US begins new unfair trade probe against overproduction in India, 15 others

New Delhi: The US has begun a new trade investigation into excess industrial capacity in 16 major trading partners including India under section 301 of its Trade Act which could lead to new tariffs.

India has created significant excess capacity in petrochemicals, steel and solar module while its global goods trade surplus sectors include textiles, health, construction goods, and automotive goods, the United States Trade Representative (USTR) said Wednesday, adding that it has requested consultations with the governments of the respective economies. China, the EU, Japan, Switzerland, Mexico and Indonesia are some of the other impacted economies.

“Evidence of structural excess capacity and production exists for India. In 2025, India had a bilateral trade surplus with the United States of $58 billion. India’s global goods trade surplus sectors include textiles, health, construction goods, and automotive goods,” it said.


These probes will focus on economies that appear to exhibit structural excess capacity and production in various manufacturing sectors, such as through large or persistent trade surpluses or underutilized or unused capacity.

The investigation will determine whether those acts, policies, and practices are unreasonable or discriminatory and burden or restrict American commerce. The USTR can self-initiate an investigation under Section 301. The hearings will begin May 5.

“Evidence suggests the solar module sector is plagued by excess capacity, including that India's current module manufacturing is nearly triple annual domestic demand,” it said.

The new tariffs could kick in by summer.

The USTR Jamieson Greer said that across numerous sectors, many US trading partners are producing more goods than they can consume domestically.

“This overproduction displaces existing US domestic production or prevents investment and expansion in US manufacturing production that otherwise would have been brought online,” he said, adding that in many sectors, the US has lost substantial domestic production capacity or has fallen worryingly behind foreign competitors.

Citing an illustrative list of more than 20 sectors “plagued by excess capacity and production” including aluminum, ships, automobiles, batteries, cement, chemicals, electronics and energy goods, robotics, satellites, semiconductors, it said that in many of these sectors, the US has lost substantial domestic production capacity or has fallen worryingly behind foreign competitors.