US Launches Section 301 Probe into India | 14 Mar 2026

Source: ET 

The US has launched a Section 301 investigation under the Trade Act, 1974 into 16 major trading partners, including India, over alleged structural excess capacity in manufacturing sectors. 

• Trigger for the Probe: The move follows the US Supreme Court striking down tariffs imposed under emergency powers, prompting the administration to use Section 301 to sustain trade pressure. 
• Legal Basis: The probe is initiated under Section 301 of the US Trade Act, 1974, which empowers the Office of the United States Trade Representative (USTR) to investigate foreign trade practices deemed "unfair" or burdensome to American commerce. 
• Rationale for the Investigation: The USTR will investigate whether these countries maintain "structural excess capacity" in manufacturing through policies such as government subsidies, state-owned enterprise activity, subsidised lending, currency practices, suppressed wages, and lax labour or environmental standards, which could distort trade and harm American industries. 
  • A US 2025 official order noted India's USD 58 billion bilateral trade surplus with the US, highlighting surplus sectors like textiles and automotive goods.  
  • It observed structural excess capacity in industries such as solar module manufacturing, which is nearly triple the annual domestic demand, along with significant excess in petrochemicals and steel. 
• Potential Consequences: If violations are found, the US can impose tariffs, import restrictions, or suspend trade concessions. Notably, in 2018, the US used Section 301 to impose tariffs of up to 25% on approximately USD 370 billion of Chinese imports over technology transfer and intellectual property concerns. 
• WTO Compatibility Debate: The legality of Section 301 has been contested. In 1998, the European Union (EU) challenged it at the WTO, with India, Brazil, China, and others joining as third parties. A WTO panel concluded that key provisions of the law did not conflict with global trade obligations.