Major global economies, shaken by the imposition of unexpected tariffs by the United States, were just about settling down and recalculating their financial setbacks in the aftermath of the U.S. Supreme Court’s order striking down tariffs imposed by invoking the International Emergency Economic Powers Act (IEEPA) on 20th February. As markets began adjusting to the decision, the U.S. administration imposed an unexpected 10 percentad valorem tariff on almost all imports on 24th February.
Four days later, on February 28th, the coordinated attack by the United States and Israel on Iran escalated into a full-fledged war, which has now entered its third week.
Amidst the crisis in West Asia—already impacting the global economy and international trade—on 11th March, the United States Trade Representative (USTR), Jamieson Greer, announced the initiation of investigations into 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.
These investigations, it was announced, will determine whether the acts, policies, and practices of these economies are unreasonable or discriminatory and whether they burden or restrict U.S. commerce. The economies subject to these investigations by the USTR, include China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.
In the order initiating the Section 301 investigations, the USTR emphasized that the Trump administration’s reindustrialization efforts continue to face significant challenges due to foreign economies’ structural excess capacity and manufacturing output. Across numerous sectors, many U.S. trading partners are producing more goods than they can consume domestically. This overproduction, according to the USTR, displaces existing U.S. domestic production or prevents investment and expansion in American manufacturing that otherwise might have occurred. In several sectors, the United States has either lost substantial domestic production capacity or fallen significantly behind foreign competitors.
Nature of Section 301(b) Investigations for unfair trade practices:
It has been clarified that an investigation under Section 301(b) of the Trade Act of 1974 examines whether the acts, policies, or practices of a foreign country are unreasonable or discriminatory and whether they burden or restrict U.S. commerce.
It is further stated that only after considering the advice of the inter-agency, Section 301 Committee and consulting with appropriate advisory committees, the USTR has initiated these investigations. It has also been emphasized that upon initiation of such investigations, the USTR must seek consultations with the economies whose acts, policies, or practices are under scrutiny. Accordingly, the USTR has requested consultations with the governments of the economies mentioned above. A docket for comments regarding the investigations will open on March 17, 2026. To ensure consideration, interested parties must submit written comments and requests to appear at the hearing—along with summaries of their testimony—by April 15, 2026. The USTR will hold hearings related to these investigations starting on May 5, 2026.
Investigations Relating to Forced Labour:
Following this announcement, on March 12th , the USTR also initiated 60 additional Section301 investigations relating to failures to take action against Forced Labour.
The office release stated that investigations have been initiated against 60 economies under Section 301(b) of the Trade Act of 1974. These investigations will determine whether the acts, policies, and practices of these economies—specifically their failure to impose and effectively enforce bans on the importation of goods produced with forced labour—are unreasonable or discriminatory and whether they burden or restrict U.S. commerce.
The list of economies subject to these investigations includes 60 of the largest trading partners of the United States, including India.
As in the earlier set of investigations, consultations will be sought with the concerned governments, and hearings will also be held as part of the process.
Primarily, Section 301 of the U.S. Trade Act of 1974 allows punitive tariffs to be imposed if the USTR determines that a trade partner is engaged in unfair trade practices. The provision has been used in the past against several countries, including India in 2020.
Some notable instances where investigations were launched include: Japan’s automobile and electronics sectors in the 1980s,China’s intellectual property, technology transfer, and innovation policies in 2018, Aircraft subsidies involving the European Union in 2020 and Brazil’s digital trade sector in 2025.
The current investigations—targeting 16 countries in one group and 60 countries in another—represent the largest number ever under Section 301 investigations.
Section 301 of the U.S. Trade Act of 1974:
Section 301 of the Trade Act of 1974 grants the Office of the United States Trade Representative, broad responsibilities and authority to investigate and take action to enforce U.S. rights under trade agreements and respond to certain foreign trade practices.
The Trump administration has justified the use of Section 301 tariffs as punitive measures aimed at closing what it considers a large and persistent gap between U.S. and foreign government practices that allegedly disadvantage or discriminate against U.S. exporters, firms, and workers.
Section 301 delegates to the USTR broad authority—subject to specific direction from the President—to take action to enforce U.S. rights under trade agreements and address certain acts, policies, or practices of foreign countries. Broadly, four types of foreign government conduct are subject to Section 301 action: Denial of U.S. rights under any U.S. trade agreement, Unjustifiable actions that burden or restrict U.S. commerce, Unreasonable actions that burden or restrict U.S. commerce and Discriminatory actions that burden or restrict U.S. commerce. Section 301 investigations are conducted by a Section 301 Committee, and the Act prescribes the procedure for initiating investigations, consulting with targeted foreign governments, requesting formal dispute settlement, conducting public hearings, and soliciting public comments. The Act also outlines procedures for consultations prior to final determinations and for implementing both mandatory and discretionary actions. Once the USTR determines that action should be taken under Section 301, the agency generally has 30 days to implement that action, although the implementation may be delayed for up to 180 days in certain circumstances.
The Latest USTR Investigations and their Timelines:
The USTR press release dated March 11, 2026, indicated that investigations under Section 301(b) have been initiated against 16 major trading partners, including China, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, India, and the European Union. The timeline for the investigations indicate – March 17, 2026 – Opening of dockets for comments and written submissions, April 15, 2026 – Deadline for written submissions and requests to appear at hearings and May 5, 2026 – Commencement of hearings.
