Government/Policy
March 13, 2026
US steel groups cheer as USTR launches sweeping probe into global overcapacity
Written by Laura Miller
The office of the US Trade Representative has opened a major Section 301 investigation into structural excess capacity across global manufacturing, with steel and aluminum at the center of the inquiry.
Section 301(b) of the Trade Act of 1974 authorizes investigations into the acts, policies, or practices of a foreign country to determine whether they are unreasonable or discriminatory and burden or restrict US commerce. It allows the US to impose unilateral tariffs or restrictions.
A USTR notice, published March 11, warns that foreign governments are sustaining industrial capacity far beyond market demand, fueling global overproduction, distorting trade flows, and undermining US mills and smelters.
USTR cites global manufacturing utilization stuck between 75.0% and 75.9%, well below the roughly 80% benchmark considered healthy for sectors like steel. The agency notes “global steel excess capacity is expected to increase to 721 million metric tons by 2027,” a trend it attributes to non-market policies abroad.
China remains the largest driver of the imbalance. According to the filing, China’s share of global excess steel capacity “rose significantly” in 2025, reaching 54% of the world gap between capacity and demand, up from 47% the year prior. The document also highlights China’s broader industrial surplus, including overcapacity in aluminum, chemicals, and machinery, supported by subsidies, state-directed lending, and depressed domestic consumption.
But the investigation extends far beyond China. USTR lists 16 economies where steel, aluminum, petrochemicals, machinery, and other heavy industries show signs of structural overcapacity. Included on the list are China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.
One example in the notice cited Malaysia’s steel sector, which expanded capacity by 22% between 2018 and 2022 despite a 25% drop in demand. Another said Vietnam continues to run excess steel and cement capacity, with cement output nearly double domestic demand. For Mexico, USTR said its steel industry grew capacity 46% from 2000 through 2019, contributing to a widening US trade deficit. The document also called out the EU, particularly Germany, which maintains large surpluses in machinery, chemicals, and autos, even as capacity utilization in key sectors remains low.
Aluminum also appears in the crosshairs. The notice identifies aluminum among the sectors “plagued by excess capacity,” alongside steel, batteries, automobiles, auto parts, machinery, chemicals, semiconductors, and more. China’s aluminum exports and low-cost inputs – such as discounted Russian oil feeding PET and chemical overcapacity – are cited as contributing to global distortions.
USTR argues these persistent surpluses – often supported by subsidies, currency practices, state-owned enterprises, and suppressed domestic demand – push excess production into the US market, displacing domestic output. As the filing states, “Unused foreign capacity can chill production and new investments in the United States.”
The Section 301 Committee will hold public hearings beginning May 5, with written comments due April 15. The investigation could lead to new tariffs or other trade actions targeting steel, aluminum, and other industrial goods from the listed economies.
At this time, it is unclear if any Section 301 tariffs would stack on top of Section 232 tariffs.
Domestic steel cheers
Both major trade groups representing domestic steel producers welcomed the 301 investigations.
The Steel Manufacturers Association (SMA), representing US EAF-steelmakers, said it will work closely with USTR throughout the investigation.
With Chinese capacity exceeding 700 million tons annually, “This situation demands decisive action, and we are pleased to see Ambassador Greer act decisively,” SMA President and CEO Philip K. Bell said.
The American Iron and Steel Institute (AISI), which represents both integrated and EAF producers, applauded USTR for initiating the investigations.
“For years, massive government subsidies and non-market policies—particularly in countries like China —have fueled chronic overproduction of steel and other manufactured goods, distorting global markets and undermining fair competition,” AISI President and CEO Kevin Dempsey told SMU.
“These practices place significant pressure on the American steel industry and the manufacturing sector — despite our continued investments in advanced technologies, sustainability and high-quality domestic production,” he noted.
Praising the investigations, Dempsey said, “This is another important step by the administration towards a comprehensive policy to address the many forms of unfair trade practices that distort global trade in steel.”
