- The US Trade Representative launched an investigation into India and 15 others for unfair trade practices
- Investigations focus on structural excess capacity in manufacturing causing overproduction and trade surpluses
- US Supreme Court invalidated most reciprocal tariffs, affecting US-India trade talks and tariff policies
Stung by the US Supreme Court ruling that invalidated most of the reciprocal tariffs, the Trump administration on Thursday initiated a formal probe into India and 15 other major trade partners for alleged unfair practices.
The United States Trade Representative has initiated investigations under Section 301 of the Trade Act of 1974 regarding the acts, policies, and practices of certain economies relating to structural excess capacity and production in certain manufacturing sectors, according to a notification.
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"Key trading partners have developed production capacity untethered from the incentives of domestic and global demand. This excess capacity leads to, among others, overproduction and large or persistent trade surpluses, as well as underutilized and unused capacity, in manufacturing sectors," it said.
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The USTR said it has evidence of "structural excess capacity and production" in India, while highlighting the $58 billion bilateral trade surplus it had with the world's largest economy last year. The agency noted India's global goods trade surplus sectors include textiles, health, construction goods, and automotive
goods.
"... evidence suggests the solar module sector is plagued by excess capacity, including that India's current module manufacturing is nearly triple annual domestic demand. India also has created significant excess capacity in petrochemicals, steel, and other industries," the agency said.
Washington and New Delhi agreed on a trade deal early February that will slash US tariffs on many Indian goods to 18% from 50%. However, the US Supreme Court later struck down the duties imposed under emergency powers last year, halting trade negotiations. Trump has since imposed a new 15% global tariff on most imported goods.
The other countries that the USTR will probe are China, the European Union (EU), Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, and Japan.
After public hearings and consultations, it will mull whether to take tariff and non-tariff actions.
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