A report by the Global Trade Research Initiative said that while Section 301 remains an important US trade tool, it is slower and more legally constrained than the reciprocal tariff system invalidated by the Supreme Court. Section 301 investigations require evidence of harm and must be tied to specific trade practices.
 
“The United States may also consider tariffs under Section 232 of the Trade Expansion Act of 1962, which allows trade restrictions on national-security grounds. The provision has already been used to impose high duties on steel and aluminium and could potentially be extended to additional sectors,” said Ajay Srivastava, Founder, GTRI, adding that the revival of Section 301 investigations signals that US trade policy is entering a new phase following the court ruling that curtailed Washington’s tariff powers.
 
The Confederation of Indian Textile Industry said that it is awaiting more clarity on this development, and it adds further uncertainty to the textiles and apparel sector, which is already under stress due to the West Asia crisis. “However, CITI remains hopeful that the Indian government will do all it can to safeguard the interests of the textiles and apparel sector, one of the country's major exporters and the nation's second-biggest employer,” it said.
 
Amit Maheshwari, Managing Partner, AKM Global, however, said that India's inclusion in this 16-nation investigation should not be viewed through the same lens as other countries. “While it seems this USTR probe could significantly affect China, given its well-documented domestic surplus capacity and record trade surpluses, India’s economic realities are fundamentally different,” he pointed out.

Indian manufacturing is primarily driven by its massive domestic demand, and this investigation is unlikely to have any significant adverse effect on the Indian economy, provided these facts are appropriately placed on record before the US authorities, he said.
 
India has previously faced this instrument during 2020–2021, when the USTR investigated India’s Equalisation Levy on the grounds that it discriminated against American technology companies. This ultimately led to the abolition of the levy in Budget 2024, illustrating that Section 301 proceedings can lead to tangible policy outcomes, Maheshwari pointed out.