‘Structural Excess Capacity’ concerns under Section 301

The Office of the United States Trade Representative (USTR) has launched an investigation under Section 301 of the Trade Act of 1974 into more than a dozen economies, including India and China, citing concerns over “structural excess capacity” and overproduction in certain manufacturing sectors.

The probe, initiated on March 11, will examine whether government policies in these economies are contributing to excess industrial capacity that may distort global trade and harm U.S. industries.

According to the USTR, the investigation targets several sectors in India, including:

• Textiles
• Health products
• Construction goods
• Automotive goods
• Solar modules
• Petrochemicals
• Steel

Apart from India and China, the economies identified for scrutiny include the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico and Japan.

The USTR stated that available evidence indicates structural excess capacity in several Indian manufacturing sectors. Trade experts noted that many of the economies under investigation maintain goods trade surpluses with the United States.

The USTR highlighted that India recorded a $58 billion bilateral trade surplus with the U.S. in 2025. Sectors such as textiles, health products, construction goods, and automotive goods were identified as major contributors to India’s global goods trade surplus. Additionally, the notice pointed to excess capacity in solar modules, petrochemicals, and steel.

Source: BL