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Here’s what Section 301 means and why it matters.
What is Section 301?
“Section 301” refers to Sections 301–310 of the Trade Act of 1974, a US law that allows the government to take action against foreign trade practices it considers unfair. The provision empowers the Office of the United States Trade Representative (USTR) to investigate and respond to policies that allegedly violate trade agreements or burden US commerce. Action can include imposing tariffs, restricting imports, or suspending trade concessions. The law allows the USTR to either respond to petitions filed by industry groups or “self-initiate” investigations.
How do Section 301 investigations work?
Investigations are handled by an inter-agency Section 301 Committee, which reviews evidence, conducts hearings and recommends action. If the issue involves a trade agreement, the USTR must first seek consultations with the concerned government under the agreement’s dispute resolution mechanism. Even when no agreement is directly involved, consultations are typically sought. The process usually concludes within 12 months in cases that do not involve formal trade agreement disputes. What happens after the probe?
If the USTR finds that a foreign country has violated a trade agreement or adopted “unjustifiable” practices that restrict US commerce, retaliatory action is mandatory. If the practices are deemed “unreasonable or discriminatory” but do not clearly violate an agreement, action is discretionary.
Possible measures include:
- Imposing tariffs or quotas
- Negotiating compensation or binding commitments from the country concerned
- Withdrawing trade concessions
How has the US used Section 301 in the past?
After the creation of the World Trade Organization in 1995, the US largely used Section 301 to build cases for dispute settlement at the WTO. That changed under Trump’s first term. The administration launched six investigations under Section 301. Two major cases — against China and the European Union — resulted in tariffs.
In 2018, the USTR imposed tariffs of up to 25% on roughly $370 billion worth of Chinese imports following a probe into alleged forced technology transfer and intellectual property practices. In 2020, tariffs were imposed on certain EU imports following a WTO ruling on aircraft subsidies.
These were later suspended in 2021. Under President Joe Biden, the administration reviewed and, in some cases, increased tariffs, including on electric vehicles. It also initiated investigations into issues ranging from labour rights practices to semiconductor and shipbuilding policies in China. The current Trump administration has already initiated investigations into Brazil’s digital trade and payment systems, and into China’s compliance with the “Phase One” trade deal.
Is Section 301 compatible with global trade rules?
The European Union challenged Section 301 at the WTO in 1998, arguing that unilateral US sanctions bypassed the WTO’s dispute settlement system. India, Brazil, China, Japan and Canada participated as third parties. The WTO dispute panel ultimately held that commitments given by the US — particularly that it would act in conformity with WTO rules — were sufficient to avoid a violation.
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As a result, Sections 304, 305 and 306 of the Trade Act were found not inconsistent with WTO obligations, although concerns about unilateral trade action remain.
Why it matters now
If fresh Section 301 investigations are launched, they could open the door to new tariffs or trade restrictions at a time when global trade flows are already strained by geopolitical tensions and supply chain realignments. For major trading partners of the US — including India, China, the EU and Brazil — the move signals a potential return to aggressive unilateral trade enforcement measures.
(With inputs from TOI)