Additionally, on March 12, 2026, the USTR initiated investigations into 60 economies under Section 301(b) to determine whether their failure to effectively ban goods produced with forced labour constitutes unreasonable or discriminatory practices that burden U.S. commerce. For these investigations, the USTR has scheduled hearings beginning April 28,2026. Jamieson Greer, the USTR, also stated that he hoped to conclude these investigations before the temporary tariffs imposed by the Trump administration in late February expirein July. He reiterated that the United States would no longer sacrifice its industrial base to other countries exporting their problems of excess capacity and overproduction.
Was This a Possible Fallout of the U.S. Supreme Court Ruling?
On February 20, 2026, the U.S. Supreme Court, in Learning Resources, Inc. v. Trump (Case No. 24-1287), struck down tariffs that the Trump administration had imposed under the International Emergency Economic Powers Act (IEEPA). The Court ruled that the IEEPA is designed strictly for genuine national emergencies and that any sweeping tariff authority must be explicitly mandated by the U.S. Congress. However, the ruling applies only to tariffs imposed under the IEEPA. Other tariff regimes—such as those under Sections 232, 301, and 122 of the Trade Act of 1974—are not affected by the decision.
Following the SC ruling, the U.S. administration responded rather quickly by imposing a temporary universal tariff of 10 percent on all imported goods under Section 122 of the Trade Act of 1974. It was also indicated that the tariff could be increased to 15 percent, though that has not yet been implemented. Importantly, the imposition of tariffs under Section 122 has a limited duration of 150 days.
Strategic Implications of the Supreme Court Decision
The Supreme Court ruling striking down the reciprocal tariffs posed a significant challenge to the Trump administration’s broader strategy to revitalize domestic manufacturing, secure critical supply chains, and generate employment for U.S. citizens. The administration’s argument that the United States can no longer sacrifice its industrial base to other countries, appears to have been complicated by the Court’s decision. The initiation of USTR investigations starting in May could well be aimed at completing the investigative process within the 150-day timeframe before July, when the temporary tariffs imposed under Section 122 are scheduled to expire. This would allow the administration to impose higher tariffs based on the findings of the investigations.
Several experts have also questioned the timing of these investigations, particularly in light of the ongoing conflict involving the United States, Israel, and Iran. Many believe that the investigations are intended to provide a legal pathway for imposing tariffs similar to those that were earlier blocked by the Supreme Court—if the investigations conclude that unfair trade practices or forced labour practices are involved. With the Supreme Court striking down sweeping global reciprocal tariffs, it is also estimated by experts that the U.S. government could face a shortfall of nearly $1.6 trillion in expected tariff revenues, which had been anticipated as part of the administration’s broader fiscal strategy to offset tax-cut measures. Media reports too suggest that the Section 301 investigations are expected to conclude before July, allowing the administration to replace the temporary 10 percent duties imposed under Section 122 with potentially higher tariffs.
India and Section 301 Investigations:
India has previously faced Section 301 Investigations. In 2020, the U.S. administration initiated investigations against India, Italy, Turkey, and the United Kingdom concerning digital services taxation policies. In India’s case, the investigation related to the 2 percent Equalisation Levy imposed on e-commerce supply of services. The United States sought consultations, and India submitted its comments to the USTR on July 15, 2020. India also participated in bilateral consultations held in November 2020, and clarified its position.
India had explained that the levy contained no retrospective element, as it had been enacted before April 1, 2020, which was its effective date. The objective of the Equalisation Levy was to ensure fair competition and reasonable taxation of digital businesses operating in the Indian market. It was also clarified that Government retains the right to tax businesses that have a significant nexus with their markets through digital operations. However, on January 6, 2021, the USTR released its findings concluding that India’s Digital Services Tax (DST), i.e., the Equalisation Levy, was discriminatory and restrictive to U.S. commerce.
The report concluded that India’s DST is discriminatory against U.S. companies, it contravenes prevailing international tax principles and burdens or restricts U.S. commerce.
The report further stated that these findings supported a determination that India’s DST was actionable under Section 301.
Similar determinations were also made against Italy and Turkey. However, following the OECD/G20 framework agreement in October 2021, India and the United States reached a transitional arrangement. India agreed to continue its 2 percent Equalisation Levy on e-commerce services until March 2024 or until the implementation of Pillar One of the global tax agreement, while the United States agreed to terminate trade actions against India during the interim period.
India’s Current Challenge: Treading the hazardous Trading path
India is already engaged in negotiations with the United States regarding earlier reciprocal tariff issues and those imposed following the U.S. Supreme Court’s decision striking down earlier tariffs. The announcement of new Section 301 investigations adds a new and complex dimension to the ongoing consultations, as the process under Section 301 investigations differs significantly from negotiations surrounding reciprocal tariffs. The U.S. government has laid out a very tight timeline, and it remains to be seen how India will participate in or respond to these investigations. The timing appears particularly rushed, as many economies are currently coping with the economic consequences of the ongoing conflict in West Asia and are struggling to manage their energy security concerns.
The investigations initiated by the United States are clearly intended to conclude before July, when the temporary tariffs imposed under Section 122 expire. India has so far been treading the trade path cautiously, balancing its economic interests while engaging constructively with the United States and other global partners. Given the prevailing global uncertainties, geopolitical tensions, and economic vulnerabilities, such a cautious and calibrated approach may well be the most prudent course for safeguarding national interests.
(The writer is a Distinguished Fellow at CRF and a Governance and Public Policy Expert.)
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