Investigating Excess Capacity and Labor Practices
Before you start to believe this administration cares about in country’s manufacturing and people working more hours for less pay, think about it first. Do you really believe this administration cares about either? It is all about giving an edge to him to play the nation’s economy to fill his pocket.
Guest Commentary by Erica York . . .
New Section 301 tariff investigations affect 99 percent of US goods imports
Amid the geopolitical developments of the past week, the Trump administration launched multiple new Section 301 investigations. An investigation related to “excess capacity” in manufacturing affects16 US trade partners that together accounted for just over 70 percent of US goods imports in 2025. Another investigation into forced labor practices affects the top 60 US trading partners, accounting for 99 percent of US goods imports in 2025. The investigations lay the groundwork for replacing the now unlawful IEEPA tariffs that affected nearly all US trade partners.
The 16 targeted for excess capacity investigation are China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India. Imports from these countries reached nearly $2.4 trillion in 2025, out of nearly $3.4 trillion in total imports. The forced labor investigation covers nearly all US imports, leaving off countries that accounted for just $25 billion, or less than 1 percent, of total goods imports in 2025.
As the Trump administration conducts investigations under Section 301 authorities, recent data illustrate the scale of the tariffs they aim to replace.
- January’s international trade data shows the effective tariff rate for the month was 10.6 percent, calculated by dividing customs duties revenue ($27.7 billion) by not seasonally adjusted goods imports ($262 billion).
- February’s Monthly Treasury Statement shows the US government collected $26.6 billion in customs duties. The Supreme Court’s IEEPA ruling had little effect on February revenues, as the unlawful duties didn’t end until midnight on February 24 and were immediately replaced by a 10 percent Section 122 tariff. We estimate that the Section 122 tariffs will replace around half of the revenue IEEPA would have generated over the next 150 days.
- The Congressional Budget Office estimates the Court’s ruling against IEEPA will reduce tariff revenue collections by $1.6 trillion from 2026 through 2036 (an 11-year period). That compares to Tax Foundation’s estimate of $1.4 trillion from 2026 through 2035 (a shorter 10-year period). CBO estimates that without IEEPA the tariff rate will drop 8 percentage points to 7 percent, compared to our estimated drop of 7.1 percentage points to 6.7 percent (note that both estimates exclude the effect of Section 122 tariffs).
In all, we estimate that the shift to the temporary Section 122 tariffs will fall short of fully replicating the revenue and effective rates created by the IEEPA tariff regime. Whether the pending Section 301 tariffs fully replace IEEPA remains to be seen.
Guest Posting by:
Erica York
Vice President of Federal Tax Policy