US Trade Probe Targets India, China; New Tariffs by Summer

Introduction to the New Trade Investigation

The administration of US President Donald Trump has initiated a significant new trade investigation targeting 16 major trading partners, including India, China, and the European Union. This move is designed to rebuild tariff pressure after a US Supreme Court ruling on February 20 struck down a key legal foundation of the administration's existing tariff program. The new probe, conducted under Section 301 of the Trade Act of 1974, focuses on excess industrial capacity and could result in the imposition of new tariffs by the summer of 2026.

Scope and Targets of the Probe

US Trade Representative Jamieson Greer announced that the investigation will scrutinize economies Washington believes are contributing to a global glut in manufacturing. The list of targeted economies is extensive and includes China, the European Union, India, Japan, South Korea, Mexico, Taiwan, Vietnam, Thailand, Malaysia, Cambodia, Singapore, Indonesia, Bangladesh, Switzerland, and Norway. Notably, Canada, the second-largest trading partner of the US, was not included in the probe.

Greer stated that the investigation will focus on economies that exhibit signs of structural excess capacity. The US will examine evidence such as large and persistent trade surpluses, government subsidies, suppressed domestic wages, activities by state-owned enterprises, subsidized lending, currency practices, and weak environmental or labor standards. This broad mandate allows the administration to investigate a wide range of economic policies among its trading partners.

Legal Context and Accelerated Timeline

The timing of this investigation is directly linked to a recent Supreme Court decision that deemed Trump's global tariffs under a national emergencies law to be illegal. This ruling dismantled the central framework of his administration's tariff strategy. In response, the President imposed a temporary 10% tariff for 150 days under Section 122 of the Trade Act of 1974. This measure was a stopgap to maintain leverage while pursuing other legal avenues.

The new Section 301 investigation is that alternative pathway. The administration has set an accelerated timeline to ensure a resolution before the temporary tariffs expire in July. Public comments for the probe are due by April 15, with a public hearing scheduled for around May 5. This rapid schedule signals the administration's intent to act quickly.

Parallel Probe on Forced Labor

In addition to the excess capacity investigation, Greer announced a separate Section 301 probe focusing on imports produced using forced labor. This investigation is expected to be even broader, covering more than 60 countries. The stated goal is to encourage trading partners to adopt and enforce bans on forced-labor products, aligning their standards with US trade law.

US-India Bilateral Trade Negotiations

While the new multilateral probe creates a layer of uncertainty, the US and India have been making separate progress on a bilateral trade agreement. These negotiations aim to lower tariffs and resolve long-standing market access issues. According to Greer, the framework for an interim agreement is designed to unlock one of the world's largest economies for American producers.

Under the terms being finalized, India has agreed to reduce its tariffs on American industrial goods from 13.5% to zero. It will also eliminate duties on a range of US agricultural products, including tree nuts, wine, spirits, fruits, and vegetables. However, sensitive commodities like rice, beef, and dairy remain protected. In return, the US has agreed to reduce its tariff on most Indian goods to 18%, a significant reduction from the 50% rate imposed earlier.

The Rationale for Continued Tariffs

Greer explained that the decision to maintain an 18% tariff on Indian goods, despite the deal, is a direct response to the large and growing trade deficit the US has with India. According to US Census Bureau data, this surplus reached $13.5 billion in the first 11 months of 2025, up from $15.8 billion for the entirety of 2024. The tariff is intended to address this imbalance while still improving market access for Indian exporters compared to competitors.

The Russian Oil Factor

A significant point of contention in the bilateral talks has been India's imports of Russian crude oil. US officials have linked progress on tariff relief to India reducing its reliance on Russian energy. Greer acknowledged that India has made progress in curbing these purchases but stated that "they still have a ways to go." He noted the challenge for India is the discounted price of Russian oil, but emphasized that continued diversification of energy sources toward the US is a key expectation.

Broader Market and Diplomatic Implications

The dual-track approach of a broad new investigation alongside specific bilateral deals reflects the Trump administration's core trade strategy. The goal is to use tariffs as a tool to re-industrialize the American economy, reduce trade deficits, and secure better market access for US exports. The new probe comes as US officials prepare for high-level meetings with Chinese counterparts, indicating that trade remains a central focus of US foreign policy.

For India, the situation is complex. While it is close to finalizing a beneficial trade deal with the US, it is also a target in the new, broader investigation. This is happening as India successfully concluded a free trade agreement with the European Union, a move that diversifies its trade relationships and provides greater access to the European market.

Conclusion

The Trump administration has renewed its push on trade by launching a sweeping investigation into the industrial policies of 16 key economies. This action, born from a legal setback, creates fresh uncertainty in global trade. For India, it presents a mixed picture. While facing potential new tariffs under the broad Section 301 probe, it is simultaneously on the verge of implementing a bilateral agreement with the US that would significantly lower existing duties and open markets. The outcome of the new investigation, expected by summer, will be closely watched by global markets and policymakers.