Section 301 New Investigations (2026): Excess Capacity and Forced Labor

Informational only — not legal advice.

Why USTR opened these investigations

The Supreme Court held on February 20, 2026 that IEEPA does not authorize tariffs on imports. CBP stopped collecting IEEPA duties effective February 24, 2026. The administration responded with a two-phase strategy:

• Bridge (Section 122): a temporary 10% import surcharge, effective February 24, 2026, scheduled to expire July 24, 2026. Capped by statute at 15%, now being challenged in litigation at the CIT.
• Permanent replacement (Section 301): the March 2026 investigation packages. Section 301 carries no statutory rate cap, imposes no 150-day expiration, and has survived thousands of legal challenges since the China tariff lists were first imposed under the first Trump administration.

Treasury Secretary Scott Bessent stated publicly that "tariff rates will revert to their previous levels within five months" using "authorities that have withstood over 4,000 legal challenges." The target is to complete these investigations and issue remedy determinations before the Section 122 bridge expires on July 24, 2026.

Track 1: Structural excess capacity (16 economies)

Initiated: March 11, 2026
Legal authority: Section 301(b), Trade Act of 1974, self-initiated under Section 302(b)
Federal Register: 91 Fed. Reg. 51, p. 12886, Doc. No. 2026-05214 (published March 17, 2026)
Comments docket: USTR-2026-0067
Hearing requests docket: USTR-2026-0068

What is being investigated

USTR is examining whether each of the 16 targeted economies uses "acts, policies, or practices" that sustain structural excess manufacturing capacity through governmental interventions — including production subsidies, non-market lending, wage suppression, state-owned enterprise activity maintaining unprofitable firms, currency manipulation, and market access barriers. Global manufacturing capacity utilization stood at approximately 75–76% at the time of initiation, below the roughly 80% threshold associated with healthy market dynamics.

The 16 targeted economies

Canada and South Africa were not included despite appearing on the prior IEEPA reciprocal tariff list.

21 targeted industry sectors

Aluminum, automobiles (including EVs), batteries, cement, chemicals, electronics, energy goods, glass, machine tools, machinery, non-ferrous metals, paper, plastics, processed food and beverages, robotics, satellites, semiconductors, ships, solar modules, steel, and transportation equipment.

Key dates — Track 1

Track 2: Forced labor enforcement failures (60 economies)

Initiated: March 12, 2026
Legal authority: Section 301(b), Trade Act of 1974
Federal Register: Doc. No. 2026-05151 (published March 17, 2026)
Comments docket: USTR-2026-0133
Hearing requests docket: USTR-2026-0134

What is being investigated

This is the first use of Section 301 to target foreign governments' regulatory inaction on forced labor as an "unreasonable or discriminatory" trade practice. The investigation examines whether each economy has "failed to impose and effectively enforce a prohibition on the importation of goods produced with forced labor." USTR references the Department of Labor's 2024 List of Goods Produced by Child Labor or Forced Labor, covering 134 goods and 34 downstream products.

Prior forced labor tools (UFLPA rebuttable presumption for Xinjiang, Section 307 Withhold Release Orders) targeted specific goods or specific regions. Section 301 enables country-level tariff responses based on government policy failures.

The 60 targeted economies

Algeria, Angola, Argentina, Australia, The Bahamas, Bahrain, Bangladesh, Brazil, Cambodia, Canada, Chile, China, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, El Salvador, European Union, Guatemala, Guyana, Honduras, Hong Kong, India, Indonesia, Iraq, Israel, Japan, Jordan, Kazakhstan, Kuwait, Libya, Malaysia, Mexico, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Pakistan, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Taiwan, Thailand, Trinidad and Tobago, Türkiye, United Arab Emirates, United Kingdom, Uruguay, Venezuela, Vietnam.

These 60 economies collectively represent over 99% of U.S. imports in 2024.

Note on EU, Mexico, Canada: USTR's notice specifically alleges that all three "adopted prohibitions [on forced labor imports] but failed to enforce them."

High-risk sectors for forced labor track

• Textiles, apparel, and footwear
• Agricultural products and seafood
• Electronics and solar products
• Batteries and critical mineral inputs
• Auto parts

Key dates — Track 2

How these relate to existing Section 301 tariffs

The existing China Section 301 tariff lists — the 9903.88.*, 9903.91.*, and 9903.92.* Chapter 99 families — remain in effect and are not modified by these new investigations. They are a separate set of USTR actions. The Nicaragua line (9903.89.01) and the legacy large civil aircraft family (9903.89.05–.63) also remain unaffected.

What changes with a successful new Section 301 action is that new Chapter 99 code families would be added to the HTS for the new country/sector combinations. In the first Trump administration's China lists, each "tranche" generated a distinct code family (e.g., List 1 → 9903.88.01–.03, List 2 → 9903.88.04–.06, etc.). A similar approach is likely here, but no code families have been assigned yet.

Importers with existing China Section 301 exposure should not assume these investigations automatically change their current duty liability. The operative question is which Chapter 99 lines appear on each entry, and that answer requires checking the entry documents.

Have new HTS codes been assigned yet?

No. As of April 2026, no product-specific HTS codes or Chapter 99 classifications have been published for either investigation track. Product lists and Chapter 99 code assignments are published in the Federal Register only after USTR makes a final affirmative determination — which follows the hearing record, post-hearing rebuttals, and a recommendation period. The current phase is still the investigation/comment/hearing phase.

What importers should do now

1. Know which investigations affect your supply chain

Map your sourcing by country and sector against the two investigation lists. If you import from any of the 16 economies in the excess capacity track — or from any of the 60 economies in the forced labor track — you have exposure worth tracking. The fact that rates are not yet set does not mean the risk is speculative.

2. Submit comments before April 15, 2026

The comment period is the primary procedural vehicle for importers to shape:

• Which specific products end up on any tariff list
• Whether your sector receives exclusions or phase-outs
• The factual record that will be relied upon in any future legal challenge

Companies without an administrative record will be in a significantly weaker position to seek exclusions or mount challenges after rates are set. Comments and hearing testimony are submitted through the USTR portal at comments.ustr.gov.

Dockets:

• Excess capacity comments: USTR-2026-0067
• Forced labor comments: USTR-2026-0133

3. Monitor the hearing schedule

Hearings run April 28–May 1 (forced labor) and May 5–8 (excess capacity) at the USITC in Washington, D.C. Attendance requires a request filed by the April 15 deadline. Post-hearing rebuttal windows follow immediately — typically about seven days after the final hearing day.

4. Assess supply chain exposure now, not after rates are published

Section 301 products lists, once published, can become effective quickly — the China lists had relatively short effective date windows. Importers who have not mapped HTS codes, valued exposure, or identified alternative sourcing options will have less time to respond when (and if) remedy determinations are issued.

5. Track the Section 122 bridge expiration

The Section 122 10% surcharge is currently being collected and is scheduled to expire on July 24, 2026. If Section 301 remedy determinations are not issued by that date, there will be a gap between Section 122 expiration and any new Section 301 enforcement. Track both timelines simultaneously.

What to watch

• Preliminary determinations from USTR after hearings close (~late May 2026)
• Federal Register notices proposing specific product lists and Chapter 99 code assignments
• Comment period for proposed product lists (a separate notice-and-comment phase typically follows the preliminary determination)
• Section 122 litigation at the CIT — outcome could affect the bridge timeline
• Whether IEEPA rates are used as the benchmark for new Section 301 rates (Treasury Secretary Bessent's "revert to previous levels" statement suggests this is the intent)
• Exclusion process design — whether USTR builds an exclusion process similar to the China lists' multi-round exclusion rounds